In the span of just four months, the COVID-19 crisis is expected to cause a $16 million shortfall at the New Jersey Institute of Technology. (File Photo: Shutterstock)

NEWARK, NJ — In the span of just four months, the COVID-19 crisis is expected to cause a $16 million shortfall at the New Jersey Institute of Technology (NJIT) in Newark, the university’s president says.

Although the projected financial losses at the university pale in comparison to the loss of life wrought by this virus, they are “massive and cannot be ignored,” President Joel Bloom said Monday.

READ MORE: NJ Coronavirus Updates (Here's What You Need To Know)

“Higher education has not been immune to the impacts of COVID-19 and, in many ways, has been acutely affected,” Bloom stated.

When colleges and universities throughout the U.S. were forced to move instruction online for the remainder of the spring semester, it caused a big blow to many of their coffers, Bloom said.

See related article: NJIT Moves Classes Online Amid Coronavirus

The school community has adapted quickly and its students have rapidly adjusted, Bloom said. But the move to remote instruction brought along some unanticipated costs, which caused a one-two punch with “massive funding reductions” for public colleges late this fiscal year, when little could be done to adjust budgets or enhance revenues.

“From a fiscal standpoint, we are fortunate that NJIT was in a strong position prior to the onset of COVID-19,” Bloom said. “In fact, Fiscal Year 2020 (which ends on June 30, 2020) was set to be a banner year for our university. NJIT’s enrollments were healthy and increasing, and applications for admission were at record levels. The university’s endowment was growing, and we had been successful in attracting robust funding through grants, gifts, and appropriations from both public and private sources in support of exciting initiatives. Nevertheless, the fiscal impact of COVID-19 has been monumental and has forced our leadership team to take significant steps to assure a balanced budget at the close of FY 20.”

Here’s how the financial crunch is affecting NJIT, Bloom said.

$16 MILLION SHORTFALL – “From March through June of 2020, COVID-19 will create a financial shortfall of more than $16 million for NJIT. That total is comprised of the following: a nearly $6 million reduction in state appropriations; more than $5.3 million credited or refunded to students for housing, dining, and parking fees; approximately $3 million in investment income and cost recovery losses; roughly $1 million in receivable payment defaults; and hundreds of thousands of dollars in event and program revenue losses as well as unanticipated business continuity costs.”

CLOSING THE BUDGET GAP – “NJIT’s senior leadership team has scoured budgets for savings. In two separate rounds of cost reductions, we have identified almost $10.5 million that has been moved to reserves. This has not been easy and will result in the deferral of many important projects and expenditures, but it has been absolutely necessary to close the budget gap. We also have restricted hiring to only the most essential vacant positions. In addition to the savings we identified, NJIT will receive $4.055 million from the third phase of the federal CARES Act. A like amount of funding will be made available to our students through the university for their expenses resulting from COVID-19. We also have identified numerous costs that NJIT has incurred due to this pandemic, which may be partially reimbursable through the Federal Emergency Management Agency (FEMA). These efforts, combined with a final round of budget reductions, will enable NJIT to close FY 20 with a balanced budget.”

FUTURE HARDSHIPS – “Despite successfully addressing the FY 20 budget gap, we face many uncertainties for FY 21 (July 1 - June 30, 2021) and must plan based upon some grim assumptions. At present, enrollment for summer session is ahead of last year’s pace and projections for the incoming freshman class and transfer cohort remain ahead of expectations, but we likely will realize significant declines in the number of international graduate students enrolled next year. This will affect our masters and doctoral degree programs most heavily. We also cannot be certain how severely external funding received by NJIT (state appropriations, private gifts, grants, corporate contracts, event and program revenues, etc.) will be diminished. Furthermore, the uncertainties surrounding COVID-19’s impact are numerous and must be considered. We need to prepare for the possibility that some form of social distancing as well as testing and personal protective equipment (PPE) may demand new investments and could limit or eliminate various sources of revenue. We also must recognize the likelihood that many of our students’ families will face financial hardships that threaten their enrollment status and academic progress. Along those lines, I note that our university fundraising efforts now are focused on this area of need and that 100% of NJIT’s senior leadership team members (president, vice presidents, and chief administrative officers) have made personal contributions to the Highlander Student Emergency Fund. Since April, we have raised a total of more than $62,000 for that fund.”

COST CONTAINMENT – “As we prepare for FY 21, NJIT will need to explore a broad range of cost containment strategies and revenue enhancement efforts. Details of those will be shared as they evolve and our university’s financial picture becomes more clear in the coming weeks and months. We also are transitioning our COVID-19 Task Force and advisory group to a Recovery Steering Committee that is actively planning for future university operations.”

Despite the challenges ahead, it’s important to remain positive, Bloom said.

“I cannot thank the members of the NJIT community enough for all your efforts as we work together to meet the challenges of this moment,” Bloom said Monday. “NJIT was on a rapid ascent prior to the arrival of COVID-19, and we undoubtedly will resume that trajectory once this tragedy abates. I have confidence that will be the case, because I know the people of NJIT. Our students, faculty, staff, trustees, and alumni are problem solvers who possess great talent and fierce determination. They give me reason for optimism and hope.”

See related article: NJIT Designers Help to Battle COVID-19

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