Furloughs, hiring and budget cuts seek to minimize $33 million deficit

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Fowler Hall, Johnson Hall and the Arthur G. Coons Administrative Center steps. March 17, 2020.

With only around 100 students residing on campus and 1,835 students — 12 percent fewer than anticipated — enrolled at the college for the Fall 2020 semester, Occidental’s finances have been significantly impacted by the coronavirus pandemic. According to Vice President and Chief Operating Officer for Finance, Planning and Operations Amos Himmelstein, the college anticipated to receive $26 million in revenue from its residence halls this fiscal year, and if the college remains online for the spring semester, it will only receive around $2 million of that revenue. Himmelstein said 129 employees were furloughed to some degree, with furloughs varying from 100 percent to 50 and 25 percent. The college also missed out on $4 million of summer programming revenue, and shelled out $810,000 on technology capabilities for the remote semester.

According to Himmelstein, Occidental’s budget during a normal fiscal year is around $120 million, its current operating deficit is around $33 million and the projected revenue shortfall is $41 million.

“We anticipated this year it was to be around 120 million dollars in our annual operating budget,” Himmelstein said. “That’s all the money we would spend in our operations for the year. That includes pretty much everything.”

Himmelstein said the lack of students on campus is the primary contributing factor to this deficit.

“If you take your revenue loss and the money that you’re not spending just simply by not having students on campus, that gap is $33 million,” Himmelstein said. “Now we cut that budget significantly by doing things like furloughs and not traveling and not doing things, but even after we’ve cut the budget, we still are going to borrow more money from our endowment.”

Occidental’s endowment is currently about $430 million, according to Himmelstein. Himmelstein said that only around 20 percent of this endowment is unrestricted, and that most donations to the college are made to a specific department or group on campus.

According to President Harry J. Elam Jr.’s financial update for this fiscal year, while last year’s endowment contribution was $18 million, through an increased percentage draw and the repurposing of one-time endowment funds, this year’s endowment contribution will be approximately $35-45 million. In addition, the College required all vice presidents to present 10–15 percent cuts for their departmental budgets, centralized expenditures to generate $6 million in savings, and instilled roughly $5 million in savings via salary and hiring freezes, senior staff pay cuts and the reduction of the 4 percent match for retirement benefits. Elam also announced the discontinuation of the football team over email Oct. 13, citing recruitment and financial concerns.

Elam announced that each student who enrolled in the fall semester would receive a $1,500 tuition credit in a July 20 email, costing the college approximately $2.7 million. According to Himmelstein, this credit, which is just above 2 percent of the full tuition cost, was implemented to make things easier for students and families during the pandemic.

“We wanted to recognize that students, that families were going to be in a different situation,” Himmelstein said. “We never thought to ourselves, ‘Does this equate the difference between being in class or online?'”

Tuition for remote instruction has been a contentious aspect of this global pandemic. Cornell University, Harvard University and Yale University increased their tuition for the 2020–2021 school year. Occidental first moved all instruction online in response to coronavirus March 12, announced a hybrid-instruction model for the Fall 2020 semester June 15 and then reversed its decision by announcing the fall semester would be fully online July 15. According to Himmelstein, while the leadership at the college did have a conversation regarding the cost of tuition, they ultimately decided against reducing tuition.

“Our feeling was that you still are getting an Occidental education,” Himmelstein said. “They are still small classes in terms of, even though it’s online, it’s not like another online model where there’s 100 students doing an online class. Faculty should be still very much engaging with the students and it’s still an Occidental degree in education. So from that point, you also don’t want to lessen that brand of what we’re delivering.”

The tuition credit was one of the ways the college sought to make things easier for students, Himmelstein said.

“The tuition credit, in terms of making it a little bit easier on families, seemed like the right thing to do, which was acknowledging that people are having a hard time, but as far as the credit that you’re getting, the degree that you’re getting, it’s still an Occidental College degree,” Himmelstein said.

According to Vice President for Information and Technology Services (ITS) and Chief Information Officer James Uhrich, the college did everything in its power to ensure that students had the technology capabilities to study online for the semester. Uhrich said the college spent $630,000 on hardware such as laptops, webcams, Wi-Fi hotspots and more for students and faculty, and spent an additional $180,000 on software such as Zoom, the video platform Panopto, Adobe Creative Suite and Virtualization software licensing. According to Uhrich, more than 250 students have been helped with their technology needs thus far.

Uhrich said he worked with individual academic departments to assess their specific needs for technology.

“We worked closely with them and the students in those departments to look at what classes they were offering and what technology needs they would need for those,” Uhrich said. “Departments did outreach to students to say, ‘What do you need? Do you have the right computer? Do you have the right tools?’ And if they didn’t, we worked with those students to make sure they had the tools they needed to take those classes.”

Students from these departments received packages in the mail prior to the start of the semester that addressed these technology needs.

According to Vice President for Academic Affairs and Dean of the College Wendy Sternberg, faculty and students alike have had to adapt to the influx of technology that comes with remote learning.

“This is a new way of teaching for nearly all of our faculty,” Sternberg said via email. “But it’s also been an opportunity for faculty to learn to use tools that were intended to supplement face-to-face instruction that we’ve come to rely on. And it’s far more time consuming to interact remotely, so everyone is really putting in a ton of work. Morale and burnout are significant challenges.”

According to Associate Vice President for Hospitality Services Amy Muñoz, campus dining has also had to adapt its functions because there are only 100 students living on campus. Muñoz said there are also 23 students living off campus using Meal Plan D. According to Muñoz, 45 percent of the campus dining staff was furloughed, and the majority of those furloughed were furloughed 100 percent. Himmelstein said that employees at the college could be furloughed 25, 50 and 100 percent. If an employee is furloughed 100 percent, they are not permitted to work but continue to receive their benefits. A 50 percent furlough, however, means an employee may continue working half as much as before, also while continuing to receive benefits.

“You can see that’s a significant number of employees who are on furlough for these four months,” Muñoz said. “That is irrespective of the revenue. So, that is a decision that the college made that I believe was both pragmatic and compassionate, because if the extent of the furloughs in dining had to match the extent of the revenue reduction in dining, there would have been a lot more furloughs.”

Muñoz said that since campus dining is directly impacted by the number of students living on campus, the impact of COVID-19 on her department’s revenue is significant.

“We have less revenue across the college, but the impacts on room and board are greater because we don’t have students living here,” Muñoz said. “We’re the board part of room and board, and that is a certain percentage of the college’s budget. That is the most impacted portion of the college’s budget because students aren’t physically here on campus.”

Muñoz said she and the campus dining staff have been creative and entrepreneurial in creating an adapted food service for those students still residing on campus, including implementing Saturday specials, where students have the opportunity to eat churros, pretzels, visit a bagel bar or eat something out of the ordinary.

“We’re trying as much as possible to give students the best food during an apocalypse, and if in COVID, our resident students have food to look forward to, then we’re doing our job,” Muñoz said. “We’re not a contract operation, we are part of the college, and we feel that Oxy’s own food service, Oxy’s own dining service, is something that makes Oxy special, and we fully intend to come back strong.”

According to Director of Communications Jim Tranquada, every department has been impacted differently by the remote learning environment that came with COVID-19. Tranquada said the communications budget for the quarterly alumni magazine was cut in half as a result of the pandemic’s financial impact on the college.

“As a result, there will be only two print issues being mailed to our list of 24,000 alumni and parents this academic year; the other two will be digital-only,” Tranquada said over email. “Budget cuts have had other impacts as well; for example, there’s far less money to replace or buy new equipment and software for College Photographer Marc Campos.”

Himmelstein said that in the summer, Occidental usually rents out facilities and residence halls for summer camps, charges people to film on campus, and hosts weddings. Himmelstein said the college lost a projected $4 million in revenue over the summer that would have usually come in through this avenue.

Another aspect of the college’s finances that has been impacted by COVID-19 is fundraising, according to Himmelstein. Himmelstein said while there are times of the year in which giving is more common, fundraising is an essential part of the college’s finances.

“We count a lot on fundraising and I was concerned because people are losing their jobs in many places. At the same time, the markets aren’t doing that poorly. So it’s hard to really say that it’s going to have an effect or not, but that’s one that you never know, really, if people are going to step up and still give,” Himmelstein said.

Gwen Berghof contributed to the reporting of this article.