Units will need to cut 5% from the budgets they're developing for the fiscal year that begins July 1, President Wendy Wintersteen shared with university employees in an April 20 memo. She asked budget staff to plan for another 5% reduction the following year.
Five percent of this year's $742 million general fund operating budget is about $37 million.
Wintersteen also announced the university won't be able to provide performance-based salary increases for faculty, P&S and contract staff and post docs this summer. Consistent with their negotiated contract with the state, merit employees will receive a 2.1% salary increase on July 1.
In addition to an already tight budget climate for higher education in general -- Iowa State is planning for flat state appropriations and tuition revenue -- Wintersteen said the university budget will need to absorb at least $80 million in costs, refunds and lost revenue through the summer due to the COVID-19 pandemic. She noted this is a conservative estimate.
"As we consider these financial implications and understand there are more to come, it is important that we take a prudent and frugal approach to our budget," she wrote.
Federal emergency funds
Iowa State is receiving $21.6 million in emergency aid from the federal stimulus package, known as the CARES Act. As required by the legislation, $10.8 million will be used for emergency student financial aid. Wintersteen wrote that the senior leadership team and senior budget leaders are developing a plan to allocate the remaining funds, $10.8 million.
The president emphasized the current situation is "only a snapshot that will continue to develop" as more information and impacts arise, including decisions by the Iowa Legislature (adjourned until at least April 30), state Board of Regents and state and federal leaders. But she said university leaders will work to leverage all available resources.
Wintersteen noted that the federal CARES Act will allow employees and former employees with defined contribution retirement plans (including TIAA, AIG VALIC and Ameriprise) who experience "adverse financial conditions" resulting from COVID-19 to take up to $100,000 from an account through Dec. 31. They also may suspend their 2020 required minimum distribution from those accounts. On April 21, the payroll, benefit and tax office published an FAQ about the changes to retirement fund distribution rules.
For more information, employees should contact their financial adviser or staff in their plan's office.
As campus advances further into this period of reduced operations, Wintersteen asked supervisors to be flexible about finding sufficient work for their employees. Their options include:
- Temporary changes to job tasks.
- Temporary reassignments for employees to other areas that have work.
- Reduced or rotating schedules.
If sufficient work isn't available, employees may use appropriate time off. She encouraged employees and supervisors to consult university human resources' COVID-19 FAQ.
Difficult times, Wintersteen wrote, provide "an opportunity to demonstrate Iowa State's resolve, innovation and strength.
"Thank you for your commitment to our mission and your compassion for each other."