As politicians and citizens wage debates over reopening the country amid the COVID-19 pandemic, the novel virus’s economic impacts on Americans have become central in discussions over when to open non-essential businesses and relax social distancing protocols. Recent administrative emails to the campus community indicate that the College of William and Mary has encountered similar economic hardship because of COVID-19.
To maintain campus operations, the College relies heavily on revenue from study abroad programs, athletics, housing and dining, all of which have been cut off because of the novel virus. According to the College, while some costs are down due to remote learning, other unforeseen expenses due to unanticipated changes related to COVID-19, including support for faculty, students and remote learning operations, have affected the College’s finances. In an April 24 email, the College announced several measures to offset the lost revenue.
“As we navigate cost-saving measures, our mission remains our north star,” College President Katherine Rowe said in her email. “We bring together exceptional people to learn and pursue knowledge at the highest levels. An outstanding university workforce is built slowly, over time, to achieve the quality of expertise and human understanding – and the commitment to community – that distinguishes W&M faculty and staff.”
In an attempt to support students through potentially difficult economic circumstances, the College issued a reversal of its planned tuition increase for next year, which was set to increase by no more than three percent for in-state students. Instead, the Board of Visitors decided that tuition will remain flat for all students for the 2020-21 academic year.
“As we begin to plan for next year and ways in which we can flatten the curve of financial impact for our community, the Board and administration concurred that freezing tuition and mandatory fees for all students at the current year’s level was critical, as were other prudent decisions to freeze new hiring and limit other costs.”
“As we begin to plan for next year and ways in which we can flatten the curve of financial impact for our community, the Board and administration concurred that freezing tuition and mandatory fees for all students at the current year’s level was critical, as were other prudent decisions to freeze new hiring and limit other costs,” Rector John E. Littel said in an email.
Other initial steps include extensions of restrictions on university-related travel through August as well as a university-wide reassessment of current budgets and spending.
“We will engage collectively in establishing a shared understanding of our financial position and ensure that we align available resources – including curricular resources – to support the programs and people that are at the heart of William & Mary,” Rowe said.
The College has not been shy in confessing its economic vulnerability. Currently, the College projects losses ranging from $13 million to $32 million through August 2020.
Some students and faculty have pointed to funding sources that could help counteract these massive losses: the $3.9 million in CARES Act funding and the College’s nearly $1 billion in endowments. Both were discussed in a virtual undergraduate town hall held by Rowe and other university administrators April 27. Senior Vice President for Finance and Administration Sam Jones was asked how the CARES funding would be allocated.
“We are submitting our application to the Federal Government this week to get their approval,” Jones said. “That money needs to go directly to students. The federal government has suggested we do that on a need basis. We will use those types of calculations to do that and the exact date of the distribution will depend on how quickly the federal government approves our request.”
The CARES Act funding, offered through the Higher Education Emergency Relief Fund, is distributed to colleges and universities based on both the number of enrolled students and the number of those students who are Pell Grant eligible. At least 50 percent of the funding received must be used for direct student aid. For the College, this amount equates to roughly $1.97 million. Jones did not mention whether the College would accept the remaining 50 percent, nor did he specify how the remaining funding would be allocated.
Several prominent universities, including Harvard University and Princeton University, have declined CARES Act funding following controversy over their large endowments. These actions have raised questions over whether the College’s own endowment can be used for emergency expenses.
“It’s a great question,” Jones said. “People think about that and say, ‘oh, well they’ve got a billion dollars of unrestricted money that can be used for any purpose.’ What you really have with endowments is a collection of many gifts that donors have given over an extended period of time that are restricted for particular purposes. The money isn’t really available to reprogram for other purposes or else you have violated the donor’s intent. So, while it’s wonderful money to have, in this particular instance, it doesn’t give us flexibility to address the shortfalls. We have to do that in other ways.”
“What you really have with endowments is a collection of many gifts that donors have given over an extended period of time that are restricted for particular purposes. The money isn’t really available to reprogram for other purposes or else you have violated the donor’s intent.”
Beyond its endowment and federal funding, the College has identified alternative mechanisms to address students’ financial hardship. Dean of Students Marjorie Thomas pointed to the College’s HEART Fund, which was created just months before the COVID-19 pandemic, as a source of emergency funding for students.
“The HEART Fund was established by a donor that really wanted to ensure that there were emergency resources available for students dealing with hardships,” Thomas said. “During this unprecedented time, we have really been able to work with wonderful partners to further expand that fund to support students this semester who are in need of financial resources due to lodging insecurity, technology needs, as well as medications. Students that are navigating dire needs at this time, all they have to do is email my office. Requests are reviewed and students are contacted within 48 hours. It is a wonderful opportunity and is representative of the giving nature of our community.”
Despite its previously cited sources of emergency funding, the College faces economic challenges in the months ahead. Jones said that, so far, the College has not furloughed any of its employees. He mentioned teleworking and Centers for Disease Control and Prevention sanitation guidelines as steps taken to protect employees and keep them working.
Though the College has not furloughed any of its own employees, this does not include those employed by companies contracted by the College. Jones emphasized that the College does not have direct control over these companies, including Sodexo, the College’s dining services provider.
“We continue to work with our major contractors in terms of what are they doing to support employees that they have had to furlough and what can we do to help,” Jones said. “Those conversations continue.”
Some of the biggest losses of revenue for the College come from housing, parking and dining. In March, the administration decided to issue rebates to most students to account for the time spent away from campus. Jones cited various fixed costs that were important in determining the amount students would receive in rebates.
“In calculating the rebates, we looked at the amounts that students have paid, we looked at where we were in the semester,” Jones said. “We also had to look at the fixed cost of running the housing program. In our case, we have debt service on the residence halls that has to be paid whether we have anyone in them or not.”
Ultimately, the College must walk a fine line between focusing on students’ financial hardship and taking steps to alleviate its own situation. In her town hall, Rowe closed by letting students know that the College wants to be there for them in any way they may need.
“I do have an ask for you, which is that William and Mary faculty and staff are here to support you,” Rowe said. “If things aren’t going well, if it’s tough right now, reach out and ask for some advice and for some help. No one should feel like they need to go solo right now. You see here a leadership team that could not be successful without each others’ wisdom and support. Seek out your team and ask for their support.”