NJIT Fiscal Update
Dear NJIT Community Members,
Since the onset of the COVID-19 pandemic, we have endeavored to keep our community informed by maintaining communication regarding the virus’ impact on our operations as well as our efforts to address the many challenges it has created for NJIT and its community members. Each of our pandemic-related communications, along with NJIT’s Pandemic Recovery Plan, frequently asked questions, resources, as well as other news and information can be found on our pandemic recovery site, which is updated regularly. We will continue to use this site as a hub for pandemic-related information and will maintain a flow of communication as we move toward the onset of the Fall semester.
As such, today I write to share with you an update on NJIT’s financial position for the end of Fiscal Year 2020 and as we begin the first six months of Fiscal Year 2021, which began on July 1, 2020.
I am pleased to report that, despite realizing an unexpected $16+ million shortfall during the last quarter of FY 2020 due to the ramifications of COVID-19, NJIT was able to close the fiscal year with a balanced budget. This required the university’s senior leadership team and our colleagues to scour budgets for more than $10 million in reductions, defer many significant projects and initiatives, restrict hiring to only the most essential vacant positions, and develop a thorough cost-recover strategy for funding from the Federal Emergency Management Agency (FEMA). We were also helped with $4.055 million from the third phase of the federal CARES Act.
The greater challenge for NJIT, unfortunately, comes in FY 2021. When we began developing a budget for the first six months of this fiscal year, we were faced with a projected shortfall of approximately $35 million (a number that does not consider the potential hurdles to be overcome during the second half of FY 2021). Through more rounds of significant budget cuts, project deferrals, salary freezes, use of some fund balances, and prudent financial decisions, we were able to reduce the deficit to $11.2 million. A partial restoration ($3.9 million) of NJIT’s state operating funds for the 1st quarter of FY 2021 (July1-September 30, 2020) and the first tier of personnel actions announced on June 5 brought our six-month shortfall to $6.35 million. Those personnel actions included nearly $500,000 in compensation givebacks by the university’s senior staff, $206,000 in savings through the voluntary furlough program, and approximately $267,000 from the elimination of retirement contributions above the Alternate Benefit Program limit. We anticipate closing much of this deficit through the implementation of involuntary furloughs, vacation give-backs, and using prior year balances, thus avoiding the need to implement university-wide layoffs. I thank the university bargaining units which have agreed to salary-freezes and give-backs.
This plan remains tentative, though, as there are multiple variables--state appropriation, federal relief funding, fall enrollments, FEMA reimbursement, residence hall capacity, and more--that could significantly affect NJIT’s budgetary position. Additionally, it is important to note that our university’s financial challenges could become far greater during the second half of this fiscal year. In balancing FY 2020 and the first half of FY 2021, we have taken several cost-saving opportunities that no longer will be available in January 2021 and beyond. So, while I am grateful to have avoided a reduction in force thus far, we must continue to be cautious in our planning and vigilant in monitoring what is an incredibly fluid situation.
We will continue to share updates on our planning for the Fall as we move through July and August, and we will remain guided by the dual priorities of delivering upon the university’s mission to provide a high-quality educational experience and assuring, to the best of our ability, the safety and wellbeing of NJIT’s community members.
Thank you all for your continued dedication and significant contributions to NJIT. Your cooperation has helped to safeguard our university, students, personnel and future. Please stay safe and well.
Sincerely,
NJIT President Joel S. Bloom
