LU declares financial exigency

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Lincoln University's administration informed the university's faculty union last week the institution is declaring financial exigency - a move that could open the door to some unusual and extreme actions to help LU survive the economic effects of the COVID-19 pandemic.

"Declaring financial exigency basically acknowledges that a college cannot meet its contractual obligations and allows it to take unusual cost-saving steps, like firing tenured faculty members," according to a 2011 article from The Chronicle of Higher Education.

Forbes in March 2020 called financial exigency "a doomsday scenario to be used only by institutions facing such imminent and severe financial circumstances that the survival of the institution as a whole is threatened."

"We certainly recognize the gravity of our current situation, but we also draw upon the resiliency that has kept the university going for more than 150 years," LU spokeswoman Misty Young told the News Tribune. "We have faced and persevered through tough times before, and we are confident we will do so again."

Administration was scheduled to have a closed meeting today with the faculty union - the Lincoln University Missouri National Education Association - to discuss "recommendations as to the impact of this financial exigency on bargaining unit positions," according to an April 27 letter from LU President Jerald Jones Woolfolk to Michael Scott, vice president of the union.

Scott did not immediately respond Thursday regarding whether he had any comment about the declaration of financial exigency.

"The circumstances giving rise to this declaration should not come as a surprise," Woolfolk said in her letter.

LU courses have been delivered online since March 23 because of the pandemic, and all summer classes will be delivered online as well.

"At this point, no decision has been made regarding the return of students to campus for fall semester, but it is very likely those classes will be online as well," Woolfolk wrote.

"Given this change in instruction delivery, general uncertainties surrounding the future as a result of the pandemic, and actual and projected enrollment trends prior to COVID-19, we are anticipating a decline in enrollment for the next academic year," she continued.

Student enrollment at LU has been on an overall downward trend since 2012, when there were 3,388 students enrolled for the fall semester, compared to 2,436 students enrolled last fall.

With the pandemic, the university earlier this week said summer enrollment was so far down 42 percent from 2019, and fall enrollment was so far down 25 percent from the same time last year.

The state withheld approximately $1.4 million from LU's budget for the remainder of the current fiscal year - part of a larger set of spending restrictions enacted, especially on colleges and universities, because of the effects of the pandemic on Missouri's budget.

The new fiscal year starts July 1.

The Missouri Senate's proposed budget hoped to use anticipated federal aid to restore the cuts to higher education that the House had passed, though it's not yet clear whether that will happen. The state Legislature has to pass a budget today.

Lincoln's leaders were also hopeful earlier this week Gov. Mike Parson will decide to use approximately $56 million in federal funding appropriated for emergency education needs to restore higher education cuts.

The vast majority of LU's revenue - 98 percent - comes from state appropriations and tuition and fees.

Woolfolk said the combination of the realized and expected budget withholdings and the enrollment declines led LU to declare financial exigency.

When asked to quantify how much of a financial problem LU is facing, Young said: "This is an extremely fluid situation with new information coming in on a daily basis. A determination of an exact number is not feasible at this time, but we are considering all available funding sources to drive our decision-making."

The university received approximately $1.3 million through the federal Coronavirus Aid, Relief and Economic Security Act, which should cover the university's expenses this spring from refunding room and board charges to students.

The university is also to receive $3.4 million through the CARES Act as part of a broader aid package for historically black colleges and universities, which could be used for lost revenue, reimbursement of incurred expenses, technology costs with the school's transition to remote learning, staff training or payroll.

With the declaration of financial exigency, it's not yet clear what the university's course of action will be going forward.

"While the university is evaluating all cost-savings measures, the collective bargaining agreement makes it necessary to give this notice to the union to be able to fully consider all options," Young said.

"A timeline will be created in collaboration with the union during the meeting (today). This is just one step in our efforts to stabilize the university financially and that is an ongoing process," she added.

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