Dear Colleagues –
More than ten weeks ago, in the face of extraordinary difficulties confronting our laboratory, our nation, and our world, the MBL community rose to the challenge. Each of you—whether on-campus or at home—is sustaining the MBL through your work. On behalf of the Board of Trustees, we thank you for your unwavering dedication to the MBL.
Even as we make steady progress toward a reopening amongst what will clearly be an ongoing public health threat, we must also navigate the financial impacts confronting us now and in the future. As noted last month, there have been substantial impacts on most every major MBL revenue source and we expect these declines will continue for the duration of the pandemic.
We have developed an adjusted Fiscal Year 2021 budget that assumes cancellation of all remaining 2020 calendar year programs and projects a decrease of $9.2M in revenue. Our adjusted budget, which is pending approval, relies on a contribution of continued operating support from the University of Chicago. Board approval of our FY21 budget is contingent upon this level of support from the University.
Assuming approval of the requested level of University operating support, and taking into account the cost-saving measures announced previously (salary freeze for all faculty, staff, and administrative salaries; cancellation of all summer hiring and strict limits on new hiring), a financial shortfall of approximately $2M remains to be addressed. The additional cost-saving measures outlined below will help us meet this $2M shortfall.
Please note that until we have confirmed the University’s level of support, these measures are subject to change. We fully recognize the unfortunate consequences of the timing of this year’s budget approval, the uncertainty it causes, and the understandable desire of everyone to know exactly what is going to happen, but we feel that it is more important to share our approach to the FY21 MBL budget now.
Reduction in discretionary non-personnel spending
The MBL has made a 15% reduction in all discretionary non-personnel spending that can be deferred to a later date with no fundamental harm to MBL’s facilities, programs, or mission.
As we have noted previously our goal is to protect our workforce to the best of our ability. That said, there are a few areas where reduced programming and operations have left some employees with no work available to be done, a situation that will likely continue over the next six months. The COVID-19 leave bank has been an effective temporary measure, however that leave is mostly or completely expended for some employees. Human Resources has been working with affected supervisors and employees in recent weeks. Approximately 15 furloughs will take effect later this week. The MBL will continue to pay for the employer portion of furloughed employees’ health care plans.
Temporarily reduce pension plan employer contributions
The MBL will temporarily reduce pension plan employer contributions administered through the TIAA-CREF 401(a) Plan from 10% to 5% of compensation for participating faculty and staff. This does not affect an employee’s ability to personally save for retirement through the MBL’s Tax Deferred Annuity 403(b) Plan. The measure will go into effect on July 27, 2020 and will last for the duration of FY21. Participants will receive a separate communication with details from Patty Mahoney in Human Resources.
Vacancies and retirements
Any upcoming retirements and position vacancies where we believe we can leave the positions unfilled for the next six months or longer without significant risk will not be immediately replaced.
The MBL Director is taking a salary reduction of 20% in FY21. Administrative and faculty leadership are encouraged to either voluntarily reduce their pay or make a substantial gift to the MBL Annual Fund.
Any actions that impact personal finances are painful, but the responsible financial decisions we are required to make now are essential to securing MBL’s future. Development of the FY21 budget was and remains extremely challenging due to the evolving nature of the pandemic and its impacts on both MBL and University of Chicago finances. The MBL’s goals throughout the process have been to (a) preserve our workforce to the greatest extent possible, (b) minimize short- and long-term risk to the organization, and (c) ensure our ability to emerge from the pandemic with a continued focus on our five-year strategic plan. If we find ourselves in a stronger financial position during the coming year, possibly through the resumption of some education or Whitman programs in the fall, we will revisit these cost-cutting decisions.
The MBL will overcome its financial challenges in the same way that we have met other difficulties presented by this pandemic: by supporting one another and doing our best work to support the mission of the MBL. Despite the disruptions we face today, we are making steady progress toward our strategic goals and that is due in large measure to the hard work and dedication of all of you. We are grateful for your continued patience as we navigate the MBL through these unchartered waters. We will provide another financial update following budget approval by the University of Chicago and the MBL Board of Trustees.
Nipam H. Patel
Chief Operating Officer