Dear Lehman Colleagues:

You may have learned that Chancellor Félix Matos Rodríguez sent a memo to all CUNY college presidents this week. In that memo, he outlined CUNY's developing response to the approved New York State budget, as well as the growing state and city revenue shortfalls due to COVID-19. Everyone knows that the entire nation is in an economic free fall at the moment. What we don't know is whether we are attached to a bungee cord and poised for a rapid return to "normal," or whether we will have to laboriously climb back to where we were before COVID-19 hit.

At the beginning of the budget season, New York State faced a $6 billion shortfall due to Medicaid costs. CUNY asked the state for an additional $136 million beyond fiscal year 2019-2020, or FY20, to cover the new Collective Bargaining Agreement (CBA), other mandatory costs, and new programmatic initiatives. We also pushed hard for funding to reduce or eliminate the TAP gap.

We are in a different world now, and the "flat" budget that became law on April 3rd added only $50 million for increased fringe benefit costs in the new CBA and other labor agreements. Coming as it did in the middle of the COVID-19 pandemic, the budget that passed seemed better than we feared. But the budget bill included three dates, April 30, June 30 and December 31, when the state budget director can unilaterally modify the budget, based on actual state revenues. 

The state budget director had recently projected an eight percent reduction in FY21 revenue, but this morning the Governor projected a $13.3 billion revenue drop, which is 14 percent. These are estimates based on the current situation, and do not assume a federal stimulus package that would include payments to states. Governor Cuomo has requested at least $10 billion.

The CUNY Budget Framework

So how does this alter our financial planning at CUNY? While there will be a good deal of unanimity in the way all the CUNY colleges plan for FY21, each college also has its own financial situation that will impact the decisions it is able to make.

Two weeks ago, Chancellor Matos Rodríguez established a Fiscal Scenarios Group to create the most realistic estimates about how the CUNY budget could be impacted by the state's finances. Then, after he spoke with the college presidents, he issued the memo I referred to above. In it, he laid out four immediate actions:

• CUNY is implementing a freeze on all personnel actions, including all hires and discretionary salary increases. Some exceptions that will be considered include health and safety positions and faculty searches in which an offer has already been made. Such cases will need to be presented to a CUNY Vacancy Review Committee that will be created in the coming days;
• Per state and city regulations, the University must pause all active campus construction projects, with the exception of those that are COVID-19 related;
• For the remainder of the fiscal year, colleges should refrain from any new one-time or recurring expenditures, with the exception of those that are related to COVID-19 or distance learning instruction; and,
• Campuses should not be entering into any new long-term contractual obligations (new or renewals) until further notice and should consult with the Chief Financial Officer's Office for any exceptional situations.

• There is a hiring freeze in effect. This includes offers already made, which always have a financial contingency clause. We will have our own campus process for evaluating all hiring that is in process, to determine if we are still able to complete them. If we find that we are, we will submit those to the CUNY Vacancy Review Committee for approval.
  
  I believe that our own campus process is the most important, because we do not want to make any hires now that jeopardize our financial position. The pain that could cause would be much worse than the pain of not being able to make a hire now.
  
  There has been a rush this week to submit paperwork for hires to Human Resources. All of these personnel actions will be held at HR until we have reached the point of planning where we are confident we know which hires we can follow through with. If you are part of the hiring process, please be sure to inform candidates of the process, which will probably take a few weeks or more to complete.
• We have passed the deadline for submitting a requisition in this fiscal year, and all Other Than Personal Service (OTPS) accounts have been swept into the College's pool account. With a few exceptions for mandatory costs, only expenses related to COVID-19 and distance education will be encumbered for the remainder of this fiscal year.
• We will not enter into new long-term contracts other than those absolutely required for purposes of compliance or safety.
• Some campus construction projects will be allowed to proceed, but beginning new ones will depend upon state, city and CUNY approval.
• We do not have a budget reduction target at the outset. There are variables that make this impossible at the moment. On April 30, the state budget director will announce his first revenue and budget revision. That will be a strong indication of what lies ahead.

• Establish the values and guidelines for our budget discussions and decision-making;
• Establish a timeline for our budget process;
• Revise our current base budget and worst-case budget scenarios, probably
• Set up the process for making decisions;
• Present the current budget scenarios and discuss budget saving ideas with the Senate Budget and Long-Range Planning Committee;
• Learn on April 30 what the State budget director does with the currently-approved State budget.

• Identify places where costs can be reduced in the coming year;
• Identify where opportunities exist to bolster revenue through maintaining enrollment and other actions;
• Move ahead with the work already begun on developing the 2020-2025 Strategic Plan;
• Complete a draft FY21 budget that projects out three years – this will be presented to the College community;
• Communicate frequently about progress.