Michigan State University’s Residential and Hospitality Services has taken one of the largest financial burdens at the university due to COVID-19.
“With a COVID-19 outbreak, we've had a lot of uncertainty about what's going on," MSU vice president for finance Mark Haas said at the Feb. 16 Faculty Senate meeting. "So far, we've run several hundred different budget and economic scenarios that we've analyzed since March of last year."
The university was expecting the general fund to take a bigger financial hit, but after looking at other departments, it was found to be more of a bright spot.
“Things have changed quite dramatically," Haas said. "Athletics had a huge drop in their revenues, and they've cut their expenditures not quite as much as the revenues fell. The Clinical Center is just about the same position as they were back in June. Residential housing is wildly different. ... So, huge drop in revenues there and they've made adjustments accordingly.”
This summer, the university said they were estimating $300 million in lost revenue for the 2021 fiscal year due to the pandemic.
The total revenue for the first half of the 2021 fiscal year is $228 million lower than the first half of the fiscal year 2020. Total spending has been cut by $139 million, according to a presentation that Hass and Vice President for Planning and Budgets David Byelich gave.
Housing and athletics had most of the revenue losses.
Residential and Hospitality Services has had an 80% decrease in revenue this year, according to RHS communications director Kat Cooper.
“There is just no way to make up this kind of loss,” Cooper said. “We're our product, besides delivering an outstanding ... experience to students. It's like a movie seat, and there's only one opportunity to sell that seat and once that time has passed, there's no going back and recouping it.”
According to the presentation, units may exceed or understand their budgets in any given year by using funds not spent in past years.
“I don't know that the division overall is making a lot more money because we really have a system built on the capacity that we normally have,” Cooper said. “And so, it costs a lot of money to run additional homes. So, while it's good because it means we're keeping people employed and providing jobs and housing students who need housing, it's not necessarily a big moneymaker for RHS.”
In typical years, MSU houses approximately 16,000 students on campus every year. The university is currently housing nearly 4,000.
“We're a nonprofit, so ... we pay our bills, and we'll pay our people and any money left over is reinvested into the facilities themselves,” Cooper said. “If we want to improve the experience, we've got to make the money to take that. And of course, we're always looking to improve the experience.”
RHS also runs the Kellogg Center, the Breslin Center concessions, golf courses, the MSU Union, the Tennis Center, the alumni chapel and is financially affected by the absence of summer conferences last summer as well.
According to Live On, MSU’s current room and board rate is $5,236 per semester. Students were placed in their own traditional residence hall double room while still paying the double room rate. Students living on campus were still required to purchase an unlimited dining plan.
“RHS is self-sustaining and self-funded,” Cooper said. “So, we don't get any money from people's tuition or from the government. Whatever money that we use to update our facilities, to pay our people, to buy food, all of those things, is money that we earn through room and board revenue.”
Room and board rates were set by the MSU Board of Trustees in May 2019 and reapproved at the same rate in May 2020. With the changes to the academic calendar, RHS adjusted residence hall room and board rates to offer a slight decrease from fall semester 2020.
MSU recently announced a second year live-on campus requirement beginning for incoming fall 2021 freshmen.
The additional room and board revenue that will come from this requirement will be about 6%, Cooper said. With this year’s 80% revenue decrease, it would take over a decade to make up for the losses.
According to a March 5 email from MSU President Samuel L. Stanley Jr., MSU will be able to award around $15 million in student financial aid grants under the Coronavirus Response and Relief Supplemental Appropriations Act signed into law December 2020, and the university will be sharing information in the coming weeks.
In the 2022 fiscal year, the university hopes to stable enrollment, discontinue wage concessions, discontinue benefit concessions and invest in priority programming.
“It's a big problem, but we had to do the right thing to protect people and to help keep coronavirus at bay as much as we can,” Cooper said. “And so, even though this has had a devastating impact on finances, what's important is that Spartans are safe, and we're really looking forward to everyone getting the vaccine and returning to some semblance of normal.”
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