COVID-19 hit to Pennsylvania’s largest universities nears $800 million
The universities have been able to cover most of the losses with reserves and savings from canceled activities, like travel.
The University of Pennsylvania expects to lose $77 million by the end of the school year in June. Penn, which earned $1.9 billion on investments in just the final three months of 2020, is wealthy enough to take that hit without much difficulty.
“Pressure remains, but we are well positioned,” MaryFrances McCourt, Penn’s vice president of finance, told the university board’s budget and finance committee on Thursday. The loss is for Penn as an academic institution with $4.5 billion in revenue last year and does not include its gigantic health system.
But the shortfall, paced by a $79 million reduction in tuition and fee revenue through December, shows that even the richest schools have taken significant financial hits from COVID-19, as students at many schools had to stay home for the fall semester and others delayed starting college.
Fitch Ratings, a credit ratings agency, said Tuesday that freshman enrollment nationally was down 16% last fall, compared to the year before. But it is expected to rebound quickly because most potential students are expected to take only short breaks. Enrollment of foreign students is forecast to take longer to recover.
The number of first-time undergraduates at Penn last fall fell 3%, to about 2,300 from 2,400 the year before. Overall, Penn’s undergrad enrollment was down 5%, to about 10,400, according to a disclosure to municipal bond investors. Penn did not say how many students had pushed back their enrollment date.
In another negative for higher education, the typical burst of enrollment during recessions by people trying to retool their skills has not happened during the coronavirus pandemic “due in part to the uncertainty of the duration and the public health risk of this crisis,” Fitch said.
The recovery is expected to be hardest for small private school that are heavily dependent on tuition for revenue, Fitch said.
While Lincoln University, Pennsylvania State University, the University of Pittsburgh, and Temple University depend a great deal on student tuition, as state-related universities, with the exception of Lincoln, they are not small and they also benefit from an annual state appropriation. They are asking for a total of nearly $600 million for the coming academic year.
In all, the various universities face a collective shortfall nearing $800 million.
On Wednesday, leaders of the schools testified in Harrisburg at a House budget hearing about the financial impact of COVID-19 on their institutions and urged lawmakers to continue their support.
Since the pandemic started, Temple University has contended with $120 million in lost revenues and increased costs, president Richard M. Englert told lawmakers. Excluding Temple University Health System, Temple had $1.6 billion in revenue last year.
Brenda A. Allen, president of Lincoln University did not provide specifics, but said the Chester County institution expected revenue for the academic year to be about 16% less than expected.
Penn State has taken a roughly $400 million hit in lost revenues and added expenses, president Eric J. Barron said. In the year ended June 30, 2020, Penn State had $4.1 billion in revenue, excluding its health system.
University of Pittsburgh Chancellor Patrick D. Gallagher during a board of trustees meeting Friday said lost revenues and costs totaled $50 million in fiscal 2020 and were expected to reach $115 million in this year. Pitt had $2.5 billion in revenue last year.
“We have been able to cover a lot of this financial shock by implementing temporary, one-time budget reductions,” he said. “We’ve been able to take advantage of the fact that we aren’t doing other things across the university and redirect those savings to cover these COVID-related costs.”