Johns Hopkins projects revenue losses of $475M, expects furloughs and layoffs

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Photo of Gilman Hall at Johns Hopkins University. Photo by callison-burch, via Flickr.

Johns Hopkins University expects to furlough or layoff employees and freeze the majority of salaries in response to projected coronavirus-related losses of $100 million this fiscal year and $375 million in fiscal year 2021, University President Ronald J. Daniels wrote in a letter to the Hopkins community posted late Tuesday night.

Earlier forecasts from before the public health crisis hit showed Johns Hopkins, which has an overall budget of $6.5 billion, with $72 million of profit in the current fiscal years, which runs through June. The school expected to be $80 million into the black for fiscal year 2021.

Daniels said he and Provost Sunil Kumar will take salary reductions of 20 percent in the next fiscal year, and all deans and university officers will have their pay slashed by 10 percent.

Hopkins will also continue a policy, enacted earlier this month, freezing base salaries for the rest of employees. And the university will slow down the hiring process, requiring written approval from a dean or division director for new staff positions and reviews with the provost’s office for academic openings.

On the development side, the university has halted capital projects with a price tag exceeding $100,000.

Nevertheless, Daniels wrote, furloughs and layoffs “are regrettably expected” at Hopkins, one of the largest employers in the state.

“In a setting where almost two thirds of the university’s budget is comprised of salary, wages and benefits to personnel, it would be naïve and disingenuous to deny that in the face of the various losses enumerated above, we will need to consider layoffs, furloughs and other measures that impact employees in some areas of the organization,” Daniels wrote.

The biggest loss comes from a steep drop in elective procedures at the Johns Hopkins Health System, which are expected to decline by as much as $100 million this fiscal year and $200 million in the next. The school owns 50-percent stakes in Johns Hopkins HealthCare LLC, an organization to manage contracts with health care providers and other groups, and The Johns Hopkins Home Care Group, Inc., a nonprofit offering home health services, equipment and supplies and outpatient pharmacy services.

“Johns Hopkins Health System shifted entirely toward the treatment of seriously ill COVID-19 patients and sought to reduce the risks to our workforce and preserve personal protective equipment,” Daniels wrote.

Revenue from tuition and other student-related costs is also expected to drop. Like most schools across the country, Hopkins has shifted courses online to finish the spring semester. The university provided a $12 million rebate on housing, dining and student service charges, Daniels said, and extended $5 million in financial aid to help students struggling through the pandemic.

As a result, that revenue could be off as much as $25 million this fiscal year. With restrictions on campus activities possibly extending into the fall, and a hampered ability to recruit international students, those figures could be off $150 million in fiscal year 2021.

Larger fluctuations in the U.S. economy and the bottom lines of the federal and state governments could also affect research, philanthropic donations and the university’s endowment fund, Daniels wrote.

Hopkins, as of fiscal year 2019, had an endowment fund of approximately $6.3 billion, according to figures from the National Association of College and University Business Officers.

In the letter to the Hopkins community, Daniels pledged that any future budgetary decisions will be “be guided by a set of principles that reflect our core values.”

That includes prioritizing the health and safety of staff, pursuing state and federal support and targeting “administrative reductions over academic activities wherever possible.”

Daniels said the COVID-19 pandemic has placed Hopkins in a difficult situation, but the university has emerged from other periods of turmoil during its 144-year history stronger than before.

“This crisis has already demanded great sacrifice from each of you, and it is painful to consider what may be required of us ahead,” Daniels wrote. “But the COVID pandemic has also shown once more what a crucial institution Johns Hopkins is—to Baltimore and to the world.”

Brandon Weigel

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