Budget and Workforce Update
Dean Jon Levin writes to the Stanford GSB community with priorities for the coming fiscal year.
I am writing to provide information on how the GSB is responding to the substantial financial impact of COVID-19. The pandemic has affected all of our revenue sources, including the loss of all on-campus Executive Education. From the beginning of the pandemic through the end of the coming fiscal year in August 2021, we expect a revenue shortfall of over $100 million. Unlike past crises where the impact has been almost entirely financial, the pandemic has forced us to move rapidly to adapt our operations, and challenges us to make longer-term investments so we can teach and pursue our mission in a changed world.
Early in the pandemic, we moved quickly to limit expenses, pausing hiring and scrutinizing discretionary expenses across the school. All of Stanford’s deans took voluntary salary reductions. At the same time, we extended pay continuity for our employees through August 31. The net result of these actions is that we expect to end the current fiscal year with a $25 million operating deficit. We will cover this deficit with cash reserves we provisioned over the last few years.
For the coming fiscal year, we set clear priorities in our financial response: allocating increased funds for financial aid; protecting our core mission with strong support for teaching, research, and student experience; investing in virtual learning; and ensuring resources to protect the health and safety of the campus community. At the same time, we have frozen salaries, cut discretionary spending, and reduced staff size, primarily by eliminating open positions. We made the very painful decision to lay off some staff, who have been notified and will be continuing with us through September. These actions together will reset our baseline expenses by $60 million, and bring them in line with anticipated revenues.
This has been the toughest financial and operational situation I can recall at Stanford, dating back 30 years. It has challenged us to adapt rapidly and decisively, while at the same time reinforcing the value of our core mission and our vision of intellectual and educational leadership for society. I believe that our response, while difficult, will position us to sustain our excellence through the challenges ahead and emerge with strength.
Thank you for your partnership and support as we navigate this time.