Coronavirus (COVID-19) updates from VC Finance

In February the Crisis Management Team was convened to monitor the emerging threat of the coronavirus COVID-19. In March, the Emergency Operations Center was also activated to organize groups across campus to respond to the immediate threat of COVID-19 and implement safety measures on campus. In early March, campus leadership provided deans, department chairs, and faculty with guidance regarding remote instructions and exams and updated the campus community regarding alternative work arrangements. Public Affairs began hosting a COVID-19 information hub. 

By March 13 when the White House declared a national state of emergency, campus was already shifting to remote instructions and remote work. Events larger than 100 people were canceled and residential in-person events were transitioned to virtual events. Athletics had begun holding events without spectators and Cal Day was canceled. On Monday, March 16, the Chancellor implemented additional social distancing actions in accordance with the bay area shelter-in-place orders that would take effect on March 17. Following that, instructions regarding housing and dining were shared with students along with resources for financial aid, basic needs, scholarships, and mental health. Students were given the option to leave Berkeley and obtain prorated relief from the payment obligations of their housing contracts. The Vice Chancellor for Research updated instructions and information on their website and instructed Principal Investigators to suspend on-campus research to the greatest extent possible and implement plans to operate remotely. University Health Services updated its COVID-19 response page and offered patient screening outdoors to increase capacity for testing. The Office of the Vice Chancellor for Finance created two new chartfield codes to track costs related to COVID-19 and UCOP provided 128 hours of paid administrative leave for eligible employees. Accounts Payable suspended late fees for student payments. Later in March, Executive Vice Chancellor and Provost Paul Alivisatos and Vice Chancellor for Administration Marc Fisher provided further clarification on campus operations during shelter-in-place. Campus leadership announced that spring semester classes would be marked Pass/No Pass unless a grade was specifically requested. A job exchange program was created to match people who need work with managers who need staff. Cal Dining began offering meals to go and Berkeley Conversations centered on sharing information on COVID-19 were made available online. The Division of Equity and Inclusion began offering virtual services. In late March, the shelter-in-place orders were extended through April. 

On April 1, the Chancellor provided updates with regard to the financial impact of COVID-19 on campus and announced a hiring freeze. The next day, President Napolitano and the Chancellors of the UC System announced that there would be no COVID-19 related layoffs for all career employees through the fiscal year ending on June 30, 2020. In April, University Health Services extended testing services for students and UC Berkeley staff and began offering drive-through testing. Further instructions were provided to staff on using face coverings to limit COVID-19 spread. The Chancellor sent an update on the UC Berkeley budget situation to faculty and staff delaying the campus budget planning process and acknowledging a projected $200M budget impact due to COVID-19. The Vice Chancellor for Finance convened a Disaster Recovery Group made up of leaders from teams across campus to coordinate efforts to track activities that may be eligible for state and federal funding and to lead our submission to the Federal Emergency Management Agency (FEMA). Public Affairs launched the Berkeley at Home Variety Show to foster community and campus spirit during our social distancing. The Recreational Sports Facility was converted for use as a study site for students with ADA accommodations. Face coverings became mandatory for all employees who are working on campus. Vice Chancellor Rae and Associate Vice Chancellor of Financial Planning & Analysis Chris Stanich met with Divisional Finance Leaders and Chief Administrative Officers to review the state of the budget and discuss the implementation of a delayed budget process for this year. In late April, the city of Berkeley, along with six other Bay Area public health jurisdictions, announced the extension of the current shelter-in-place order (with a limited easing of restrictions) until the end of May. Campus events scheduled through May 31 were canceled. On May 22, Vice Chancellor, Administration, Marc Fisher, and Vice Chancellor, Research, Randy Katz announced the extension of the shelter in place orders that were set to expire on May 31. On June 15, Chief People & Culture Officer Eugene Whitlock released an update for campus on remote work through January 1.

On June 17, the Chancellor released initial information on fall planning for faculty and staff. During the summer of 2020, the campus focused on recovery efforts and returning safely to campus. On Wednesday, July 15, Chancellor Carol Christ, Executive Vice Chancellor and Provost A. Paul Alivisatos, Vice Chancellor for Administration Marc Fisher, and Vice Chancellor for Finance and Chief Financial Officer Rosemarie Rae provided an update on the budget to campus. On Tuesday, July 21, Executive Vice Chancellor and Provost A. Paul Alivisatos, Vice Chancellor for Undergraduate Education Catherine P. Koshland, Vice Provost for Graduate Studies and Dean of the Graduate Division Lisa García Bedolla, and Chair, Berkeley Division of the Academic Senate Oliver M. O’Reilly announced that UC Berkeley will begin the fall semester with remote instruction.

Vice Chancellor for Finance Rosemarie Rae was a member of the Crisis Management Team and the Emergency Operations Center and is now a part of the Recovery Management Team. She meets regularly with academic leadership, the Board of Visitors, the UC Berkeley Foundation, Deans, Divisional Finance Leaders, and Chief Administrative Officers to communicate the ongoing assessment of the financial impact of COVID-19, the state of the budget, the likely future scenarios for campus finances, and outline options for how best to move forward. 

Financial assessment and impact analysis

In March, VC Finance convened a COVID-19 Financial Impact working group to assess the financial impact of COVID-19. In the first phase, VC Finance delivered a Campus Directional Assessment based on three scenarios. The assessment determined the size and nature of COVID-19 financial impacts for the campus. In the first phase, we formed a working group of Divisional Finance Leaders to develop scenarios by duration and severity, develop forecasts/projections for each scenario with divisional leadership, determine the 2020 base methodology (operating budget/forecast), develop the 2021 budget base by applying known adjustments, and project 20221 operating results and ending balances. 

In the second phase, the working group revised the Campus Directional Assessment and associated model to include scenario amendments, revenue resiliency testing, and human resource staffing models. In the second phase, the workgroup expanded to include faculty planning, the academic senate, and human resources partners. The working group identified revenue preservation and growth opportunities in alignment with the campus mission, refined the COVID-19 financial impact analysis, created two additional scenarios for the fall and spring semester, assessed key revenue and expense drivers categories to ensure directional completeness, performed revenue and expense resiliency testing for each category, and developed staffing models to support the fall and spring scenarios. Once the work in the second phase was complete, VC Finance moved into a third phase that included revision of the Campus Directional Assessment to include reserve analysis, deficit “funding” strategies, and general allocation methodology at the unit level. 

Disaster recovery efforts

As the Chancellor announced on April 17, UC Berkeley is pursuing a number of strategies to mitigate the impact of COVID-19 on our budget. VC Finance is coordinating efforts to apply for state and federal funding.

We’ve submitted a Request for Public Assistance to the Federal Emergency Management Agency (FEMA). The Financial Planning & Analysis team and the Controller’s Office are working with campus partners to distribute CARES Act funding. Other federal stimulus packages are being considered which may provide funding for COVID-19 research, capital, and infrastructure projects. VC Finance is also partnering with the Divisional Finance Leaders to gather and compile data related to COVID-19 costs and submit this information to UCOP on a monthly basis. UCOP then submits a consolidated update for the UC system to the California Department of Finance on the financial impact of COVID-19.

Planning for the future

As the Chancellor announced in her fall planning update, the guiding principle as UC Berkeley plans for the fall is to protect the health of our community. As VC Finance works with campus leadership to plan for the three scenarios identified in the Chancellor’s message, the Vice Chancellor of Finance will lead financial planning efforts through the finance committee. The campus is modeling mitigation strategies including enrollment preservation measures such as “Semester in the Cloud”, nonresident financial aid, and focused admission management. Additionally, campus leadership is modeling the effect of human resource actions. Similar to many of our university peers, UC Berkeley has deferred certain capital projects to preserve cash reserves required to support operations during the COVID-19 crisis. After the application of mitigation strategies, a deficit for 2021 is currently projected.

Based on the information provided by the financial impact assessment, the Chancellor and Provost decided on a revised budget process, shortened from six to two months by reducing the number of forms submitted and eliminating the divisional budget hearings. This process defers entry of the final budget into CalPlanning until mid-summer when the campus has greater clarity on the impact of COVID-19 on fall operations.