Financial impact of MIT’s COVID-19 response already $50 million
MIT pauses hiring except essential personnel
The financial impact of the COVID-19 crisis on MIT, including measures for response, has already reached a figure of $50 million, President L. Rafael Reif wrote in an email to the MIT community Monday.
Reif wrote that “unexpected costs of the spring’s emergency efforts” included “providing the technology to enable the sudden shift to remote teaching and working, supplying financial assistance to help students leave campus quickly, refunding student housing and dining fees while making sure contract dining workers and others are paid through late May, and helping to support Cambridge’s small businesses, nonprofits and residents — including those who are homeless.”
Reif wrote that the pandemic may also lead to “reductions in many major sources of income” for MIT, including research grants, foundation funding, philanthropic support, and the endowment.
Reif outlined measures to curb the institute’s expenditure.
The Institute “imposed tight controls on hiring and asked units across MIT to forgo non-essential spending and reassess any significant new financial commitments” March 20, Reif wrote.
Additional measures to take immediate effect include “pausing hiring except for essential personnel,” providing “guidance to help all units rework their FY21 budgets to reduce expenses,” suspending “merit increases for the coming academic year,” and “reducing budgetary funding for physical space improvements.”
Both Reif and Provost Martin A. Schmidt PhD ’88 will reroute 20% of their compensation for the next year towards the MIT Staff Emergency Hardship Fund.
Reif wrote that although MIT has worked to build its financial reserves after the 2008 Great Recession, “the present crisis may be more severe” in its potential financial effect.
Following 2008, MIT’s endowment saw a 20.7% decline in value. Measures taken in 2009 to curb expenditure included cutting eight varsity sports and closing two libraries: Lindgren Library and the Aerospace and Astronautics Library.
The revised budget in 2009 also impacted dining, housing, and the MIT News Office and led to salary freezes for approximately 40% of faculty and approximately 50% of administrative staff.
Schmidt said at the town hall April 7 that MIT will draw a larger portion from its endowment, which funds one third of MIT’s budget. Withdrawals will be made “carefully” so the fund is sustainable in the long term, Schmidt said.
“Over the next few months, as the full financial picture becomes clear, we may well need to take additional actions that affect the budget and our community,” Reif wrote.
Reif wrote that MIT remains committed to “admitting undergraduates regardless of their financial situation” and “covering their full demonstrated need.” Reif added that MIT is “preparing for the likelihood that students may need more help.”