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A coronavirus Q&A with Amy Sebring, VP for finance and technology

  • A photograph of Amy Sebring
    Managing COVID-19's financial effects  Amy Sebring, vice president for finance & technology, has been working to ensure the financial health of William & Mary in wake of the novel coronavirus pandemic.  Photo by Melissa Payne
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The novel coronavirus has affected every aspect of American life, including wide-ranging impacts on students and institutions of higher education. William & Mary News spoke remotely with Amy Sebring, vice president for finance & technology, to talk about how the university is confronting the financial challenges presented by COVID-19. Sebring is slated to become W&M’s chief operating officer in July, after the retirement of Sam Jones, senior vice president for finance and administration. The interview has been edited for length and clarity.

Thank you for making time to talk with us, Amy. Let’s just jump right in. The university has already announced a financial impact of between $13 million and $32 million through August due to COVID-19. Can you provide us insight into those numbers and why they range?

Good question. The numbers reflect early estimates for potential impact through the end of summer, and they include a mix of reductions in revenues and projections. For instance, we know W&M will receive $1 million less from the NCAA for athletics. We also paid out $8.4 million to students through a combination of housing, dining and parking rebates. Yet we still can only project impact on fall enrollments, research grants and contracts and philanthropic support. The good news is that it looks like we’re going to fall on the lower -- $13 million – side of that projection.

What about after summer?

That’s the big unknown, and the projections range up to $100 million, or roughly 20%, of our operating budget, largely due to the same factors. Enrollment is a huge factor. Three-fourths of W&M’s revenue derives from students through tuition and fees. If we are not able to be back in person safely, we also know that many of our revenue streams will be diminished and we will have to respond accordingly.

As we think about the fall and providing on-campus instruction, we know students want to be back in person and that delivering personal, interactive, quality education is what we do best. As President Rowe has said, we are committed to being here in person if it is safe to do so and we have a coordinated, university-wide team designing a plan to make it happen.

What are some other factors driving your forecasts?

We know federal funding will affect some research programs and we anticipate that private giving and William & Mary’s endowment are going to be impacted by market forces. We’re also awaiting details on the impact to the commonwealth. In earlier recessions, we saw state funding reductions to higher education upward of 20%. Recently, Virginia’s finance secretary reported revenues for April fell $700 million year-over-year. So the state could see a $1 billion revenue shortfall this fiscal year, which may require the state to reduce budgets for next fiscal year. Other economic forces both national and international – including travel restrictions and high unemployment rates – may have a negative impact on our students and their families. 

How has William & Mary responded to the financial challenges?

Immediately we halted university travel and instituted a hiring freeze except for critical positions. Both decisions were made with health in mind – limiting the movement of people to and from campus – but also had positive financial implications.

Since then, we’ve also launched a mission-based budget review. I know, sounds exciting, right? But it’s really important. The entire William & Mary community prides itself as a place where our actions are driven by our values and priorities. The budget review reflects that. There are four areas that are mission-critical: ensuring our ability to deliver the essential elements of W&M's curriculum and meeting obligations of externally funded research, supporting student enrollment, sustaining our ability to generate revenue and upholding our legal obligations and accreditation standards.

Learn more

President Katherine A. Rowe has sent two messages concerning W&M’s finances, one on April 24 and another on May 19. Flattening the Financial Curve, on the W&M Finance Office website, offers information about the university’s response to COVID-19 and background on how W&M’s finances work. Sebring appeared in a W&M Community Conversation on April 22 and virtually met with W&M’s Professionals & Professional Faculty Assembly on May 1.

Why not just tell all the units to cut 20% off their budgets?

You can apply across-the-board budget reductions at smaller percentages and for relatively short periods of time without dramatically impacting the delivery of services. We’re considering that COVID could affect the university for up to two years. And large, across-the-board cuts like that can be like performing surgery with a butcher knife. So, rather than taking a formulaic approach, we are looking much more closely at how we protect and even enhance those four mission-critical areas over a sustained period, and in the short-run how we apply the “mission-critical” lens to spending.

I’ve heard you talk about that and put spending in terms of what we’re willing to sacrifice later.

When I’ve received questions about whether a proposed expense is mission-critical, I continue to ask whether it is so essential to the continuity of our operations that it’s worth potentially having to furlough a colleague in the future if we hit a major decline in revenue. Even in cases where we have a mission-critical purchase, we need to question whether it can wait six months. Every dollar we save now creates a cash buffer to help weather disruptions in revenue next year.

I’ve heard President Rowe say that William & Mary expects to reach its $1 billion campaign goal by the end of FY20. How will that impact our financial picture?

The “For the Bold” campaign has been extremely successful – showing the incredible generosity of our alumni, students, parents, employees and others donors. It’s important to recognize, though, that the $1 billion includes a variety of gifts. For instance, the vast majority of the funds raised are restricted by the donor for a specific purpose, like student scholarships, the library, or a particular academic program or area of research.

The campaign also includes gifts for capital projects, like the Alumni House renovation and expansion, the construction of the Shenkman Jewish Center, or the renovation of Kaplan Arena. It also includes pledges for future gifts as part of estate planning or other long-range commitments. Those gifts are applied toward the $1 billion total even though they may not result in cash payments to the university for years. 

Many gifts are also endowed. With endowments, the university is obligated to invest the gifted funds and can only spend annual income earned off those investments. To ensure that endowed funds continue to produce an annual payment stream, the payout typically is less than 5% of the principal amount. So, a $1 million endowment may yield $50,000 in expendable funds annually. Again, there may be donor-imposed restrictions on the purpose or program for which those funds can be used.

In the long run, the success of the campaign will yield dividends for the university and create revenue streams important to our long-term financial health. In the short-term, however, it provides little base operating relief for personnel, facilities operations and maintenance, or other basic expenses of the university. 

Let’s talk about personnel. What can we expect going forward, though?

One of President Rowe’s top priorities has been to keep William & Mary faculty and staff working for as long as we possibly can. Community – people – make W&M what it is. The university is also an economic driver for our region, so there’s value at all points, from Hampton Roads to Richmond, in keeping people working.

We may get to a point where salary reductions, furloughs or layoffs become a reality to sustain the university. But my hope is that we can find strategic and creative alternatives to manage spending in other ways. If we can reduce or defer expenditures now, we can target our funds to continue supporting our employees. This is one of the reasons I’ve been so focused on limiting discretionary spending.

If we can’t?

If we aren’t able to keep everyone fully employed, we will prioritize furloughs over layoffs to the extent we can. That allows William & Mary employees to keep benefits – particularly their health insurance – and allows us to bring them back into service quickly as we recover.

The pandemic has affected some faculty contracts, though.

That is correct. William & Mary has reviewed all faculty hiring. Initially, we paused spring recruitments for new faculty hires as part of the university’s hiring freeze. Since then, the provost has formed a review group to assess positions to ensure that the positions are essential for delivering students the curriculum they need and supporting externally funded research obligations -- and doing so in a manner that is fiscally prudent.

If we do have furloughs, what will that decision-making process look like?

Again, it’s complicated. Actions may be dictated by the area of the organization that is impacted by budget shortfalls. For instance, state budget reductions will impact those working on the academic side of the house. For auxiliary enterprises, like housing, conference services, parking and athletics, Virginia provides no funding, so those programs will be impacted more by public health limitations and consumer demand. For research programs, reductions in federal funding or other external sponsors will disproportionately impact faculty and staff in those areas. Unlike corporations, there are restrictions on our different revenue streams, and we can’t supplant a dollar in one area necessarily for a dollar in another area.

Do you have a timeline yet for when we can expect more information?

As noted, we’re rapidly planning for the fall, with teams tasked by the president to consider all adaptations that will need to be made in order to open the campus safely. We’ll know more this month as those plans are finalized and as the commonwealth closes its books on the fiscal year. I also expect that the mission-critical budget review being undertaken across the university will offer much more information that helps us plan.

Communication is a top priority for William & Mary -- now more than ever. We know there is a lot of uncertainty, and no small measure of anxiety, so we’ve been trying to err on the side of over-communication, with messages, a new website and participation in university town halls. We also help provide answers for the COVID-19 web hub. So we’re really trying to keep the community up-to-date on developments, and that will continue.

Will you sit down with us again this summer?
Of course; anytime. I expect we’ll continue to have much to discuss.