Dear USD Campus Community: Virtually every sector of society has been compelled to adjust its near- and long-term plans as a result of the COVID-19 pandemic, and I write to offer you some perspectives on how we are making adjustments at the University of San Diego. Together, we have responded to this global health emergency with decisiveness, creativity and cooperation. Our response is a testimony to our commitment to protect our students, staff and communities while at the same time continuing to care for the most vulnerable among us. It has been inspiring to hear from so many members of our Torero family as they selflessly take action for those in most need. This expression of compassion and empathy has been truly remarkable and has informed how we have approached this crisis. Over the past two months, we have taken a number of steps to protect our campus community while still delivering a high-quality educational experience to our students. While no one was adequately prepared for what has unfolded this spring, I am deeply grateful that we have been preparing for a crisis situation on our campus for several years. Our training for emergency response has included tabletop exercises with the Federal Emergency Management Agency, the Department of Homeland Security, local police and fire departments as well as city, county and state health officials. These group meetings allowed us to develop key emergency contacts that were essential to our response to the pandemic. The financial impact of the pandemic on our fiscal year ending June 30, 2020, has been significant — now approaching $17 million. To address this, we immediately implemented key cost-control measures to prevent a fiscal 2020 operating deficit. These measures included postponing two large deferred maintenance and four minor capital projects scheduled for this summer. We instituted a hiring freeze with limited exceptions. We also ended some temporary/seasonal employee assignments early and put limitations on discretionary spending across campus. For the remainder of the spring semester, we are using a set of principles to help guide us as we make further decisions: Continuity of service in delivering a high quality, liberal arts and professional education remotely;

Providing support to our students and campus community members who are most in need;

Minimizing the impact of any financial decisions on our lowest-paid employees;

Keeping the university “in the black” for the current fiscal year; and

Continuing to move forward with the Renaissance Plan. It is important to recall where we were 18 months ago when we initiated the Comprehensive Administrative Review (CAR) program, StrideTo2024@USD and our new budget modeling. These were all essential in preparing us for an uncertain future. By planning ahead, we could best position ourselves to manage the demographic changes in high school graduations expected by 2026. We gave ourselves until 2024 to reallocate funding of at least $15 million in our budget to two primary strategic goals: increasing student financial aid and improving faculty and staff compensation. Thankfully, we started implementing these changes in 2020, and we were able to redirect $4.1 million to those objectives. If we had not initiated these actions, we would not have been able to be as generous as we have been this spring to our students and employees by providing credits and guaranteeing continuity of pay through June 30, 2020. We are now planning for the impact of the virus, moving forward. Please understand that our goal is to return to campus in the fall. However, we must also be prepared for any number of other scenarios including remote teaching and the possibility of a sudden disruption should the virus flare up again. We have made the decision not to offer on-campus classes this summer, moving all instruction to a remote teaching model. We have also decided not to host any summer camps and continue our restrictions on the use of our campus by outside groups. We made these decisions based on the information we were given by local health officials about how to keep our campus safe and best mitigate the spread of the virus at this time. It also will help us better prepare for the fall semester. Provost Baker and the academic deans, along with our COVID-19 Action and Strategic Leadership Teams, continue to meet with a focus on what the academic experience for the fall semester might look like at USD. For example, the deans and faculty are evaluating on-campus/remote academic hybrid models that support the high-impact practices that are the hallmark of a USD experience while building in the necessary flexibility should we need to change the delivery mode with little advance notice. Our Student Affairs staff is exploring various timing scenarios for the fall semester, including considerations to begin the semester later than usual or to end it earlier than normal. The health emergency information we are using to help us plan is changing weekly, if not daily, and we are not yet certain of what we will be facing in August. While it is frustrating to not be able to provide a clear answer at this moment, our current strategy is to prepare for the worst and pray for the best. We miss having our students and faculty on campus in person, and we are preparing for their return to campus in the fall with new measures to provide our high-impact learning practices while implementing safeguards and new social distancing practices. At the same time, the safety and wellbeing of our students, faculty and staff are paramount, and we need to balance our decisions with these considerations in mind. We are also evaluating various financial scenarios based on different enrollment and revenue projections. Currently, our enrollment for the fall looks strong, but we also know that nationally, enrollment at colleges and universities is dropping, which will make for a very competitive market for students over the summer. We also know that rising unemployment rates across the country will impact our students and their families, and they will need additional financial support if they are going to be able to attend USD. The University of San Diego is both strong academically and financially. Even with these strengths, increased competition, coupled with the greater financial need of our students, will create some real financial challenges and disruption for the next 18 to 24 months. Given these uncertainties, along with current difficulty in projecting further disruptions due to the virus, I believe we need to plan for a negative financial impact on the university that likely will exceed $30 million. To put this in perspective, at the peak of the 2007-2009 recession, the negative financial impact to USD was approximately $10 million. What further complicates matters is that we need to make many decisions sooner rather than later if we wish to mitigate the financial impact on USD for the next fiscal year beginning July 1, 2020. For this reason, I am proposing to our Board of Trustees the following immediate actions: No merit or wage increases for USD employees in 2020;

Continue the university wide hiring freeze;

Significantly reduce or defer discretionary spending;

Place most deferred maintenance projects on hold;

Reduce discretionary spending; and

Re-evaluate and accelerate decisions associated with many cost-saving initiatives already identified and proposed as part of StrideTo2024@USD. In addition to the above-mentioned actions, I will be taking a 15 percent reduction in my compensation and the vice presidents and academic deans have also agreed to take a 5 percent reduction beginning July 1, 2020. Any additional decisions implemented for the entire campus will also apply to this group. We recognize that many members of the Torero community have concerns about further cost reductions in the months following the end of our fiscal year, including reductions in hours or benefits, layoffs or furloughs. As we indicated previously, we still do not have a complete picture of the COVID-19 pandemic's impact on our university. We will be moving as quickly as possible to make any additional decisions that will have a financial impact on our employees so as to allow those impacted to plan and adjust to these changes. Please know that our first priority in making these decisions will be based upon our culture of care values and the goal to preserve as many jobs as possible for our USD colleagues. What we do know is that there are many cost-reduction ideas associated with our StrideTo2024@USD initiative, several of which were proposed by members of our campus community. This can help to inform decisions in our next fiscal year. We will communicate more information on this topic in the coming weeks. I am both humbled and proud to be a part of a community that continues to flourish and make deep sacrifices for others in the face of very difficult challenges. Our Torero family remains a force for good, and I am confident that we will channel our energies in ways that elevate our mission. While these times are unlike any we have ever seen at USD or in our nation, I do firmly believe that if we make the right strategic decisions now, we can emerge stronger than most of our competitors and in a better position to meet the lofty goals we set for ourselves in Envisioning 2024. We are #TorerosTogether! Peace, James T. Harris III, D.Ed.

President