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Dear Colleagues:

I am pleased to share some positive news, both from the actions of the Kentucky General Assembly and the American Rescue Plan Act passed by the Biden administration.

Three bills advanced by the General Assembly and signed by the Governor have resulted in a very favorable outcome for NKU.

Senate Bill 214
enables NKU’s exit from the Kentucky Employment Retirement System (KERS). The legislation gives the university the authority to issue bonds for the cost of ceasing participation, lets NKU make a lump sum payment before the June 30 deadline with a credit for early payment based on the KERS interest rate and ensures the university will be refunded any overpayment plus interest if the final amount comes in less than the estimated liability calculation.

House Bill 192
which establishes the 2021-22 Budget for the Commonwealth, included a 2% ($17 million) increase for the Higher Education Performance Funding Model. The bill retains our $52 million in base funding, and we have the ability to vie for our share of $17 million in performance-based funding. Preliminary estimates indicate that NKU is likely to receive between $2.5 to $3 million in additional funds.

But perhaps most meaningful, was a key amendment filed by Senator McDaniel in House Bill 8 which also involves the pension system and changes the annual contribution for universities and quasi-governmental agencies remaining in KERS. As a result of this amendment, our cessation cost is reduced by $73 million; our total payments and debt service is reduced by nearly $120 million. And, we should see close to a $4 million reduction in annual bond payments! You can see why I am so ecstatic about this outcome for NKU. Not only have we addressed the uncertainty of the pension challenge and the resulting stress on our employees, we have made a permanent lower reset to our annual payments. This is a huge win for us and special thanks are due to Carmen Hickerson, Trey Grayson, Eric Gentry, Mike Hales and Joan Gates for tremendous “behind-the-scenes” work.

The recently passed COVID-19 Federal Stimulus Package (American Rescue Plan) will also impact NKU’s 2021-22 budget. The latest round of funds provides nearly $40 billion to higher education. Preliminary estimates indicate that NKU will receive $24 million in relief funds, half of which must be distributed to directly assist students. The rest of the funds will be applied to lost revenue and direct COVID costs to help NKU address the challenges and uncertainties that lie ahead.

Which brings me to the “headwinds” we continue to face and new ones on the horizon. The underlying challenges facing public higher education, particularly AASCU institutions, have been exacerbated by the pandemic – overall student completion rates and equity gaps in retention and graduation, enrollment pressures, competition from non-traditional forces, and access to mental health and other academic and social support needs. The pandemic has created new challenges as many students and their families, particularly first generation, low-income and those from vulnerable communities are struggling with the impact of campus shutdowns and questioning whether it is worth it to pay for college. Under these circumstances, the risk of outcome inequities—from completion to employment to lifetime earnings—could worsen. Underpinning all of these challenges is a business model that is still unsustainable as institutions face falling revenues and rising health-and-safety costs.

As we enter a post-COVID world, we must accelerate the “Three Box Solution” to achieve the goals of Success by Design. Recall that Box 1 is scaling up or modifying current activities to improve performance, efficiency and alignment, and Box 3 is innovating for the future. However without the hard choices needed to address Box 2 – strategically evaluating and “forgetting” programs, services, procedures and even culture and attitudes – we cannot realize our vision of becoming a premier student-ready, regionally engaged institution.

We have a unique opportunity to maximize the impact of our positive short term financial outlook by investing in ways to better serve current and future learners. The pandemic has confirmed the case for fast and fundamental change. It has also shown that change is possible. This past year, NKU demonstrated its ability to be nimble, agile and innovative. So while we have difficult decisions to make across the institution, I have every confidence that our university will make the necessary changes to secure our long term future.

Thank you for all you do for our university, our students and our region.