Education

Covid-19 Outbreaks Are Wreaking Economic Havoc On College Towns


It’s no secret that the coronavirus (Covid-19) pandemic is raising hell for colleges and universities across the United States. Schools have had to make tough decisions on how to reopen, how to hold classes and, crucially, how to manage their budgets as the pandemic puts institutions under greater financial strain than they have ever faced in their existence. Relatedly, one of the more alarming implications of the Covid-19 pandemic is the disruption it’s wreaking on college towns — places where universities and their ancillary institutions and programs employ a plurality, or even a majority, of the city’s residents. Colleges have reopened, classes are back in session and operations have resumed, but it’s simply not the same as it was before.

Covid-19 and the Impact on College Towns

Colleges and universities play an incredible role in the U.S. economy, employing millions of Americans in thousands upon thousands of college towns scattered across the country. However, while colleges bring abundant benefits to their hometowns, they can also bring some negatives too. The economies of college towns, and, therefore, the livelihoods of their residents, are heavily dependent on the school’s financial fortunes. As the Covid-19 pandemic has spread, it has seriously jeopardized the traditional economic foundations that underpin thousands of college towns in the U.S. The higher-education website BrokeScholar combined data on Covid-19 outbreaks at colleges, tracked by The New York Times
NYT
, with employment data of college towns, sourced from each city’s respective Comprehensive Annual Financial Report (CAFR). The combined report shows that many of the colleges with the worst outbreaks of Covid-19 are also the principal employers of each town’s residents.

For example, the University of Alabama at Tuscaloosa has 2,882 positive cases of Covid-19 (per the latest data from October 22). According to Tuscaloosa’s 2019 CAFR,  the University of Alabama is the town’s biggest employer by far, employing 11,403 residents and accounting for 24.03% of total employment in Tuscaloosa. If the outbreak gets worse and the continuing operation of the university becomes untenable, then the livelihoods of a quarter of Tuscaloosa’s working population would be in peril. And there are plenty of other college towns just like Tuscaloosa that are facing this threat.

In Champaign, Illinois, the University of Urbana-Champaign employs 13,934 people, equal to 32% of the city’s total employment. That university is suffering from a growing outbreak of Covid-19, with 2,802 positive cases as of October 22. Another major Alabama institution, Auburn University, has 2,019 positive cases of Covid-19 while at the same time sustaining the livelihoods 8,446 people, accounting for more than a third of the town’s employment. Lastly, there’s Miami University of Oxford, Ohio, which is home to a little under 20,000 undergrads, and is suffering from 2,189 positive cases of Covid-19 and growing. Economically, the residents of the town of Oxford are completely at the mercy of Miami University’s fortunes: 3,215 people — more than two-thirds (69%) of the city’s employed population — works for the school.  

Covid-19 Responses by Colleges

Already, colleges have been making cuts in the face of unprecedented financial strain brought on by the Covid-19 pandemic. Although the pandemic is affecting colleges and universities in countless ways, it is striking at a particularly important source of revenue for schools —room and board. Excluding sporting and related events that draw people and bring in revenue, most colleges break even or lose out on most of their operations. Room and board, however, is one main area where colleges traditionally do turn a profit. But the Covid-19 pandemic has utterly upended this normal, and vital, source of revenue for colleges and universities.

What’s more, the impact of the Covid-19 pandemic on colleges has been, and will continue to be, uneven. The capacities and responses of colleges and universities vary significantly from institution to institution. Thus, the pandemic’s effects are falling harder on some colleges, and types of colleges, than others. For instance, big and richly endowed universities can potentially weather the pandemic storm better than a small public or private school can. That being said, one measure that seems universal to colleges of all sizes is resorting to furloughs. For example, Pomona College, a small private liberal arts college with less than 2,000 undergraduate students and only a couple hundred faculty members, announced the furloughing of 264 non-faculty staff, both full- and part-time employees, according to the Claremont Courier. On the other end of the spectrum, the much larger and public University of Massachusetts at Amherst, with over 30,000 undergrads, also has turned to furloughing 850 of its employees indefinitely, mainly dining hall workers and residence hall operations staff, according to the university’s website.

What’s also worrying, and not too well-known among the general public, is that many universities were already grappling with serious financial pressures before the onset of the Covid-19 pandemic. According to a recent New York Times article, the chancellor of the Pennsylvania State System of Higher Education told his board of governors that the organization had already been in “aggressive recession management for…probably more than 12 years.” The Pennsylvania State System of Higher Education, made up of 14 universities, including highly ranked ones like the West Chester University of Pennsylvania, has seen its enrollment shrink by nearly 20% over the last decade. Now, the Covid-19 pandemic threatens to accelerate that decline as financial pressures are changing from difficult to unbearable.



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