Spring Scenario Assumptions 1 Base Case Scenario Tuition

Spring Scenario Assumptions 1. Base Case Scenario Tuition and Room/Board same as Fall, except: +200 students living in SHM and these 200 students move from "fully remote" to "not fully remote" 2. Better Case Scenario 900 students move from "fully remote" to "not fully remote" 68 international students doing Lehigh in residence come to campus 50 students who deferred decide to start in Spring 3. Worst Case Scenario 200 students decide to take a semester off. 100 fewer students living in dorms 1

Overview • The major factor in making all the cases worse than our provisional budget was increasing our $1. 5 M assumption for Covid testing to $8. 4 M. Our range of deficits is now $45 M as a best case and $52. 7 M as a worst case. • Implemented and planned cost reductions total $49. 8 M and financial results after the first quarter confirm we are on track to achieve these reductions. • Based on the YTD gift numbers, we may have some downside risk of $3 M to $4 M on that number. • On the upside, we are submitting $2. 6 M to FEMA for reimbursement and a 2 nd CARES Act would likely cover a couple million dollars of our testing & PPE costs. 2

Enrollment Dashboard Budget FY 21 Incoming Class As of 7/30/20 As of 10/16/20 1, 453 1, 435 1, 367 Transfers 34 46 47 Readmit/Transient/General College 23 34 29 3, 799 3, 765 3, 729 Total Fall Enrollment 5, 309 5, 280 5, 172 Estimated FTE for Full Year 5, 158 5, 136 5, 025 Returning Classes Notes 6 students registered with less than 12 credits 78 LOA; 74 Transfer/Not Ret. 3

FY 21 Projected P&L (Provisional Budget) FY 21 Fall Undergraduate Enrollment FY 21 Spring FY 21 Full Year 5, 025 $49, 310 (50% of class) $52, 050 40. 6% 50% Remote Single Rooms Undergraduate Margin Decline – Enrollment Decline -$2. 3 M -$4. 6 M Undergraduate Margin Decline – 10% Remote Tuition Decrease -$6. 2 M -$12. 4 M Housing Margin Decline -$4. 3 M -$8. 6 M Other Student Tuition & Fees -$0. 8 M -$1. 6 M Covid-19 Related Operating Expenses -$5. 0 M -$4. 9 M -$9. 9 M Other Margin Impacts (Gifts, Investments) -$2. 9 M -$3. 0 M -$5. 9 M -$21. 5 M -$43. 0 M Undergraduate Tuition Discount Rate On Campus/Remote Housing Configuration Total Margin Impact 4

FY 21 Projected P&L (Base Case) FY 21 Fall Undergraduate Enrollment FY 21 Spring FY 21 Full Year 5, 025 $49, 310 (42% of class) $49, 310 (37% of class) $52, 625 40. 6% 42% Remote 37% Remote 40% Remote Single Rooms Undergraduate Margin Decline – Enrollment Decline -$2. 3 M -$4. 6 M Undergraduate Margin Decline – 10% Remote Tuition Decrease -$5. 7 M -$5. 5 M -$11. 2 M Housing Margin Decline -$4. 3 M -$4. 1 M -$8. 4 M Other Student Tuition & Fees -$0. 8 M -$1. 6 M Covid-19 Related Operating Expenses -$7. 4 M -$9. 6 M -$17. 0 M Other Margin Impacts (Gifts, Investments) -$2. 9 M -$3. 0 M -$5. 9 M -$23. 4 M -$25. 3 M -$48. 7 M Undergraduate Tuition Discount Rate On Campus/Remote Housing Configuration Total Margin Impact 5

FY 21 Projected P&L (Better) FY 21 Fall Undergraduate Enrollment FY 21 Spring FY 21 Full Year 5, 025 5, 075 5, 050 $49, 310 (42% of class) $49, 310 (25% of class) $52, 954 40. 6% 42% Remote 25% Remote 34% Remote Single Rooms Undergraduate Margin Decline – Enrollment Decline -$2. 3 M -$1. 4 M -$3. 7 M Undergraduate Margin Decline – 10% Tuition Decrease -$5. 7 M -$4. 7 M -$10. 4 M Housing Margin Decline -$4. 3 M -$4. 1 M -$8. 4 M Other Student Tuition & Fees -$0. 8 M -$1. 6 M Covid-19 Related Operating Expenses -$7. 4 M -$7. 6 M -$15. 0 M Other Margin Impacts (Gifts, Investments) -$2. 9 M -$3. 0 M -$5. 9 M Total Margin Impact -$23. 4 M -$21. 6 M -$45. 0 M Undergraduate Tuition Discount Rate On Campus/Remote Housing Configuration 6

FY 21 Projected P&L (Worse) FY 21 Fall Undergraduate Enrollment FY 21 Spring FY 21 Full Year 5, 025 4, 825 4, 925 $49, 310 (42% of class) $52, 488 40. 6% 42% Remote Single Rooms Undergraduate Margin Decline – Enrollment Decline -$2. 3 M -$5. 6 M -$7. 9 M Undergraduate Margin Decline – 10% Remote Tuition Decrease -$5. 7 M -$5. 9 M -$11. 6 M Housing Margin Decline -$4. 3 M -$4. 4 M -$8. 7 M Other Student Tuition & Fees -$0. 8 M -$1. 6 M Covid-19 Related Operating Expenses -$7. 4 M -$9. 6 M -$17. 0 M Other Margin Impacts (Gifts, Investments) -$2. 9 M -$3. 0 M -$5. 9 M -$23. 4 M -$29. 3 M -$52. 7 M Undergraduate Tuition Discount Rate On Campus/Remote Housing Configuration Total Margin Impact 7

FY 21 Cost Reduction Actions FY 21 Fall FY 21 Spring FY 21 Full Year Undergraduate Margin Decline -$8. 0 M -$7. 8 M -$15. 8 M Housing Margin Decline -$4. 3 M -$4. 1 M -$8. 4 M Covid-19 Related Operating Expenses -$7. 4 M -$9. 6 M -$17. 0 M Other Margin Impacts (Gifts, Fees, Investments) -$3. 7 M -$3. 8 M -$7. 5 M -$23. 4 M -$25. 3 M -$48. 7 M University Pension Contributions Suspended $7. 8 M $15. 6 M Position Freeze $5. 4 M $10. 8 M No Merit Increases $2. 5 M $2. 6 M $5. 1 M President (20%) & Senior Staff (10%) Salary Cuts $0. 4 M $0. 8 M Furlough – 2 months $0. 3 M $0. 0 M $0. 3 M Identified Departmental 10% cost reductions (Pending) $7. 3 M $7. 4 M $14. 7 M Unallocated FY 21 Budget Requests $1. 2 M $1. 3 M $2. 5 M $24. 9 M $49. 8 M Total Margin Impact Total Cost Reductions 8

Faculty Questions Have the projected losses in revenue been accurate or are we in better shape than what was previously thought of? Projected losses in revenue were worse than original estimates, mainly due to the elimination of a tuition increase and the 10% reduction for students choosing remote. Enrollments coming in 133 below budget also contributed to the revenue losses. Auxiliary revenue from housing and dining is down 70% and gift income is expected to be down at least 25%. Were student enrollments (freshman, returning students, etc. ) sufficient to meet projected revenues? The incoming class was budgeted at 1, 453 and yielded 1, 370, a shortfall of 83. The returning class was anticipated to be 3, 799, but is 3, 729, a shortfall of 70. These shortfalls were somewhat offset by and increase in transfers and readmits. Projected revenues for the year are still highly uncertain due to the status of the returning students for the Spring Semester. With stock markets at historic highs (and hence endowment returns high) and also with enrollment reasonably strong (no major drop in incoming classes or returning students), was there expectation to be financially stronger than previously expected? The Lehigh one year endowment return, through 6/30/20 was -0. 1%. Gifts into the endowment were significantly less than anticipated for the year. The vast majority of the $1. 56 billion (down from $1. 63 billion in FY 19) endowment is restricted to particular uses and can not be used to fund general university deficits. The costs of student testing are expected to be $8. 4 M, much higher than anticipated. 9

Faculty Questions Concern was expressed about the decision to stop the retirement contribution benefit since this had impact on the long term growth of retirement savings for faculty/staff. The question was if there was any consideration of how the same amount could have been taken out of salary (which is taxable) versus from retirement (which is free of taxes and has potential to grow). There was also a question that perhaps this could have been a choice or at least a discussion item to see if the retirement versus the salary cut were potential options for faculty. Senior administration has weighed numerous cost reduction options, including furloughs, layoffs, salary reductions, travel and entertainment reductions, benefit reductions and departmental cost cuts. It was deemed less financially impactful in the shortterm to the majority of faculty and staff to suspend the pension match, with the hope it could be reinstated as soon as possible. The salary reductions and/or layoffs required to match the savings from the pension suspension would be drastic. A somewhat more complex question was brought up at the Executive Committee meeting about how all of this relates to College of Health, i. e. , were the budget cuts/hiring freeze/merit raise freeze/retirement contribution cuts, etc. done so that there would be continuity in building up the College of Health? None of the cost reductions implemented by the university were used to subsidize the College of Health. The start-up costs for the College of Health were already in the original FY 21 budget. The amount of funds allocated to COH were reduced significantly in response to the pandemic crisis. The COH has had to adapt their hiring and spending plans to their level of enrollments and the university’s financial constraints. 10

Faculty Questions During the recession in 2008, Lehigh did not stop raises nor make any major cuts but in fact even continued hiring, which was a great strategy since other universities had a freeze on hiring. As a result, Lehigh was able to hire top quality faculty members at that time due to a unique opportunity. Is there anticipation of when the hiring freeze might end if the financial situation improves? The 2008 financial crisis was mostly contained to the stock market and housing market. Enrollments increased and tuition was raised. This current crisis has impacted the university’s revenues and expenses to a much greater degree. The hiring freeze is a major component of our cost reduction response. If the hiring freeze was lifted, other cost reduction options like layoffs and/or furloughs would be necessary. The University implemented many budgetary strategies as a result of the 2008 financial crisis. In FY 10 department budgets were reduced by 10% permanently for non-salary administrative expenses, all departments reduced wage budgets by 90%, adjunct teaching costs were reduced by at least 15%, there were no salary increases for senior leadership, and vacant staff positions were carefully reviewed by the Vacant Position Review Group (VPRG). The financial crisis did not impact the UG FTE (FY 08 +121 FTE, FY 09 +226 FTE, FY 10 +102 FTE and FY 11 +93 FTE). It was also during this time that the STEPS building was completed (Groundbreaking August 2008 - opening August 2010). There was a 10% holdback from EOY carry forward funds which went into a financial aid reserve. 11

Faculty Questions How have the various building projects on campus been affected by the changing financial situation? The major construction projects (SHM housing, HST) were delayed due to government restrictions during FY 20. Both projects have resumed construction, with SHM expected to finish in November and HST in early FY 22. The Rauch Business expansion project has been delayed in order to conserve the university’s cashflow. A decision to move forward will be made when we have better visibility about the Spring semester. All other capital projects have been put on hold except for life safety, safety precautions related to Covid-19, and delivering instruction remotely. Why doesn’t the University use reserves to cover the budgetary shortfall? Reserves are currently invested in the endowment and are not utilized to fund short term operational shortfalls. Reserves are slated for strategic purposes. Having an ample reserve allows Lehigh to retain the ability to capitalize on opportunities that might arise, as competitor’s financial situations deteriorate. Reserves will only be used for purposes that help strengthen our long-term positioning. 12

Pension Match Scenarios 13

Cost Reduction Scenarios FY 21 Fall Current Plan: Suspension of Pension Plan Contributions $7. 5 M FY 21 Spring FY 21 Full Year $7. 5 M $15. 0 M A. 7. 6% Salary reduction for all Faculty & Staff (Jan 1 Start) $7. 5 M B. 10. 5% Salary reduction for all Faculty & Staff over $50 k (Jan 1 Start) $7. 5 M C. 13. 7% Salary reduction for all Faculty & Staff over $75 k (Jan 1 Start) $7. 5 M D. Furlough 215 Staff for 6 months at avg salary of $64 k (Jan 1 Start) $7. 5 M E. Layoff 190 Staff & Non-tenured Faculty at avg salary of $73 k (Jan 1 Start) $7. 5 M Alternative Scenarios 14

Cost Reduction Scenarios FY 21 Fall Current Plan: Suspension of Pension Plan Contributions $7. 5 M FY 21 Spring FY 21 Full Year $7. 5 M $15. 0 M $3. 0 M $4. 5 M $5. 0 M $2. 5 M Alternative Scenarios F. 3. 0% Salary reduction for all Faculty & Staff (Jan 1 Start) Furlough 129 Staff for 6 months at avg salary of $64 k (Jan 1 Start) G. 5. 0% Salary reduction for all Faculty & Staff (Jan 1 Start) Furlough 70 Staff for 6 months at avg salary of $64 k (Jan 1 Start) 15

Appendix Supplementary Data 16

Summary of FY 20 Covid Financial Impacts (as of 6/30/20 est. ) Area Est. FY 1920 Impact Housing Room Refunds, Lost Conference Revenues $6, 848, 200 Dining Board and Dining Dollars Refunds $3, 267, 000 Athletics NCAA revenue, event revenue, expenses $79, 000 Business Services (Parking, Childcare, Mail, Retail rent, Bookstore, Supplies) $680, 400 LTS costs for Remote Learning $121, 200 Health & Wellness Center Supplies & Renovations $66, 800 LUPD overtime & supplies $234, 000 Study Abroad/International Affairs $346, 900 Schools (COE, COH, BUS, RCEAS, CAS) & Other $298, 500 Total Negative Impacts $11, 942, 000 Financial Aid reduction related to Room & Board refunds $3, 186, 000 Reduced food costs owed to Sodexo $2, 713, 000 Reduced Travel & Entertainment expense (projected) $1, 706, 300 Housing related savings (Admin, Student Affs, O&M) $1, 100, 000 Reduced facilities costs for snow, utilities & maintenance (Admin & Academic) $1, 400, 000 Total Cost Reductions $10, 105, 300 CARES Act Relief Allocation & FEMA Reimbursement $1, 808, 000 NET NEGATIVE IMPACT ON THE UNIVERSITY ($28, 700) 17

Summary of Estimated FY 21 Covid Financial Impacts Area Est. FY 2021 Impact Housing Room Refunds, Lost Conference Revenues $352, 900 Athletics NCAA revenue, event revenue, expenses $600, 000 Business Services (Parking, Childcare, Mail, Retail rent, Bookstore, Supplies) $734, 000 LTS costs for Remote Learning $300, 000 Health & Wellness Center Supplies, Renovations, Staffing $800, 000 Facilities (Renovations, Signage, ABM, Hand Sanitizers, Etc. ) $1, 770, 000 Lehigh in Residence for International Students $4, 000 Occupational Safety - Testing $8, 400, 000 Total Negative Impacts $16, 956, 900 Potential Expense Mitigation Reduced Travel & Entertainment expense ? ? ? Departmental Expense Cuts ? ? ? FEMA Reimbursement ? ? ? 18

Housing Dashboard As of 9/16/20 # of 1 st Years saying Yes on coming to campus 1, 051 # of Gryphons 81 # of Upper classes given exceptions to live on campus 86 Estimated Housing Need 1, 218 Estimated Housing Capacity 1, 257 Housing Surplus/(Deficit) Trembley Park Capacity Notes 6 students per bathroom limit 39 149 Designated as isolation space Local Hotel rooms available for overflow capacity at a net cost per night of $50 (Hotel rate of $87 less $37 avg. cost in Dorms) 19

Modes of Learning Survey Results Remote % of Total Students 42% Fully Remote - Home 1, 207 Fully Remote – Off Campus Total Remote Lehigh In Residence Not Remote - Home Not Remote 58% 2, 098 68 100 1, 557 Not Remote – On Campus 1, 222 Total Not Remote From Fall 2020 Modes of Learning and Tuition Discount Survey, Bursar & Housing data 891 Not Remote – Off Campus Not Remote – Unknown Notes 1, 008 Freshmen 237 3, 116 20