FY24 and FY25 Budget Updates

May 15, 2024

Dear SLU faculty and staff,

I write today with an update on the budget process and outlook, as we wrap up fiscal year 2024 and look ahead to our next fiscal year. 

As I shared with you on April 25, we continue to navigate some uncertainty related to the enrollment picture for fall, because of delays caused by the flawed FAFSA rollout. That has affected the timing of our budget process.

We will finalize our FY25 budget projections as the fall enrollment numbers become clearer this summer. In the meantime, I can report to you the following: 

• We continue to anticipate that we will end FY24 with a modest budget deficit.
• We remain in a strong overall financial position going into FY25, and the challenges we face are surmountable. However, because some of the factors that caused this year’s budget deficit will carry forward, we will need to make reasonable fiscal adjustments for FY25 and future years.
• We will update you on additional FY25 budget details, including the status of annual compensation increases, later this summer.

Wrapping up fiscal year 2024 (FY24)

In the current fiscal year (FY24), which closes in June, we expect that we will record a modest budget deficit. 

Each year, we strive to build budgets that are resilient enough to adjust to the occasional unanticipated challenge. In FY24, however, a number of unexpected issues emerged:

• In fall 2023, we enrolled fewer first-year students than we projected, and more consequentially, we awarded more institutional aid and recorded less net tuition revenue than budgeted. These outcomes will continue to affect our budget until this class graduates in FY27.
• We also saw unanticipated expenses as we implemented necessary changes to research support infrastructure. These new costs will carry forward into future years.
• In addition, we invested more than we initially budgeted in essential support for our growing international graduate student population. We will continue to provide this support for our students going forward.

We were in a strong position to weather these events. Our endowment growth exceeded expectations, and all areas of the University have worked to delay spending. These factors helped to reduce the amount of the deficit. 

Our FY24 budget deficit should not cause alarm – but it has prompted important learning, analysis, and meaningful fiscal changes going forward.

For example, teams within the Office of Vice President for Research, School of Medicine, Human Resources, Provost’s Office, Compliance and Ethics, and Business and Finance are working together to implement improved grants management services and other refined financial processes. We are also monitoring our fall 2024 enrollment projections and discount rate much more carefully as we plan for next fiscal year.

FY25 budget outlook

As noted in my April 25 budget update, SLU’s enrollment management team responded to anticipated FAFSA delays with exemplary planning and strategy that received positive national press. However, along with many other colleges and universities across the country, we cannot yet confidently predict the size of our first-year class in the fall. Therefore, we could not finalize a budget to propose to the Board of Trustees in early May, as we ordinarily do.

At this point, I can share some general trends that have informed our budget planning:

SLU’s overall financial picture is strong, relative to many institutions in our current environment. We have fostered growth in overall enrollment by sustaining our undergraduate enrollment and retention, while increasing international graduate enrollment substantially. Our net tuition revenue has grown, and so we have invested in key areas, including faculty and staff compensation, student support, faculty positions in growing programs, and research administration. 

However, we are not immune from the pressures of our environment, or from the need to adjust and adapt in response.

Though our net tuition revenue has been favorable, our FY24 operating deficit is evidence that our expenses have begun to outpace our revenue growth. We need to make wise and proactive fiscal adjustments to more closely align expenses with revenue. This will require the provost and vice presidents to work with deans and other leaders to analyze and propose potential expense reductions over the next several months.

What this means for you

We have prioritized employee compensation in recent budget cycles, and that remains a priority. We hope to include compensation increases in the budget we intend to propose to the Board this summer. 

We will update you again as the impact of the FAFSA delays become clear and we finalize a budget for Board approval. For the time being, decisions on annual compensation adjustments will have to be delayed:

• Faculty who receive annual contracts can expect to receive a contract this summer that continues their current salary. The Provost’s Office will keep you informed with details and timing. If future compensation increases are implemented, you will receive an updated contract.  
• Staff salaries will also remain unchanged until a final FY25 budget is approved. After the trustees approve a budget this summer, the vice president of human resources and your direct supervisor will be able to share more details about compensation adjustments.

Salary increases for faculty who receive promotions in rank this year will proceed as scheduled, as noted in the individual letters you receive. 

Business managers and others who make payments or manage expenses may see a delay in when your FY25 budget appears in Workday. Do not be alarmed: You will still be able to make routine payments. A detailed update will be sent to business managers by July 1.

What you can expect next

You will receive updates from me, the provost, and/or relevant vice presidents in the weeks ahead as the enrollment picture becomes clearer and we finalize the budget. 

We will adapt to the challenges we face as we have in the past: with creativity, flexibility, and an unshakeable commitment to our mission and values. Because of your wisdom and expertise, I have faith that we will effectively navigate the terrain ahead. 

Thank you for your continued commitment to our mission and to this community. 

Fred P. Pestello, Ph.D.
President