FY25 Budget Approved by Board of Trustees

July 2, 2024

Dear SLU faculty and staff,

I write with an update on the FY25 budget that was approved by the University Board of Trustees on June 5, and subsequent decisions that affect how we will proceed this fiscal year. 

As I stated in previous budget updates, we delayed our budget submission to trustees until we could be more confident in the fall undergraduate enrollment outlook. 

I can at this point report that, in the context of formidable challenges in much of higher education, we are optimistic we will meet our undergraduate enrollment goals for fall. However, we continue to monitor international graduate student enrollment closely, with particular concerns about our admitted students’ ability to obtain visa appointments at the U.S. consulates in their home countries.

SLU’s enrollment management division continues to work diligently and in partnership with faculty and staff colleagues across the University to achieve our goals. I wish to thank all who are involved in these essential efforts. 

As we continue to navigate the current landscape, the budget approved by the board is designed to give us some flexibility to adapt to changing circumstances, to sustain our investment in key University priorities, and to make reasonable adjustments to ensure a balanced budget. 

In brief, the FY25 budget:

• Reflects our commitment to faculty and staff compensation with a 3% compensation increase pool. Raises will be effective as of October 1, assuming that our enrollment projections are actualized in the fall.
• Relies on growth in net tuition revenue and fundraising, along with a temporary increase in the endowment spend rate – the percentage of endowment proceeds allocated for annual expenses – to support continued investment in critical growth areas.
• Incorporates a reduction in operating expenses of 2% across University divisions, to ensure SLU’s continued fiscal strength.

The remainder of this message includes more details about each of these elements of the FY25 budget. 

Prioritizing faculty and staff compensation

Throughout the budget process, we have continued to prioritize faculty and staff compensation. The trustees approved a 3% compensation increase pool for FY25, effective October 1 and contingent upon final fall enrollment.

The 3% pool will be used to make compensation adjustments in alignment with 2023 performance evaluations, as well as market and equity analyses.

The final decision about compensation increases will be made and announced after our analysis of fall enrollment figures is complete.

• As I stated in my May 15 message, faculty with annual contracts are receiving contracts this summer that continue their FY24 salary. Updated contracts will be issued as salary increases are made.
• Salary increases related to faculty tenure and promotion decisions will proceed as scheduled on July 1.

We expect to provide additional updates on the amount and timing of compensation increases some time after fall census numbers are finalized.

Sustaining strategic priorities with increased revenue

SLU’s revenue growth has relied on and enabled essential investments in compensation, student support, resources for our growing international student population, and essential enhancements to research infrastructure. 

In our discussions with trustees, we emphasized the importance of sustaining these investments. We must work to align our expenses with our revenue – but it is important that we do so by supporting strategic growth, in addition to making wise reductions to expenses. 

The trustees approved a budget that includes a temporary increase to our endowment spend rate. The trustees’ decision to increase the endowment spend reflects their faith in the University’s work and their belief in the importance of the investments we are making to support future growth. The trustees also made clear that this increase will be temporary. The endowment spend will decrease to more sustainable levels in FY26 and FY27, as we continue efforts to increase revenue and reduce operating expenses.

The FY25 budget also factors in revenue growth in fundraising contributions and private grants, largely driven by a number of significant unrestricted gifts that are expected to close during the fiscal year.

In addition, we have budgeted increased net tuition revenue based on a first-year class that meets our projections and continued strong enrollment in global graduate programs. Our progress toward these goals is encouraging, though there are factors we must continue to monitor carefully:

• The number of confirmed full-time, first-year students who have submitted deposits currently exceeds our budgeted goal. However, along with our national peers, we anticipate that these numbers may fluctuate over the summer more than they would in a typical year.
• The number of international graduate students we have admitted is likewise strong. But fall enrollment will ultimately depend on the number of visas granted by the U.S. consulates – an essential step that is outside our direct control.

We ask for your active support in communicating with incoming students and welcoming them and their families to campus through the summer. Your efforts are essential to affirming their decisions to make SLU their academic home.

Maintaining fiscal strength with adjustments to expenses

As I stated in my May 15 message, our expenses have begun to outpace our revenue growth. In order to bring our budget back into balance, we will need to make reasonable adjustments. To that end:

• The trustees approved a budget with a 2% reduction in expenses.
• VP and CFO David Heimburger, University Controller Tara Thomason, and their colleagues will meet this summer with Provost Mike Lewis, vice presidents, deans, and their business managers to assist them in formulating plans that will allow the University to reach this goal.
• Meaningful reductions to budgeted capital expenditures have also been made for the coming fiscal year.

A 2% reduction in operating expenses is necessary and feasible – though it may require difficult decisions. Alongside strategies to increase revenue, these reductions will support the University’s position of strength and trajectory of growth.

Navigating challenges from a position of strength

I want to affirm once again that SLU remains in a relatively strong position in the context of the difficulties faced by all higher education institutions. 

Our net tuition revenue remains strong. Our innovative response to FAFSA-related issues allowed us to build trust and affinity with incoming first-year students and their families. Our efforts to recruit and retain international graduate students have transformed our campus in important ways. And our endowment has grown considerably over the last several years. 

We are not immune to the current challenges in higher education, and we will need to make wise and sometimes difficult decisions this year and in the years ahead. But the strengths we share will allow us to address these challenges in measured ways while ensuring sustained growth in critical areas.

As a community, we have successfully navigated significant challenges because we remain committed to our mission and rooted in our values. As we make decisions in the weeks and months ahead, we will continue to rely on the collaboration, creativity and wisdom that are at the heart of our Ignatian way of proceeding.

Sincerely, 

Fred P. Pestello, Ph.D.
President