Sustaining Our Mission, Shaping Our Future
September 5, 2024
Dear SLU faculty and staff,
On July 2, President Pestello updated faculty and staff on the budget outlook for our current fiscal year. We write today with an update and to share strategic steps we will take to sustain the strong and stable financial position that is essential to advancing SLU’s mission.
Based on preliminary data, we expect that this fall’s first-year undergraduate student enrollment will meet our projections. This is an impressive achievement in a challenging climate, and it reflects both the quality of the education SLU offers and the extraordinary efforts of staff and faculty in St. Louis and in Madrid.
Concurrent with this, however, we are seeing a significant drop in new international graduate student enrollment, to a number well below the budgeted amount. The shortfall is mainly due to fewer visas issued during the summer by certain U.S. consulates abroad.
In the August executive staff retreat attended by the president's cabinet and Faculty Senate President Chris Rollins, we reflected in depth on the impact these events will have on the University’s budget this year and in the two years that follow.
Make no mistake, SLU is fundamentally in a strong fiscal position, with net tuition revenue that has grown steadily since fiscal year 2021 and an endowment that has increased by 75% in the last 10 years.
However, our expenses have outpaced revenue growth. Like most universities, we are primarily dependent on tuition for our operating revenue. Our total enrollment is strong – we continue to break records. But demographic changes in our region and beyond mean that the University’s enrollment will not realistically keep pace with the rate our expenses have been escalating. We must better control our expenses in order to ensure that we maintain balanced budgets and keep a SLU education as affordable as possible for our students in the years ahead.
After their meeting in June, the Board of Trustees approved an FY25 budget that included a temporary increase in the endowment spending rate and a 2% cost reduction. As discussed with the University Leadership Council last month, we have a plan to maintain a balanced budget this year, primarily by implementing an additional 2% cost reduction, the majority of which we hope to achieve through a disciplined review of all open positions. We will continue to prioritize employee compensation, maintaining a 3% merit compensation pool that is delayed from Oct. 1 to Jan. 1.
But the challenges our institution and our higher education peers face are not limited to one year. By approving a temporary increase to the endowment spend, the trustees ensured that we would have a period of time to phase in strategic reductions to expenses. If we make no adjustments, we anticipate that our expenses will increasingly exceed our revenues over the next three years.
We have heard from our faculty and staff colleagues that we can’t simply “do more with less.” We need to take a thoughtful and strategic approach. To emerge stronger from our current challenges, we must rethink how we work and focus on the efforts that are distinctive to our mission and essential to our future.
We will begin by immediately charging three project teams, appointed by the president in consultation with University leaders, and working under the guidance of the president’s cabinet:
Team 1: Immediate Operational Efficiencies
- This team will focus on changes that will impact this year’s budget, starting with ways we could more effectively structure and deliver a number of administrative and professional services with fewer administrators and staff at the university, college and school levels.
Team 2: Increased Revenue Opportunities
- This team will focus on revenue-generating enrollment initiatives that will have a measurable impact by FY26.
Team 3: Academic Size and Structure
- Composed primarily of faculty and academic leaders, this team will focus on more significant changes to the academic enterprise for FY26 and FY27 – changes intended to more appropriately align the number of programs, faculty, schools, colleges and administrators with our students’ needs and our enrollment picture.
- The team will be charged with seeking broad input from faculty and engaging the processes outlined in University policy and the Faculty Manual.
These teams will work at a decisive pace. We will provide regular updates as they commence their work.
While their specific objectives may vary, all three teams will be united by a common framework that reflects SLU's Jesuit mission and values. They will help us address the realities of the challenges we face while upholding a shared commitment to compassion and equity – being especially mindful of the ways that proposed actions might impact the most vulnerable in our community.
As we navigate these budgetary challenges, we are also committed to ensuring that our adjustments do not compromise the exceptional quality of the educational experience we provide. Supporting the academic and personal growth of our students remains our priority.
From its beginnings, the Society of Jesus has been a dynamic organization – one that is willing to adapt radically to meet the needs of specific communities, in their particular time and place. Our University was founded more than 200 years ago to provide education and to advance knowledge that will meet the needs of the communities we serve. Those needs have and will continue to change – and so we need to change with them.
The changes we need to make may be challenging, and our efforts will likely evolve as we welcome a new president. However, delaying action would only postpone our responsibility to uphold and enhance the strengths of this great university. Beginning today, with an eye toward the future, we can make thoughtful decisions that will shape the university we aspire to become – and the one our future students need us to be.
We know and trust in the ingenuity and wisdom of this community. We are grateful for your willingness to join us in creating the path ahead.
Fred P. Pestello, Ph.D., President
Mike Lewis, Ph.D., Provost
Christine Rollins, J.D., Faculty Senate President
Mickey Luna, Vice President for Human Resources
David Heimburger, Vice President and Chief Financial Officer