COVID-19 Update April 23: Budget Challenges Ahead
Dear members of our Saint Louis University community,
Today begins a series of communications regarding how the ubiquitous and unprecedented budget challenges facing organizations throughout the country as a consequence of COVID-19 affect SLU.
Transparency has been a hallmark of our frequent communications with you during this pandemic, as has our continued consultation with key University stakeholders. In that spirit, I want to communicate what we have done and provide a timeframe for more specific information.
Last week, the executive committee of our Board of Trustees considered the financial challenges of the current fiscal year and Fiscal Year 2021 (FY21), which begins July 1. Trustees endorsed the leadership team’s plan to do everything possible to keep our people employed. This plan was grounded in the priorities we have set during several discussions with the 45-person University Leadership Council (vice presidents, deans and representatives from faculty, staff and students). Each conversation began with a consideration of our mission, values, strategic priorities, and the expectations our SLU community has of us.
On Tuesday, the ULC began to discuss how we prioritize the possible actions we could take to mitigate the budgetary impact of the pandemic. We are also having similar discussions with the small Faculty Senate Budget Committee this week.
In our meetings thus far, we have considered the only three areas where there is opportunity for significant cost savings: benefits, salaries and positions.
Other reductions are going to be made, such as delaying new construction, restricting renovations, cutting travel budgets, and so on. However, as a people-driven organization, most of our expenses are in personnel. We can’t meet the financial challenges without reducing our payroll costs.
Potential savings from benefits and salaries could include changes to retirement contribution matches, an unpaid Christmas week break, furloughs, pay cuts and suspending our planned merit pay increase. These concepts include numerous variations and would be utilized for anywhere from six months to a year, depending on how our revenues change over time.
Once again, our leadership team and our trustees are committed to a philosophy that would seek, to the extent possible, to minimize the financial impact on staff and faculty in the lowest income brackets. Further, whatever reductions we make in salaries should most impact those who are the highest compensated.
While tempting to consider, the endowment is not a fund that can be utilized to bail us out in a crisis like this. As the stock market plummeted, our endowment experienced a substantial drop. This means that what we can spend from the annual endowment distribution will decline. As is the case with other universities, the vast majority of our endowment is made up of restricted funds – money that must be spent to support a specific initiative, such as an endowed professorship, as required by the binding agreement we have with the donor. We are not free to “spend the principal,” nor to divert the proceeds to support areas beyond those specified in the donor agreement.
Unrestricted endowment funds are limited, and largely focused on funding scholarships for our students. I do not think many would advocate redirecting that money for other uses. And were we to replace funded aid with unfunded aid, the impact on net tuition revenue would remain the same.
Moving forward, here is what I commit to you:
- We expect to share more details in the coming days about the magnitude of our budget challenges, which are our best estimates, based on the information we currently have. Unfortunately, because so much about the path of this novel coronavirus is unknown, our ability to forecast is compromised.
- We do not want to misguide you. The breadth and scope of our financial challenges rest with the duration and resolution of the pandemic. Decisions and projections are subject to revision as the future unfolds. As forecasts change, we will update you.
- We will continue to consult with leadership representing faculty, staff and students.
- Our Board of Trustees will meet at the end of next week. The Board has the authority to make the major financial decisions for the university and approves its annual budget. While you will hear more from me in the meantime, soon after that meeting – where the board’s decisions on FY21 will be finalized – I will communicate even more about our financial challenges and budget reductions.
This is a difficult time for many in our Billiken community. I hear from students, staff, faculty and alumni who have lost a loved one to this calamitous virus. I hear from alumni who have lost their jobs. I hear from graduating students who are anxious about the dismal job market. And I hear from faculty and staff members whose partner has lost their job, or who are struggling with the many, and often competing, demands of managing their household while working remotely.
I realize that this puts a tremendous strain on you and those you love. Being part of OneSLU means that we are sensitive to one another’s hardships and support each other, just as we collectively celebrate our triumphs.
During this time of shared sacrifice, I am grateful for our mission-driven community’s continued engagement, patience and grace. Your many notes of support and encouragement mean a great deal to me. I regret that my current schedule has impacted my ability to respond to each of you in a timely fashion.
Certainly, this is a painful moment in our history, but our university has faced grave moments in its past. In each of those dark times, the SLU community pulled together and rose to the occasion. I am confident we, the ones who carry this past resolve forward, will share the sacrifices necessary to position our University for a strong recovery and a bright future. The light of SLU continues to shine.
May God bless you, your families, and Saint Louis University.
Fred P. Pestello, Ph.D.
Previous Updates to the SLU Community
- April 16 (Extension of Stay-at-Home Orders)
- April 14 (Summer Courses and Camps)
- April 10 (Video/The Light of SLU Shines Bright)
- April 7 (Tradition and Opportunity for this Holy Week)
- April 5 (Taking Care of Our Own)
- April 3 (Heading into the Weekend)
- April 3 (Grading Policy Changes)
- April 2 (Commencement)
- March 30
- March 27
- March 26
- March 25
- March 24
- March 23
- March 22
- March 21
- March 20
- March 19
- March 18
- March 17
- March 16 (Evening)
- March 16
- March 15
- March 14
- March 13 (Evening)
- March 13
- March 12 (Evening)
- March 12
- March 11
- March 10
- March 3
- March 3 (Parents)
- February 4
- January 30
- January 27