|Message Sent To:||All Faculty, All Staff|
|Message From:||Message from the Office of the President|
|Date Sent:||Friday, September 18, 2020 10:00 AM CDT|
University Update and Financial Impact: Phase III
September 18, 2020
Dear Faculty and Staff,
The fall semester is underway amidst the challenges we are navigating. While many at Loyola University Chicago worked tirelessly over the summer to prepare for our fall reopening, none of us could have anticipated what campus “operations” would now look like as we continue to deliver a first-rate Jesuit education and keep our campus community safe. We are especially grateful to faculty and staff for their flexibility and commitment to welcoming our students back to Loyola and delivering a robust academic experience.
As is our annual practice, we looked to our “10th of term” student enrollment census as a key metric against which we gauge our financial condition. Now that we have this data, we are recalibrating our financial projections mindful of the other metrics previously communicated back in mid-July, which included retention and housing assumptions along with enrollment. With these final revenue numbers, we now are able to carefully assess what is needed to balance the budget, while remaining fiscally responsible and as responsive as possible to the financial needs of our students during this challenging time.
Forecasted budget shortfall and remaining reduction goal
This year’s freshmen class of 2,134 is 416 students below our budgeted enrollment. Retention was close to normal, but we have fewer continuing undergraduate students and slightly fewer transfers than budgeted. Overall, we are 555 undergraduate students short of our budgeted enrollment, which results in a revenue shortfall of just under $14 million. Although the graduate side has seen notable growth and is expected to result in a positive variance of $1 million dollars from budget, clearly it is not enough to offset the undergraduate shortfall. These enrollment results, along with the closure of our residence halls this fall term and the revenue loss of auxiliary services across all campuses, will result in an $86 million revenue deficit.
Early in the summer, we pledged that budget adjustments would be made thoughtfully and strategically based on solid data and reliable forecasts. As the summer progressed, we outlined a three-phased plan to remove costs, surveyed the University community on options available to us, and asked for feedback on prioritizing these moves. Subsequently, on May 7 and July 17, the first two phases of expense reductions resulted in about $44 million in reductions. Our revenue shortfall, reduced year-end obligations of $22 million, and the budget reductions that we have already made indicate we need to remove an additional $20 million.
Phase III Actions required to close $20 million shortfall
- The University 403(b) match portion will be temporarily suspended effective October 1. This move will save the University $6 million. We encourage Loyolans to continue to contribute to their retirement fund during this time, and we remain committed to restoring this matching portion as soon as possible.
- Additional operating budget (non-salary) reductions will be implemented across all units, especially those whose operations have significantly changed or have been suspended this year. The provost’s office and vice presidents are in the process of finalizing these reductions, which will save the University at least $5 million.
- Approximately 40 staff positions have become vacant over the past few months. Consistent with our plan to continue to significantly slow any new or replacement hiring, we will also temporarily freeze these positions, which will save the University $1.6 million. Also of importance, we will continue to suspend any replacement staff hiring for the remainder of this fiscal year.
- We have been able to recognize depreciation expense savings, savings from student worker budgets (due to the suspension of many on-campus jobs), and other savings that total $2.5 million.
Budget shortfall implications: select staff furloughs and layoffs
Since the beginning of the pandemic, and after receiving consistent and strong feedback from the University community about using staff layoffs and furloughs only as a last-resort budget reduction initiative, it is now clear that we must implement these actions in order to balance our budget. As stated back in May, one of the four principles that have been guideposts for our decision-making was doing whatever we could to support our employees and colleagues for as long as we possibly could.
When compared to other universities, we chose a different approach that is consistent with our mission and values. From the beginning of the pandemic, we have diligently worked to redeploy some staff to areas that, especially now, have seen an increased workload. We have provided 16 weeks of COVID-19 pay to those staff whose jobs did not permit them to work remotely. While this has allowed us to preserve many positions throughout the summer and early fall, we have now come to a financial juncture where, to realize $4.9 million in savings for this fiscal year, we will unfortunately need to decrease staff size through furloughs and layoffs.
As prefaced at the beginning of this message, we have conducted numerous and difficult budget discussions and scenario planning over the past several weeks that had led us to this tough decision. Given the value that we place on our fellow colleagues, we recognize these decisions impact many Loyolans and their livelihood at our University. Our commitment is that we will implement this aspect of our Phase III plan as thoughtfully and compassionately as possible. While limited unit reductions have already taken place, as shared in the July message, final departmental targets and affected roles have not yet been finalized. We expect to complete these assessments and inform those staff members impacted no later than September 30.
As you have read news reports from across the country, operational challenges in reopening campuses across the higher education landscape are quite evident and fraught with complexity. Loyola is not immune.
We are both appreciative and confident that Loyola’s Emergency Response teams and working groups have taken all of the necessary precautions to keep our campus community safe, prepared for academic and operational success, and informed us about the tough decisions that we are required to make in this most unusual of circumstances. Our commitment to you as the University’s Cabinet is that we will continue to be both good stewards of resources while continually pursuing responsible ways to safely bring students back and restore campus life and associated staffing/positions at the earliest possible opportunity.
As a community grounded in values and our mission, we remain hopeful, drawing strength from our faith and leaning into the talents of critical-thinking, problem-solving, inventiveness, compassion, creativity, and courage. All of these attributes will be needed and remain useful as we manage the challenges of Phase III while being nimble, innovative, and resourceful in our planning for our spring and summer terms. Consistent and meaningful engagement with each other in this virtual environment, especially our students, remains a key to our success.
While there remain many unknowns, we can take inspiration from the resilience of our community and the rich heritage of the past 150 years. Throughout our history, Loyola weathered storms, emerged stronger, and transformed—no matter the challenge it faced. At this time, we need to do the same. Let us navigate through the rough seas of the present as one community, while reimaging our future.
Please keep each other and our entire community in your prayers,
Jo Ann Rooney, JD, LLM, EdD President and President’s Cabinet