President’s Financial Update

Dear Saint Mary’s Faculty and Staff,

I pray you and your loved ones continue to be safe during these challenging times.

As we approach the end of this fiscal year on June 30, and prepare for the next fiscal year beginning July 1, I want to give you an update on the College’s financial state of affairs. Over the past several months, we have collectively made sacrifices and adjustments, and managed our resources through $6 million in lost revenue due to the unexpected impact of COVID-19. I am pleased to report that we are on target to meet our financial goals for this year. I am extremely grateful to each of you for your shared efforts and commitment toward achieving this goal.  

As we transition into the new fiscal year, we have been actively engaged in planning efforts to meet the ongoing financial challenges associated with COVID-19. As I reported in my last communication on June 2, the Board of Trustees has asked us to reduce our expenses by $15 million in anticipation of a revenue shortfall for the 2020–2021 fiscal year. The revenue shortfall is due to revised projections of undergraduate and graduate enrollment across programs, possible lower retention of continuing students, and additional costs associated with implementing new protocols and equipment to provide for the health and safety of our community.    

The Budget Committee, comprised of faculty, staff, and administrators, has been meeting frequently over the past two months to evaluate strategies for aligning expenses with projected revenue decreases, while successfully maintaining our commitments to our students. Because compensation accounts for nearly 70 percent of the operating costs of the College, the Committee focused on college-wide plans for compensation: the elimination of salary increases for the next academic year; changes in benefits to eliminate the pension and emeriti health plan contributions; and the reduction in travel expenses by 75 percent. In addition, each member of the President’s Cabinet volunteered to take a significant salary reduction for the fiscal year.

Even with these strategies, additional expense reductions are required to offset the anticipated revenue shortfall. In approaching the additional reductions, the Cabinet decided against across-the-board reductions in all departments. Rather, each Saint Mary’s Vice President was asked to thoughtfully and conscientiously make strategic decisions regarding reductions in their departmental budgets, guided by the overarching principle that reductions be the least disruptive to the quality of instruction and services to our students.

With regard to staff, decisions were tailored to meet the operating needs of the various departments. Many administrators and several staff members have volunteered to reduce their salaries. In some departments staff are being furloughed voluntarily or involuntarily, most for short-term periods. Many vacant positions are being frozen, and some positions are being eliminated. The realized savings from these voluntary reductions and staffing decisions total nearly $3 million. Also, non-salary operating budgets were significantly decreased to help achieve our expense reduction goals.

The faculty representatives on the Budget Committee, along with the Provost, engaged with faculty on strategies for decreasing instructional expenses. Many of the strategies involved voluntary reductions, including deferring sabbaticals, temporarily moving to reduced service status, foregoing course releases, and increasing course load. Altogether the academic strategies will generate savings of more than $2 million.

The Budget Committee met on June 15 to review and consider strategies and to recommend a new operating budget for 2020-2021 fiscal year for my consideration. These decisions regarding expense reductions for the next fiscal year are challenging for all of us, with the most difficult being the necessary staff reductions. The employees impacted by these changes will be formally notified this week.

I am deeply appreciative to all faculty and staff for their active expressions of solidarity and commitment toward our shared mission. I believe that the choices we are making now will position Saint Mary’s College for a better future that will keep us strong going forward.

Sincerely,

 
James A. Donahue
President