News

University Facing Potential $4 Million Budget Deficit in 3 Years if Costs Not Cut

Courtesy of James C. SvehlaChief Financial Officer Wayne Magdziarz wants to reduce Loyola's operating costs and raise net revenue from tuition.

Large financial aid packages, a bloated salary base and insufficient fundraising efforts have left Loyola scrambling for a million-dollar solution to address a potential looming budget crisis.

In a packed ballroom in Loyola’s Lewis Towers downtown in September, university faculty, students and administrators gathered for a presentation orchestrated by Chief Financial Officer (CFO) Wayne Magdziarz on the topic of curbing the ever-growing costs incurred by the school.

Magdziarz became CFO — the administrator responsible for managing the university’s revenue and expenditures — in August after serving as interim throughout the summer. He said a number of factors in the last decade have caused the university’s financial strain, putting the institution on track to run a deficit of $4 million by fiscal year 2021 — in three years — if nothing is immediately done to cut costs while increasing net revenue.

A majority of Loyola’s operating costs, about 62 percent, is funded by tuition revenue, Magdziarz said. One of the university’s biggest costs continues to be salaries and benefits — which account for nearly 60 percent of annual expenditures, he added.

However, Magdziarz said the university has begun to mitigate tuition increases and pay more in financial aid, meaning net tuition revenue per student has suffered.

“The days of 4, 5, 6 percent tuition increases have come to an end,” Magdziarz said. “That, along with the need for continual financial aid discounting … will make it more difficult for us to grow net tuition per student.”

This past fall, net cost of enrollment — tuition plus all other fees — per first-year student after scholarships was about $37,000 out of $57,000, Magdziarz said.

However, all of the current projections to address costs includes a tuition increase next year.

Magdziarz said it’s likely tuition will increase next year between 2 and 2.5 percent as part of the plan to avoid a deficit — that’s between $825 and $1,043 more per student per academic year.

Magdziarz said the average undergraduate at Loyola, over the course of four years, only pays about 60 percent of the university’s sticker price due to scholarships, gifts and grants. A large majority of those scholarships come directly from the university, Magdziarz said. This means Loyola isn’t making enough from each student’s tuition.

This past fall, Loyola enrolled its largest first-year class, about 2,700 students, surpassing last year’s record-breaking class size of 2,600. Magdziarz said this can’t continue, because the cost is counterintuitive — more students means more revenue, but also more financial aid and more costs to accommodate them, such as housing, facilities and classes.

“We can grow revenues by bringing in more students, but we don’t have an endless capacity,” Magdziarz said. “We don’t have the physical facilities, we don’t have the faculty resources to grow to an institution that’s going to be [18,000, 19,000] or 20,000 students.”

Currently, the university is budgeting for a smaller first-year class of 2,400 students next year, Magdziarz said. This means other sources of revenue and cost-saving measures must be introduced to reduce the chance of a budget deficit.

Magdziarz said the solution is two-pronged: fund scholarships out of the university endowment — a pool of money filled by annual surpluses, investments and alumni donations — and identify expense reductions, a majority of which is salary and benefit costs, of about $8 million by June 2018.

Instead of filling vacancies and hiring additional staff, Magdziarz said the university plans on redistributing the work to existing faculty — giving them raises for the extra work and saving money in the long run by reducing the number of positions.

“We’re not saying we’re going to be laying people off,” Magdziarz said. “There are a few hundred positions that normally become available [each year] … instead of running to fill those right away … we’re seeing if we can redistribute that work and not necessarily fill that position.”

To increase net tuition, Magdziarz wants to fund a majority of scholarships with the endowment, but the university doesn’t have enough money in the endowment to do so.

The current university endowment sits around $750 million. Only about 3 percent of the return on the endowment goes into operating costs, Magdziarz said.

“To the extent that we can begin to aggressively grow the endowment, that will help,” Magdziarz said.

One way to grow the endowment is by increasing fundraising, an effort led by Loyola’s Office of Advancement, which fundraises from the university’s network of more than 150,000 alumni.

Funds from annual giving, the program by which the university requests via mail and digital communications alumni donations of $10,000 or less, are low following a period of inactivity. The outreach program was suspended several years ago, according to Dixie Ost, assistant vice president of alumni relations and annual giving.

“A couple years ago, there was a decision made here in Advancement to stop the annual giving program,” Ost said.

Ost wasn’t with the program when the decision was made but she said the reasons for it are unclear.

Although the outreach program has since resumed, its suspension made an impact. Ost said only about 6 percent of alumni are now donating to the university — a drop from 12 percent just a few years ago.

“Annual giving is primarily the wide net,” Ost said. “That’s how we go about reaching out to the majority of our alums … We are currently in the process of rebuilding the program.”

Loyola student Bryan Glotz, 21, said it was probably nice for new alumni to not get bothered, but added that older Loyola alumni should be giving back to the university which gave them an education.

Sophomore Patricia Martinez said tuition is already a burden, so news of its increase frustrates her.

“I think it’ll impact a lot of students because tuition is already really expensive in general,” the 19-year-old journalism major said.

Glotz said he understood the increase curbs costs, but also said it’s annoying.

“I think at some point as college students it gets to a point where [a tuition increase] is almost ridiculous,” the senior supply-chain management major said. “It’s a thorn in the side.”

Still, Magdziarz said he believes the university is financially strong and efforts to reduce costs will make a deficit unlikely in the long run if those measures are successful.

(Visited 3,212 times, 33 visits today)

Managing Editor

Michael McDevitt is a senior journalism major from Quincy, Massachusetts and the managing editor for The PHOENIX. He started out as a news writer for The PHOENIX in 2015, worked as an assistant news editor in 2016 and as news editor in 2017-18. When he's not editing stories, Michael's probably watching “The Late Show with Stephen Colbert.”

10 thoughts on “University Facing Potential $4 Million Budget Deficit in 3 Years if Costs Not Cut”

  1. Hey I know this is off topic but I was wondering if you knew of any widgets I could add to my blog
    that automatically tweet my newest twitter updates.
    I’ve been looking for a plug-in like this for quite some time and was hoping maybe you would have some experience with something like this.
    Please let me know if you run into anything. I truly enjoy reading your blog and I look forward to your new updates.

  2. Also I believe that mesothelioma is a exceptional form of cancers that is normally found in these previously exposed to asbestos. Cancerous tissue form inside mesothelium, which is a defensive lining that covers a lot of the body’s internal organs. These cells ordinarily form inside the lining of your lungs, belly, or the sac that encircles one’s heart. Thanks for discussing your ideas.

  3. An impressive share! I’ve just forwarded this onto a co-worker
    who has been doing a little research on this. And he actually ordered me
    dinner simply because I found it for him… lol.
    So let me reword this…. Thanks for the meal!! But yeah, thanx
    for spending time to discuss this matter here on your
    site.

  4. Heya just wanted to give you a quick heads up and let you know a few of the images aren’t loading properly.
    I’m not sure why but I think its a linking issue. I’ve
    tried it in two different web browsers and both show the same outcome.

  5. So, securing approval despite a bad credit score will be as much a challenge for the kids as anyone else.
    On FTC’s site, you’d be able to go over the complete list of government-backed
    debt consolidation reduction firms, making a calculated decision determined by your preferences and budget.
    Moreover, you no longer need to get a remarkable financial history or a sound credit background as a way to apply for or get this form of loan.

  6. Hmm it appears like your site ate my first comment (it was super long) so I guess I’ll just sum it
    up what I wrote and say, I’m thoroughly enjoying your blog.
    I as well am an aspiring blog blogger but I’m still new
    to the whole thing. Do you have any suggestions for novice blog writers?
    I’d certainly appreciate it.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Next Story