Loyola officials project at least a $50 million revenue loss for the upcoming year, but will reduce this year’s costs by $44 million through staff salary cuts and hiring freezes, among other things, officials said.
The university said in a July 24 email it expected enrollment to be 200 students under budget, though it’s unclear if the recent closure of residence halls has impacted this number. The amount of first-year students changes daily, so Loyola can’t comment on the actual enrollment number until the official census day on the 10th day of the semester, Senior Vice President and Chief Financial Officer Wayne Magdziarz wrote in an email to The Phoenix.
However, because 80 percent of Loyola’s revenue is tied to students — through tuition, housing and meal plans — reduced enrollment will impact revenue. Revenue loss could double if enough first-years or returning students withdraw or take a gap year, according to the email, obtained by The Phoenix.
Housing options for the spring remain uncertain, so Loyola won’t know how closing residence halls will affect the budget until November, Magdziarz said.
Loyola announced a 3.1 percent tuition increase to $45,500 for the 2020-2021 academic year and hasn’t backed down on the hike despite the pandemic. Since then, Loyola suspended the $419 student development fee for the upcoming year which lowers the overall “tuition and mandatory fee increase” to 1.2 percent compared to last year.
Despite the projected revenue loss, Loyola has committed $10 million in university funds and $5 million in philanthropy to establish the Loyola Commitment — a financial aid initiative for current and prospective students facing economic hardships amid the current pandemic — The Phoenix previously reported.
At the time of the email, officials projected at least $8 million in pandemic-related costs, including hand sanitizer, disinfectant wipes, COVID-19 testing kits and IT equipment to facilitate remote learning. With residence halls closed, these costs may decrease, but the library will be open and other on-campus positions will still need supplies, Magdziarz said.
Loyola officials expect partial reimbursement from the CARES Act — a federal Coronavirus Aid, Relief, and Economic Security fund to financially support college students — to help cover these costs.
To offset the new costs and revenue loss, Loyola started a multi-phased budget reduction strategy in May, which is projected to cut nearly $44 million in expenses for the coming year, according to the email.
Faculty and staff account for 60 percent of Loyola’s operating budget, but Loyola has focused on pay reductions for senior officials to prevent layoffs or widespread furloughs, according to the email. Pay reductions for 62 senior administrators — including officers, provost staff and academic deans — ranged from 2.5 to 15 percent and saved the university $1.2 million, according to the email.
The email also outlined potential 5 percent salary cuts for faculty making over $150,000 a year, which would save an additional $2 million and affect 200 staff members. Staff members primarily from campuses such as LUREC and Cuneo — which will be closed until 2021 — have been furloughed, though it’s unclear how many.
As The Phoenix previously reported, most open positions and salaries have been frozen, including reducing salary increases for next year, all of which will save an additional $18.5 million, the email said.
Loyola officials decided in May that only “mission-critical” maintenance and improvement will be done around campus, which will defer $26 million in spending, according to the email. Mission critical projects are ones that have started already — such as Francis Hall or Cudahy Science renovations — or projects that are necessary to support academic programs, according to Magdziarz.
The email also noted the cash from deferring non-critical maintenance could be used to cover operation costs if additional revenue continues to decline.
Loyola will continue to make the principal payments on its 2012 debt, and is scheduled to have under $300 million in debt after July 1, 2022 for the first time in 15 years, according to the email.
Loyola’s endowment is about $760 million, but during the first several months of this year the value fluctuated as much as $100 million, according to the email. Eighty-eight percent of the funds are restricted by donors or designated for specific scholarships or academic and research purposes, while the other 12 percent is reserved for future debt, retiree health and institutional reserves, the email said.
Withdrawing from the fund to cover expenses now will hurt its long-term recovery because of current low market values, according to the email.
The university also established a line of credit with Wintrust Bank a few months ago to make sure cash would be available for payroll until the university gets tuition revenue, according to Magdziarz.