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Phoenix 101: Loyola CFO Details University’s Current Financial Situation

Zack Miller | The PhoenixThe Phoenix breaks down Loyola's current financial situation.

Loyola announced a 3.65% tuition increase Jan. 12, the largest in five years, adding $1,690 to students’ tuition bills in order to invest in faculty retention and hiring efforts, and to fund scholarships. 

“We have worked really hard so that if we do propose a tuition increase, it is only to balance the university’s budget,” said Wayne Magdziarz, senior vice president, chief financial officer and chief business officer of Loyola.

The 2021-2022 school year saw a 2% increase in tuition, and tuition at Loyola has gone up every year since 1989, The Phoenix reported.

Magdziarz gave a presentation to the Student Government of Loyola Chicago (SGLC) Nov. 30, in which he explained the current state of Loyola’s finances and what the university expects going forward.  

Loyola’s Overall Financial Situation

As a result of the COVID-19 pandemic, Loyola fell $99 million short of the revenue that it had anticipated during the last fiscal year — approximately 13% of Loyola’s total revenue from the 2020 fiscal year. Loyola has restored about half of this revenue so far during the 2021-2022 school year, however, it continues to operate with a reduced budget.

During the 2020-2021 school year, which Magdziarz labeled the “COVID year,” Loyola moved classes online, closed a majority of residence halls and had a smaller first-year class than the university had expected. Loyola experienced an $88 million revenue decline as a result of the pandemic, The Phoenix reported

To counteract this decrease in revenue, Loyola removed about $97 million in operating expenses, including a temporary suspension of faculty and staff retirement plans, layoffs and furloughs of staff and a cut in the events budget

Leslie Owen | The Phoenix

So far this fiscal year, Loyola has restored about $80 million in revenue — around 80% of the $99 million it lost — Magdziarz said. The university expects upcoming spring and summer enrollments to remain stable, and so far there have been “no surprises,” Magdziarz said.

Budget Cuts

The university reduced expenses by limiting the amount of money available to spend on conferences, entertainment and travel during the “COVID year;” these expenses were cut by as much as 50%, Magdziarz said in an email to The Phoenix. He added that the cuts the university made have had no effect on faculty positions or hiring.

Leslie Owen | The Phoenix

“Many events, e.g. conferences, were either canceled or being held online and on-campus operations were significantly curtailed,” he said in an email to The Phoenix. “For this fiscal year, we have reinstated most of those budgets to about 80% of funding.”

Magdziarz explained that “non-critical” expenses such as these will continue to be restored in phases. 

Nancy Tuchman, the dean of the School of Environmental Sustainability, explained individual schools within the university worked to reduce costs due to unusual expenses brought on by COVID-19 as well.

“The university had to ramp up the Wellness Center, put COVID testing into place, obtain new software like Zoom, Panopto as well as build hyflex classrooms with audio and video capabilities,” Tuchman said. “The university flew students home from Rome and refunded room and board charges as well as faculty and staff parking.”

Tuition Increases and Fundraising

Magdziarz said that tuition increases are an inevitability if the university wants to stay competitive in the hiring and retention of faculty and staff. He said that the university hopes to keep tuition increases low through debt repayments, fundraising and increasing the resources given to programs with greater enrollment growth potential. 

Loyola is a “tuition-dependent university,” he explained. Magdziarz said that as a result about 95% of scholarships given out by the university are financed with tuition money instead of through the university’s endowment. Loyola’s endowment is smaller when compared to other similar universities, Magdziarz said.

Magdziarz said the university’s endowment is currently around a billion dollars. Previous reporting by The Phoenix found the endowment to be around $760 million, though Magdziarz explained this growth in the endowment came after favorable market forces saw an increase in the university’s investment holdings.

Loyola also has a low “alumni giving rate” compared to other universities, there’s pressure from the Board of Trustees to start a “fundraising campaign of a significant dollar amount,” to change this fact, Magdziarz said. 

If fundraising increases, then the amount of student scholarship support coming from the endowment can increase as well, Magdziarz said.

Loyola brought in about $2.75 million in fundraising in 2020, according to the university’s public tax documents

Growth and The Coming Years

Magdziarz explained the university expects ‘favorable revenue’ during the 2022-2023 school year. It expects increased enrollment and the university currently plans for residence halls to return to maximum capacity for fall 2022. 

Schools Loyola determined to have high opportunities for enrollment growth — such as the School of Environmental Sustainability and the Parkinson School of Health — are prioritized in the budget and receive more funding and resources than other schools in the university, according to Magdziarz.

He said although the university is “returning to normal operations,” the medium and long-term impacts of the pandemic on the university’s campus operations and revenue “still remain to be seen.”

“We are in a different place right now. We need to be realistic on what we have to spend. Where we are right now is the first time we have felt comfortable for a while.”

Wayne Magdziarz, senior vice president, chief financial officer and chief business officer of Loyola

None of this is certain, however, due to the ever-changing nature of the pandemic and the recent rise of new variants, Magdziarz said.

There are also a series of other uncertainties which could affect the university’s finances. Magdziarz explained there are “growing litigious pressures and impact on our insurance costs.” He said that in recent years the higher education industry has seen costs go up as universities have been labeled as high risk by insurance companies.

Despite these concerns, Magdziarz said that compared to other similar universities, he feels Loyola is in a good place, due to the university moving slowly and incrementally back to normal operations. 

In June 2022 the university plans to pay back $57 million in debt, which would bring the university’s total debt to just under $350 million, according to Magdziarz. As a result, he said that the university’s interest expense will decrease. He said this puts the university in a “strong position” for the future and opens up potential future projects and expansion. 

The proposed operating budget and capital budget recommendations for the 2023 fiscal year, which encompasses the 2022-2023 school year, was passed by the university’s Board of Trustees Dec. 9, according to Magdziarz. 

COVID-19 Expenses

Magdziarz explained the university expected around $20 million in COVID-19 expenses coming into the fall semester. This number has decreased by around $15 million as the year has gone on.

These expenses include testing for COVID-19, safety protocols, an increase in resources for the Wellness Center, and the setting aside of dorm rooms for students in quarantine. Currently, only $5 million is budgeted towards these expenses, but this number could shift at any point as the pandemic changes, Magdziarz explained.

Magdziarz explained that the university will continue to operate with a budget of $5 million related to COVID-19, but if more resources are needed they will draw from money provided by the federal CARES Act. 

Difficulties In The Hiring Market

Magdziarz said that one of the biggest challenges the university faces going forward is it’s ongoing recruitment and retention of faculty and staff at all levels amidst what he called a “brutal employment market.”

This is one area in which Magdziarz has explained tuition increases are vital to the University going forward.

“We are having a really difficult time recruiting faculty and staff right now,” he said before the SGLC.

In an email to The Phoenix, Magdziarz laid out some of the ways the university has implemented to try and address hiring issues created by the competitive job market.

He said that it has increased the amount of money available for salary increases from 2.5% to 3.5% for the upcoming year. He also said that the university has stressed that when an individual leaves, managers should promote employees from within the university to fill the vacancy instead of looking to hire from elsewhere. 

Work in a Post-Pandemic World

Magdziarz explained following the pandemic, the way that work is done may be radically different and the university’s money may have to be moved around to reflect these possible changes. 

He said that certain employees within the university, specifically those who do not work directly with students, may embrace a hybrid system where employees don’t come into work every day. He explained that as a result, these employees cannot expect to have an office of their own, and therefore space may be rearranged.

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