CFO Paints Sober, But Optimistic Picture at Finance Town Hall

In the first of two Finance Town Halls hosted this school year, Senior Vice President and Chief Financial Officer Wayne Magdziarz detailed Loyola’s current financial position as the university prepares to take on challenges associated with the coming enrollment cliff and the implementation of the recently announced Campus Plan.

The coming enrollment cliff, during which there will be a lower number of U.S. students entering college due a decline in birth rates following the Great Recession, will mean Loyola will be forced to spend more to better compete with other universities for a smaller pool of students, according to Magdziarz. 

Madgziarz laid out initiatives the university will have to undergo in hopes of maintaining fiscal stability as it will need to contend with decreasing tuition revenues and increased expenses related to financial aid. 

“The way we are operating our university — the programs that we offer and the expenses we have — we can’t continue to do that and expect positive operating results going forward, it’s just not sustainable,” Magdziarz said.

Magdziarz began his presentation by discussing how Loyola performed in fiscal year 2024 — fiscal years begin July 1 and end June 30 of the listed year. He said during FY24 the university earned $24.5 million in profit while revenue growth outpaced expense increases, at 6.8% and 6.5% respectively. 

While other peer universities have faced struggles and have in some cases been forced to make budget cuts and eliminate vacant positions, Loyola has maintained its strong fiscal standing and was able to increase faculty and staff salaries and benefits by 6.8% in FY24, according to Magdziarz.

Meanwhile, Magdziarz said the university’s total scholarship support exceeded $300 million and the amount received in grants and contracts increased to $64.6 million — up 21% from the previous year. Additionally, revenue from auxiliary services, on-campus dining and Residence Life increased by 10%. 

Addressing preliminary indicators of how FY25 will turn out, Magdziarz said the university is anticipating revenue of $12 million and generally favorable fiscal conditions, thanks primarily to the utilization of $7 million in gift and endowment funds. 

A university endowment is a pool of assets donated to academic institutions. The funds are invested and the returns are used to fund university operations. Loyola’s endowment assets are currently worth about $1.2 billion, Magdziarz said, noting the fund had grown over the past year in line with favorable market conditions. 

Although next years incoming first-year class met the university’s budgeted target at approximately 2,770 students and the university saw a 30% increase in transfer enrollments this past year, Magdziarz said Loyola anticipates net tuition revenue in FY25 to be slightly below where they’d hoped. 

Expense increases are expected to exceed revenue growth in FY25 and Magdziarz said the university will likely need to begin issuing a modest amount of debt in FY26 due to projected shortfalls in FY25 and beyond. He said it’s too early to project how much total debt the university will need to take on. 

This is a reversal for Loyola, which has spent the last decade gradually paying down the debt it accumulated while undergoing a series of major Lake Shore Campus construction projects in the 2000s under former university President Michael J. Garanzini, S.J..

Because of these efforts Loyola is in a position to take on up to $500 million in new debt without its credit ratings being affected, according to Magdziarz 

Looking ahead to the university-wide budget for FY26, which is currently being finalized and is set to go before the Board of Trustees for final approval in December, Magdziarz first discussed the likely tuition increase for the 2025-26 school year, which will increase by 3.9% to $53,710 barring changes before the budget is finalized.

The 3.9% tuition fees increase is equal to the one Loyola implemented for the 2024-25 school year. Annual tuition is currently $52,230, The Phoenix previously reported. 

For FY26, the university is anticipating $15 million in total revenue and plans to sustain an increase in compensation increases for faculty and staff while maintaining the present benefit levels, according to Magdziarz. 

In order to keep the university’s discount rate — the percentage of tuition covered by financial aid and scholarships — low, Magdziarz said Loyola will need to aggressively pursue donations and scholarship awards. He said every one point change in the discount rate costs Loyola $1.5 million. 

The university will continue to pull from endowment funds as a budget relieving measure, and they will continue to be honest with donors throughout the process. The budget also anticipates a $2 million expense derived from the start of a multi-year project to update Loyola’s computer information systems, including student-facing services such as LOCUS, according to Magdziarz. 

Another area which will need changes is research efforts, as Magdziarz said this year related expenditures exceeded research awards for the first time in the last five years. 

Magdziarz said to help counteract the approaching enrollment cliff, the university is in early stages of partnering with the firm Shorelight which helps American universities attract international students. Current projections don’t account for increased enrollment as a result of Shorelight’s efforts, but Magdziarz said the potential gains from emphasizing international enrollment could help the university stabilize its expenses and reach targeted enrollment levels. 

The university is anticipating revenue from Residence Life to flatten as the Campus Plan affects the number of available beds on campus. Magdziarz said Campion Hall will likely be demolished following the completion of the 2024-25 school year and Residence Life will undergo a transitional period over the next four years. 

Based on current projections, FY26’ is the last fiscal year where revenues will exceed expenses, with overall revenue going negative and potentially sinking as low as a loss of $41.7 million in FY30, according to Magdziarz. 

“I don’t have any doubt that we’re going to be able to build a budget in 26’ that’s going to be close to what our targets are,” Magdziarz said. “And then we’ll have a good year this year and will be able to forecast and build a budget that’s healthy for next year, beyond that though I think it’s going to be a challenge.” 

These assumptions don’t factor in new faculty hiring, graduate program revenue increases, drops in the size of first-year classes or the unsustainable use of endowment and gifted funds to balance budgets, according to Magdziarz. 

To maintain its fiscal strength, Loyola needs to identify new program opportunities which can have a material impact on revenue and close or suspend programs which don’t significantly contribute to enrollment growth, with their funding being redirected to high-growth programs, according to Magdziarz.

Additionally, the university will need to continue aggressively fundraising and grow its endowment to keep up with expected levels of future scholarship support. Magdziarz said the university will also need to facilitate growth by increasing the quality of the teaching and laboratory space it offers, in line with the directives of the Campus Plan. 

Magdziarz closed the presentation with an update on the Campus Plan. He said the university is currently in the process of carrying out feasibility studies and working with the city of Chicago to amend its Planned Development 43 zoning designation to fit the university’s aims. 

He said tier one priorities for campus expansion include a new science building — likely to fill the space left void by Campion Hall — a new student success center, improved Nursing and Health Sciences facilities, a welcome center, a recreation center and high amenity on-campus residential spaces. 

Magdziarz said the university will fund these projects using a tripart model of philanthropy, debt issuances and university capital. 

He said the most important thing staff and faculty can do during the process is ensure students feel cared for by members of the university. 

“It’s easy to forget why we’re here, so as often as we can remind ourselves of that, and continue to engage with the student population at the undergraduate and graduate level I think it’s going to start going really well,” Magdziarz said.