Budget Updates for FY22

Dear Mount Holyoke faculty and staff,

As noted in the recent letter summarizing the May 2021 Board of Trustees meeting, the review and approval of the fiscal year 2021-2022 (FY22) operating budget was delayed to June to ensure enrollment and expenditure projections were as accurate as possible. On behalf of the Board and the College’s leadership team, I am pleased to share that the Board approved a balanced operating budget of $146.4 million for FY22.   

This budget is predicated on a return to on-campus teaching and residential operations to the fullest extent possible and reflects our ongoing commitment to our strategic and anti-racism action plans, to realizing new investments in affordability and access for students and to prioritizing employee benefits. It also enables the thawing of frozen positions and supports the retention of Mount Holyoke’s faculty and staff, who demonstrated extraordinary dedication, resilience and creativity throughout the many serious challenges presented by the pandemic.

As a reminder, the FY20 operating budget was $144 million. In FY21, the budget declined to $120 million as a result of disruptions to operations caused by the COVID-19 pandemic. In FY22, we expect budgeted revenue to increase by 1.4 percent over the most recent pre-pandemic budget (FY20) due to the following:

• With a projected return to a pre-pandemic total undergraduate enrollment of 2,099 students (full-year average), revenue from net tuition, room and board is also expected to return to pre-pandemic levels. This enrollment estimate includes a large first-year class (estimated at around 620 new students, including students who deferred admission offers from last academic year), a large senior class and smaller sophomore and junior classes in between. While this enrollment pattern has its challenges, resources are in place to manage an overall student body of this size.
• The value of the endowment currently stands at over $990 million. This significant increase has been fueled by extraordinary investment returns and the largest single-year gift activity in support of endowed scholarships in the College’s history. The increased endowment value means next year’s distribution to the operating budget has been set at the highest amount available within the College’s endowment spending policy.
• All other revenues are expected to be at or slightly below FY20 levels.

Because of the diligence and shared commitment of departments and budget managers, most divisions accommodated unavoidable increases in contracted services at the same time as reducing expenses in their FY22 budgets. The majority of these reductions are temporary — the result of holding approximately 20 positions (both faculty and staff) vacant for some period of time, delaying certain equipment purchases and adjusting service levels moderately to achieve savings. Some divisional savings are permanent and are the result of contract renegotiations and the permanent elimination of several staff positions.

These divisional savings — which amount to over $4.3 million — allow for a return to critical investments in employees and to increased financial support for students. 

Investment in student financial aid

In FY22, the College has allocated an additional $1 million to make programmatic funding changes to benefit our highest-need students, based on the preliminary findings and recommendations of the 2020-2021 financial aid study, with the full report due in July. This new investment of $1 million is the result of the extraordinary generosity of our donor community as well as the community’s endorsement of student financial aid and access as an institutional imperative. Details of these program changes are in development and will be communicated later this summer in conjunction with the results of the financial aid study. We anticipate additional changes and investments in student aid as a result of the report findings and continued assessment in coming years.

In addition, the student safety net fund will continue to be a resource for students, in large part thanks to two generous gift commitments totaling more than $1 million received this spring. These endowment commitments provide a permanent funding source for student needs beyond those traditionally covered by tuition, room and board, and we expect to continue to grow this fund as part of our ongoing financial aid fundraising efforts.

Investment in employee salaries and benefits

The FY22 budget includes a 2% salary increase for all employees in good standing, salary increases for faculty promoted this year and equity increases for eligible staff. Unionized employees will receive increases in accordance with their collective bargaining agreements.  And, after a 13-month reduction, the College’s matching contribution to employee retirement plans will return to 10.5%. We are pleased to be able to provide salary increases this year, and to restore full retirement benefits to Mount Holyoke’s dedicated faculty and staff — we thank you for your personal financial sacrifices and deeply appreciate the FY22 budget adjustments made in each division to ensure this is possible.

Finally, $100,000 will be added to the Employee Emergency Fund to ensure that the fund is available to support the needs of employees during the coming year, as well as to fund the childcare grants described earlier this spring. Details of the administration of these grants will be finalized later this summer.

Capital and contingency investments

In FY22, the allocation for deferred maintenance will be $6.8 million so that we can continue to invest in critical facility and campus upgrades. The FY22 budget also includes a contingency of $810,000 that will help us with expenses that cannot be anticipated now but will likely emerge as we continue to navigate the impact of the pandemic. 

Other important information    

• As FY21 ends, we expect to close the year with a balanced budget. This will be accomplished by a continued commitment to only essential spending and utilization of departmental restricted funds.   
• The College was awarded stimulus funds earlier this calendar year (HEERF III). In this package, $2.1 million was awarded for direct support to students (to be distributed in academic year 2021-2022) with a matching amount for institutional expenses. The matching award to the College will be used to fund one-time expenses that are not included in the operating budget and that are related to the impact of the COVID-19 pandemic. For example, additional courses for the large first-year class, costs of COVID-19 testing and contact tracing in the fall and other equipment costs to support changes in workforce needs. The flexibility provided by these stimulus funds will ensure we can repopulate the campus thoughtfully and safely and support the changes in operations that have resulted from the pandemic. 
• I am particularly pleased to report that nearly all current Mount Holyoke employees have returned to pre-pandemic work responsibilities — a small number of employees will continue on furlough until early July, when we will begin to reopen buildings that have been closed for much of the past year. The Facilities Management department and LITS have taken on a number of projects this summer and over 20 dining, auxiliary and Willits staff have returned from furlough to support these efforts. In addition, other redeployed staff continue to support the on-campus testing center and other activities on campus where needed. We are extremely grateful that the community came together to identify opportunities for individuals whose work has been most impacted by pandemic disruptions and who will be instrumental in operating the campus this fall.
• With the approval of this budget, a significant number of positions will be released for recruitment. As you consider the appropriate timeline to post and search for vacant positions in your area, please work with your department and/or division head for guidance. In addition, guidance on repopulating campus offices and flexible work options/remote work is being considered by a cross-divisional working group and more information will be shared as soon as the group finalizes its recommendations.

While the outlook for the FY22 budget is positive, the College’s long-term financial sustainability requires continued work to identify changes that help us transition to a lower cost structure and allow us to make investments in future strategic plan priorities and in recruiting and retaining an excellent and diverse community of students, faculty and staff. Opportunities for transformational revenue growth are limited, and growing revenue alone will not be enough to position the College for success in a changing higher education and employment environment. In the fall, my colleagues and I will host sessions for community members to discuss the operating budget for FY22 and, importantly, the College’s future financial direction. I anticipate that we will be able to host these conversations in person, alongside remote events to ensure that we are as inclusive in these conversations as possible.    

As we move into the pace and schedule of our summer work, I’d like to take this opportunity to thank the entire community for the extraordinary effort and support of our students and each other during this extremely challenging time, and to wish you some rest and restoration over the coming weeks. It has been a difficult 16 months for individuals, families, colleagues and institutions alike. Decision making in uncertain times such as these is challenging, and we acknowledge the anxieties created as we navigated a complex and financially constrained environment. We have been guided throughout this difficult period by a commitment to our students and their success, to the core academic mission and to the faculty and staff who are key to the long-term sustainability of the College. Together, we have guided Mount Holyoke through an historic pandemic, one with lasting worldwide implications and we will launch a new fiscal year with resources in place to support a return to the fullest expression of our mission and to plan for the College’s future. 

Sincerely,

Shannon D. Gurek
Vice President for Finance and Administration and Treasurer