During the first Faculty Senate meeting of the spring semester, the senate reviewed the Annual Budget and Endowment Report for fiscal year 2014.
Saint Louis University’s Chief Financial Officer David Heimburger stated that after hours of meetings with various factions of the university, the concerns of all those involved became clear.
“During that process, it became clear that there were two priorities that were unanimous. First was student affordability, the second was compensation,” Heimburger said. “It became apparent that those two issues were on one side and any new spending or any other operating issues were less important.”
The presentation went over the key components of the budget, including enrollment, financial aid, endowment spending, compensation and new spending.
For fiscal year 2014, anticipated enrollment for new freshman was projected at 1,600 students. Financial aid for the class is expected to cover 46.6 percent of each student’s tuition. The projected enrollment numbers are up only .9 percent from this year, which Heimburger attests is not a large increase.
“There is a decline in graduating high school seniors in Missouri and Illinois. It will be tougher for us to get students in,” Heimburger said. “It will be difficult to maintain a growth pattern like we have seen in the past.”
The fiscal year 2014 budget anticipates a slight increase in enrollment in undergraduate and post-baccalaureate, but expects to see a decrease in professional students.
The two pools of endowment spending, the general pool and the Health Science Center pool, will operate at a spend rate of 4.5 percent. The HSC pool, which was created with the sale of Saint Louis University Hospital in 1998, was lowered from 5 percent to 4.5 percent.
The endowment currently stands at approximately $925 million, with $12 million allocated to the operating budget.
The presentation reported that 72 percent of University expenses go toward compensation and benefits.
Only about $5.5 million was allocated to new spending, as it was not a priority in the budget meetings.
This includes $2 million in spending related to the opening of the downtown law school and the Center for Global Citizenship, as well as $1.2 million in expenses from previously approved, new programs.
The presentation also outlined some risks and opportunities that come with the budget, such as economic impact on enrollment and the potential for enrolling more students than planned.
However, the risk remains manageable.
“We feel comfortable. We are conservative by nature,” Heimburger said. “We think it is achievable, not a great risk.”
Questions raised by the faculty senators addressed cuts to library spending and the potential to create a fund to help retain faculty who might leave the University.
Ken Fleischmann, vice president of human resources, conveyed to the senate that there are currently surveys being done to assess salary grades across the university for both faculty and staff in order to begin creating different kinds of models addressing compensation.
A question was also raised as to whether the University negotiated with faculty who received offers from other institutions and whether SLU matches those offers. Fleischmann stated that the University will negotiate, but negotiations are done on a case-by-case basis.
Gary Whitworth, treasurer and chief investment officer, presented on the endowment.
Whitworth gave a brief explanation of how the endowment works and the factors that go into calculating the value of the endowment, including investment returns, spending rate, gifts, transfers and inflation. According to the presentation, the endowment is intended to provide an annual and predictable source of revenue for University operations and scholarships. Gifts to the endowment by donors are allocated to the purposes outlined by the donors themselves, such as investments.
According to the presentation, SLU targets a 7.5 to 8 percent return on investment from both endowment pools over the long run.
The endowment value has increased from $513 million in fiscal year 1997 to $884 million as of September 2012, a 72 percent increase.
Endowment peaked at 2007, but decreased during the recession.
According to Whitworth, the current endowment value of $925 million is nearing the all-time high of $959.5 million.