Fall 2020 Financial Update

August 19, 2020

Dear members of the Mount Holyoke community,   

As unusual a start to the fall semester as this is for all of us, there is still the excitement of new students, faculty and staff joining our community, imaginative new courses about to begin, and fresh endeavors before us, as we embark upon this academic year. And, while the days are a little cooler, and it is a lot quieter than usual in South Hadley, we are warming up for all that lies ahead. The beauty of our campus and the vibrancy of the community that comes together here in shared purpose have long characterized the Mount Holyoke experience—all of these are undiminished, of course, but, in this moment, it is our purpose rather than this place, and a new notion of togetherness—the vibrancy of our virtual connection--that will carry us forward. 

We write, then, first to welcome our new students—Class of 2024, transfer students, Frances Perkins Scholars and graduate students—, faculty, staff, and families to this community; to say how proud we are of the achievements of our newest graduates, the Class of 2020, as they join a network of 39,000 Mount Holyoke alums worldwide, and to wish you all success in the months ahead. We would also like to take this opportunity to extend our warmest congratulations to the Mount Holyoke faculty on being voted #1 (”Faculty get high marks”) in the 2021 Princeton Review of Colleges.

We also write to share an update on Mount Holyoke’s financial situation, not least because there has been such intensive media focus on the challenges that colleges and universities face in this moment, but also because our decision to prioritize health and safety, and so to deliver the Mount Holyoke experience remotely in the fall, clearly is not without impact to our budget. While the College is fortunate to have a strong financial foundation, the pandemic has created both short-term and longer-term challenges to our operating model, and we will need to continue to be disciplined and strategic with our resources to ensure that the College emerges from this moment in a yet stronger position, the better to support our students and all those who assure their success.  

As many of you know, the College depends on three main revenue streams: tuition and fees; investment returns from the endowment; and gifts and grants. The endowment (estimated at over $770M)  provides both current and long-term stability.  Our investments have performed well, even in a volatile market, and the generosity of our donors and success in our fundraising efforts have supported both annual operating revenues and the continued growth of our endowment. At the same time, the admission of exceptional students, and very positive enrollment trends more broadly, reflect the hard work of our faculty and staff and the College’s strong appeal and reputation. We begin the fall semester with 90% of our students enrolled in classes, while others have decided to join us or return to their studies in the spring or next fall. Success in all three of these areas has been combined with exceptional fiscal discipline, strategic use of restricted funds across departments, and shared financial sacrifices across the College. 

Prompt action in the spring, including freezing positions and all non-essential spending, a reduction in employer retirement contributions for all employees, a salary give-back on the part of senior leaders and others, followed by some summer furloughs, enabled us to close the 2020 budget gap caused by the pandemic. We were aided in this by the receipt of some federal stimulus funds—notably as a result of the CARES Act and the Employee Retention Credit—which also enabled us to provide additional financial support to our students and staff. Additionally, we decided to forgo more than half of our budgeted commitment to campus renovation projects for the year, although, in line with our stated priorities, we did move forward with a number of health and safety improvements, primarily to residence halls. We are all immensely grateful for the shared commitment to these efforts, and for the community spirit and focus on our purpose that has prevailed throughout these difficult months.

These efforts and results mean that we start the new academic (and fiscal) year on solid footing, but much work remains to be done to ensure that the current budget is in balance. A balanced budget stewards our resources, and ensures that we are able to support the most critical needs and priorities, both now and in the future. As we continue to assess the economic impact of this pandemic, we are collaborating with the Ad Hoc Financial Review Group, established in the spring, as well as with other standing committees of our faculty and staff, to determine how best to proceed. We incurred significant additional expenses over the summer to meet our own, and the Massachusetts “safe for school” standards, including a frequent, asymptomatic, on-campus COVID-19 testing program. These measures, along with some other expenditures not anticipated until July, resulted in $2 million of additional expenses for the coming year, while the health and safety decision to offer the Mount Holyoke experience only remotely this fall results in a further $4.5 million reduction in revenue.

We know already that the economic consequences of this pandemic may be deeper and more enduring, potentially impacting students’ and families’ future ability to pay for a Mount Holyoke education, and so enrollment, as well as future gifts to the College and growth in, and returns from, our endowment. Despite our very best efforts, then, our many collective actions and sacrifices to date simply will not suffice to close this and any future budget gaps. We are, therefore, writing also to share that:

• further reductions in operating budgets have been identified across all divisions;
• there will be additional furloughs and adjustments to come, reflecting the changes in fall operations;
• we will continue to operate with a mandate of only essential expenditures, with a focus on an outstanding remote experience for students and a safe and healthy campus environment;
• most positions remain frozen, though a small number have been released to ensure continued high quality operations, to sustain functions that impact revenue and/or to invest in areas of high strategic priority.

Our responsibility to the fiscal health and good stewardship of the College require our continuous scrutiny of the current budget, and that we make one-time allocations, as well as permanent, structural changes, that allow us to direct resources to areas of highest priority, potential, and need. There will be more information in mid-September about necessary budget reductions and other changes. We understand that many employees are concerned about their economic security, and we are working on plans to identify additional resources and programs to enhance financial support for those who may be impacted. 

Please know that we place a high value on what each of you brings to this community, and we are deeply grateful for your loyalty and commitment to the College as we continue to venture forth, as Mount Holyoke has always done, in community and compassion, and with great courage and purpose.

Sincerely,

Shannon Gurek
Vice President for Finance and Administration and Treasurer

Dorothy Mosby
Interim Dean of Faculty and Vice President for Academic Affairs
Professor of Spanish

Sonya Stephens 
President