University endowment in decline

By Genna Tan

As former President Paul Locatelli, S.J., prepared to leave for a working sabbatical, he had one last announcement to make to the campus community, and it wasn't a pleasant one.

In a letter addressed to students and parents, Locatelli explained that the university's endowment has been in a state of decline over the past year.

As a result, the university will have to make budget cuts as administrators anticipate a loss in revenue from both tuition and the endowment.

The letter stated that the endowment's decline is less than the overall market indices, but it is still significant.

The endowment, which is made up of donations and gifts, is mainly used to fund student financial aid, said James Briggs, executive assistant to the president.

"Until recently, there have been annual gains on the endowment, so whatever is contributed continues to grow over time, and that's why it's such a good investment," said Briggs.

Scholarships and professorships are examples of what can be endowed, said Briggs.

"The larger the endowment, the more money can be spent on the endowment," he said. "And that relieves the pressure on the budget and enables us to balance the budget without increasing tuition even more than it has been increased in the past."

Strategic budget cuts were emphasized in Locatelli's letter, which stated that the university anticipated that operating costs would have to be reduced by at least $1.5 million.

The specific areas that will receive a budget cut for next year have not been determined yet, said Briggs.

"The general criteria is the less central a program is to the core mission and strategic priorities of the university, the more likely that program could receive a budget cut," said Briggs. "Anything related to academic quality and our distinctiveness as a Jesuit university would hopefully be one of the last things to be cut."

In his letter, Locatelli wrote that tuition, which is the main source of revenue for the university, will most likely not be increased at its usual rate.

However, the amount tuition will increase has not yet been decided.

The cost of tuition increases by around six percent each year, said Briggs.

"Tuition goes up in order to cover the increased rate of expenditure on the part of the university," said Briggs.

"The main portion of that is salary benefit increases for faculty and staff. Maintaining state-of-the-art technology, covering all the liabilities that the university faces through a comprehensive risk management system," he said.

"This is a process that usually culminates in a recommendation by the Board of Trustees in their February meeting," said Briggs. "That decision won't be finalized until the Board approves."

Student organizations have not received word about any budget reductions, said Jeanne Rosenberger, vice provost for student life.

"The budget for our current year is set, and what I've asked each of the directors to do is to make reductions in their operating budget," said Jeanne Rosenberger, vice provost for student life. "However, at this point, we have not passed along any reductions in budget to the student organizations."

Rosenberger said she has given directors in student life advice on areas how and where costs can be cut effectively.

"Our starting point is to begin to look at how we can continue to deliver quality in our programs and services without spending as much money," said Rosenberger.

"The next phase would be to look at things we might have to completely stop doing because they are too expensive. At this point, we are not anticipating making any of those decisions that would impact any events planned for this year," Rosenberger said.

Travel expenses, non-essential hospitality costs, food and non-essential expenses are the four main areas where costs can be reduced, according to Rosenberger.

"We are thinking about where we can make cuts that will not alter the core educational experience for students," said Rosenberger.

Contact Genna Tan at (408) 554-4546 or gbtan@scu.edu.