FY23 and FY24 Budget Updates
May 11, 2023
Dear SLU faculty and staff,
I write with an update on the University’s budget, as we prepare to close another successful fiscal year and look ahead to fiscal year 2024 (FY24).
The budget approved by the Board of Trustees on May 5 was developed through a year-long consultative process. A group that includes 75 University administrators, faculty, staff and students – including individuals from every school, college, and division, along with representatives from Faculty Senate, the Staff Advisory Committee and the Student Government Association – met four times over the course of the year to provide input on budget opportunities, challenges and priorities.
While numerous institutions of higher education, public and private, endure budget constraints, SLU continues to have a strong and stable financial outlook. In brief:
- We anticipate that FY23 will end with a small normalized operating surplus and a significant surplus of one-time financial gain, both resulting from the integration of the SLUCare medical practice with SSM Health.
- We are projecting a balanced budget for FY24. Strategic enrollment growth will allow us to invest in student support, hire to build capacity in thriving academic programs, and designate a 4% salary increase pool for faculty and staff – 2% for market and equity adjustments, and 2% for merit increases.
The University is on strong financial footing because of your incredible work, your spirit of innovation, your care for our community, and your sustained commitment to our mission. Thank you for all that you contribute to SLU.
More details about the University’s budget status and outlook follow.
Wrapping up fiscal year 2023 (FY23)
The current fiscal year is on track to end much as we projected in October 2022.
It is helpful to discuss the overall University budget in two parts: 1) The normal operating budget, and 2) a set of one-time revenues and expenses.
We anticipate that the normal operating budget – the University’s routine, recurring revenue and expenses – will outperform our expectations of a balanced budget.
The University’s better-than-balanced normal operating budget is a significant accomplishment for a university in the current economic climate. We have increased enrollment and net tuition revenue – maintaining a strong first-year class, as we create a more strategic balance of graduate, transfer, and international enrollment.
Because of strong enrollment, we were able to make essential investments to support our employees and students:
- We restored the 10% retirement match for current employees beginning January 1, 2023.
- We implemented a 4% raise pool in FY23. This included initial increases made based on a market salary study for staff that began last fall. With the salary increases made in FY23, full-time faculty salaries continue to make good progress toward the existing benchmarks for comparison to market. The Provost will continue to work with the Faculty Senate Compensation Committee and report to the Faculty Senate on updates to these benchmarks.
- We have begun investing in a number of new faculty and student support positions, particularly focused on high-enrollment programs and support for our growing international and graduate student population.
- We increased our spending for student scholarships by more than $20M, nearly 10% above the prior year.
Impacts of the SLUCare integration in FY23
The SLUCare integration is contributing to the University’s fiscal health and laying the groundwork for advancements in medical education and research that will benefit the entire University and the communities we serve.
As we reported in October, we anticipate that a one-time, previously-unbudgeted gain will result in a substantial budget surplus. The projected $250M surplus results from the integration of the SLUCare medical practice with SSM Health on July 1, 2022.
As we shared in previous communications, proceeds from the SLUCare transaction created a transformative endowment for the School of Medicine (SOM). The spend from the endowment will fund business functions previously supported by SLUCare, along with essential investments in medical research and education.
This year, the University’s normal operating budget will also show a small surplus of about $5M, resulting from FY23 income from the SOM endowment and mission support from SSM Health. These funds will support SOM strategic priorities going forward.
Notable among these priorities is a new medical education building, which will include simulation centers that will benefit health sciences programs across the University. Initial discussions have begun toward planning this project.
Looking ahead to FY24
On Friday, May 5, the SLU Board of Trustees approved the budget for fiscal year 2024. The budget includes a 4.9% increase to tuition, and to room and board.
We anticipate that we will end FY24 with a balanced normal operating budget that prioritizes investment in student support and in faculty, staff and graduate assistant compensation.
We will continue to hire strategically to provide instructional and mission-centered student support for our growing global graduate population, and more focused student support services for our undergraduate population. And we will sustain our investments in well-being initiatives, guided by recommendations from the Provost’s Well-Being Task Force and the JED Foundation.
Based in part on input provided by a committee of graduate assistants, we will also implement increases to graduate assistant stipends and extend health insurance benefits to ensure that graduate assistants have continuous, year-round coverage. The Provost recently shared details of this multi-year effort with division leaders, deans, department chairs and graduate assistants.
We have again budgeted a 4% salary increase pool for faculty and staff. The Provost and other division leaders will distribute 2% for merit increases and 2% for equity and market adjustments. Additional funds have been allocated to support increases for faculty who earn promotion and tenure, bringing the total faculty increase pool to 4.6%. The staff market salary study and the faculty salary benchmarks will guide market-related adjustments.
As we make much-needed investments in our students and personnel, we also must work to ensure the long-term fiscal health of the University. In FY16, we increased the endowment spend from 4.5% to 5.0% to help navigate challenging budget times. We made a commitment to the Trustees that, as we returned to strong and stable financial footing, we would return the endowment spend to a rate that is more in line with that of universities of our size. In FY24, we will reduce the endowment spend from 5.0% to 4.9%. We plan to continue to reduce the rate incrementally year by year, until we return to our prior, more sustainable spend rate of 4.5%.
Gratitude in a time of growth
In our recent visits with schools and colleges across the University, Provost Lewis and I have reflected on the reality that we are in a much different position now than we were just three years ago. We find ourselves challenged by the demands of growth, instead of the stress of austerity.
Provost Lewis and I recognize that SLU faculty and staff have contributed exceptional effort to adapt to the demands of rapid enrollment growth, increases in external research funding, and the changing needs of our students.
The University, our students and our graduates will flourish long into the future because of your efforts.
Thank you for sharing your care, talent and expertise with the SLU community. May God continue to bless and watch over each of you.
Fred P. Pestello, Ph.D.