FY25 Budget Update and FY26 Budget Planning

April 8, 2025

Dear SLU faculty and staff,

We are currently navigating one of the most challenging moments higher education has faced in modern times. Demographic, economic, and political changes are directly impacting colleges and universities across the country.

Last fall, we shared with you that the University would need to engage in ongoing, strategic action to balance our budget for fiscal years 2025, 2026, and 2027.

I write today with an update.

FY25 Budget Updates

I am grateful to report that our efforts to balance the current fiscal year’s budget have been successful. Beginning in September, we worked together to take a number of necessary and sometimes difficult steps to reduce expenses. We also saw favorable tuition revenue in both fall and spring. As a result, we currently project that we will end FY25 with a balanced budget.

The University also maintained our AA- credit rating from S&P Global, which praised our “very strong enterprise risk profile,” “trend of increasing enrollment despite operating in a competitive market with demographic pressures,” and “active management of expense growth.” This sustained rating from S&P is a sign of SLU’s fundamental fiscal strength, while higher education is being challenged on many fronts. One benefit of our stable credit rating is that it helps control our expenses, because it allows the University to maintain a favorable interest rate on our debt.

FY26 Budget Planning

We have begun the FY26 budget planning process. Given the uncertainty in both the higher education sector and in federal funding, we will delay proposing a budget to the Board of Trustees until later in the summer. Decisions related to compensation increases will be made in mid- to late summer as the budget picture becomes clearer.

Our FY26 budget will be affected by a number of variables that we continue to track and analyze closely.

• A known budget gap: As we shared with you last fall in emails, meetings, and town halls, we need to continue coordinated and strategic work to close anticipated budget gaps in FY26 and in FY27.
• Uncertainty in federal funding: In recent messages to the SLU community, I have noted the volatility of the political and legal landscape. This has introduced new uncertainties to revenue projections related to federal grants and contracts. At this time, few of our current grants have been affected. University leadership continues to analyze  trends and, to the extent possible in a rapidly changing environment, anticipate potential future impacts.
• Domestic and international enrollment outcomes: The domestic and international enrollment markets have been difficult to predict in recent years. Early indicators related to SLU’s fall 2025 freshman class are positive. We have implemented a number of concrete strategies intended to ameliorate the visa-related challenges our international students encountered prior to fall semester 2024. But recent actions by the U.S. administration have introduced new variables that we believe could impact international enrollment.

We also have taken a number of actions this year to increase revenue and reduce expenses. Though these actions will not entirely bridge our budget gap, they will have a positive impact on our budget in FY26 and beyond.

• Guided by recommendations from the first working group, we have begun to thoughtfully introduce changes to the way some areas of the University’s administrative work are structured. Recent projects, which have had a narrow scope, will inform broader implementation over time. You will be updated further as this work proceeds.
• The second working group has coordinated domestic graduate student recruitment efforts across a number of schools and colleges, resulting in consistent implementation of effective practices and a measurable increase in enrollment and tuition revenue in a range of programs.
• The third working group’s efforts have so far resulted in the implementation of a new faculty workload policy, updated policies related to faculty retirement, and the introduction of a new academic program viability and sustainability policy. These policies will support expense reductions for FY26 and in future years.

Finally, your efforts to consistently and rigorously review open positions before hiring have made a substantial positive impact. The majority of the University’s expenses support employee compensation and benefits. To create a sustainable fiscal future for the University, we know that we must reduce the number of faculty and staff; we are striving to do so while minimizing the number of involuntary separations.

Since March 2024, we have reduced SLU’s full-time workforce by 5%. More than 80% of that reduction was accomplished by eliminating open positions.

I am grateful for the significant effort that many of you have made to adjust to positions lost through attrition. By viewing every open position as an opportunity to re-think and refocus our work, you are contributing to a process of transformation that will help us retain the talented and committed colleagues who move this University forward.

Implementing a 60-Day Hiring Freeze

To maintain and build on the benefits of employee attrition as we prepare for next fiscal year, the University will freeze hiring for any new or replacement staff positions between April 1 and June 1, 2025. Staff positions approved and posted prior to April 1 will continue through the recruitment process.

During this time, we will also review open positions that have not yet been approved, working with the provost and vice presidents to reduce or rethink open positions wherever possible.

Looking Ahead with Confidence

I have emphasized in these updates that our work of institutional transformation is a long-term project. I have witnessed what has been accomplished in the past year and am heartened by the efforts made by many who understand that we can only advance our mission if SLU’s fiscal health is secure.

In the history of the University, challenges and times of transition have always been present. Change is not easy, but you have repeatedly demonstrated that the SLU community can and will navigate any challenge it encounters.

May God continue to bless Saint Louis University.

Sincerely,

Fred P. Pestello, Ph.D.
President