An Update on Strategic and Budget Planning
I am writing to provide an update on strategic and budget planning. At last week’s
meetings of the President’s Advisory Council (PAC), the President’s Coordinating Council
(PCC), the Staff Advisory Committee (SAC) and a student town hall meeting hosted by
the Student Government Association (SGA), I shared that this is a difficult time for
higher education and for SLU. You probably have seen news stories about dramatic budget
cuts at some of our sister institutions. As I indicated to the groups with which I
met, while SLU remains financially strong, it is not immune to these market forces.
In FY16, the University’s expenses exceeded revenues, and they will again in FY17.
Once again, we expect to bring in very talented new students next fall; however, our
overall revenues are not expected to grow. In recent years our student counts have
waned, principally due to downward market shifts impacting particular graduate and
professional programs, community college transfers and adult student programs. Despite
these forces, we remain committed to keeping a SLU education within reach for qualified
students. We will continue to increase financial aid and maintain need-blind admission
policies that assist in enrolling low-income students, academically talented students,
veterans, and first-generation students. These efforts have helped more SLU students
graduate on time, and appreciably lowered the average student loan debt loads of our
recent baccalaureate graduates who borrow.
Information about our current financial situation has been shared regularly with the
100-member PAC. The frank and open conversations that have taken place during those
meetings have shaped major decisions during the past year, including how we are moving
forward with the Magis Strategic Plan.
Well beyond the PAC, I know that many of you served on committees that helped craft
the strategic plan and devoted many hours to that effort. You are now eager to make
progress. Moving the plan’s initiatives forward, including those dealing with compensation,
is my top priority. Improving how we operate will allow us to do that.
Earlier this year we announced the Magis Operational Excellence Program. The purpose of this program is multifold. In announcing that plan we noted that
“... we cannot continue to deal with our budget challenges one year at a time. That
is why we are beginning with an in-depth, comprehensive operational opportunity assessment ...” This program will allow us to fund the priorities, goals
and objectives in our new strategic plan, including compensation targets.
The Magis Operational Excellence Program will address our challenges in a strategic, long-term way. This will put
us in the best possible position to achieve our ambitious strategic priorities. Nearly
1,000 of you have attended town hall meetings and community fora to learn more about
this effort, to ask questions and to share concerns. As I said during the Magis Operational Excellence town halls, it is critical that we continue to collectively and effectively address
our challenges — in the near-term and beyond. Your continued involvement will be critical
to the project’s success.
As the implementation of the Magis Operational Excellence Program achieves expense savings and revenue growth in excess of that needed to address
projected deficits and create a small contingency, positive net results will allow
us to achieve our strategic priorities. These priorities include addressing faculty
and staff compensation. To reaffirm our commitment to this imperative, we plan to
devote at least 20 percent of the positive net results realized by the multi-year
Magis program to bringing our compensation practices in line with our strategic plan.
It is important to note that we are in the diagnostic phase of the Magis Program.
This stage involves interviews with numerous stakeholders and extensive data collection
and data scrubbing. This initial phase of the work will continue through June. The
18-member steering committee, which includes representatives of the faculty, staff
and student body, is responsible for reviewing diagnostic findings and providing input
and expertise in evaluating potential opportunities and implications, so that recommendations
can be made. Final decisions related to this project will be made by University leaders.
In the meantime, this coming May we have to present a FY17 budget plan to the Board
of Trustees for its review and approval. We are having preliminary conversations with
members of the Trustee Finance Committee about the shortfall. We expect to propose
a plan that includes:
- A request to extend by a second year the University’s endowment spend rate at 5 percent.
It was at 4.5 percent until FY16.
- Because of the shortfall, there will not be a merit pool for FY17. Nonetheless, we
will not penalize those who are being promoted this year; so we intend to set aside
funds necessary for faculty rank and tenure adjustments, and we will continue to adjust
salaries of staff and administrators who are promoted.
- We will not reduce SLU’s 10-percent retirement match for the coming year. This has
been expressed as a priority of the PAC.
- As a sign of our commitment to addressing those most at variance to market, and who
are most contributing to advancing priorities in our strategic plan, we hope to take
a small step forward. We will propose that $1.5 million be allocated to base salary
increases for up to 500 faculty who are below market and contributing at a high level.
We will also request $500,000 for up to 250 staff and administrators (excluding vice
presidents and the president) who are below market and most contributing to advancing
our strategic plan.
- Executive staff (president, vice presidents, special assistants to the president)
will not receive a salary increase in FY17.
I realize that you make sacrifices to ensure that the experiences of our students
and patients are minimally impacted by our resource constraints. I hear stories every
day of faculty and staff who go out of their way to help others. That speaks volumes
The administration, the Board and I appreciate all that you do for our University.
The work we are doing now will pave the way for an even brighter future for SLU and
its faculty, staff and students.
Fred P. Pestello, Ph.D.