BY EMMA RUBIN ’20
As colleges face increasing financial pressure due to effects of the COVID-19 pandemic, Mount Holyoke announced cost-saving measures totaling $6.5 million for the next fiscal year on March 29. The budget changes are expected to bridge Mount Holyoke’s $7.6 million deficit due to the pandemic.
“Mount Holyoke has a solid financial foundation, but higher expenses and uncertain future revenues on already thin margins mean that we must act now to address our financial losses and to position the College for continued excellence,” President of the College Sonya Stephens wrote in a message for the College community.
Stephens announced she will take a pay cut of 20 percent, and the College’s vice presidents will also reduce their salaries between 10 and 15 percent. According to the College’s most recent publicly available 990 tax forms, in the 2018 fiscal year Stephens’ reported compensation was $444,543. Reported compensation for vice presidents that year ranged between $115,816 and $293,974.
Mount Holyoke will not provide any salary increases for employees during the 2021 fiscal year other than those contractually obligated. A hiring freeze has also been extended until December 2020. Under usual circumstances, compensation accounts for approximately 70 percent of the annual budget.
“We deeply regret that we are not able to recognize the hard work and effort of our employees through an annual salary increase,” Stephens wrote.
Starting June 1, the College will also reduce its contribution to employees’ retirement plans from 10.5 percent of eligible compensation to 5 percent.
Mount Holyoke is also asking its employees to use four days of their paid vacation time from May 25-29, when the College will shut down. Because the College must record unused vacation time on financial statements, this is meant to reduce Mount Holyoke’s liability for accumulated vacation time. Employees who believe they won’t have four days of vacation time to spare can contact their supervisors for exceptions.
To reduce the budget for the rest of the 2020 fiscal year, Mount Holyoke is planning to use restricted fund balances — or funds which can only be used for specific purposes — to finance relevant projects.
Other schools in the Five College Consortium are taking similar measures.
Smith College is operating with an $8 to $10 million deficit. Smith is planning to reduce its budget by 10 to 15 percent to mitigate financial distress, accessing its emergency reserves and increasing its endowment spending rate.
During the first half of the 2021 fiscal year, Smith College President Kathleen McCartney will take a 20 percent pay cut, according to a letter shared with the college community. All of Smith’s vice presidents will take a voluntary cut as well between five and 20 percent.
Smith College will also have a hiring freeze through the 2021 fiscal year, with exceptions for positions deemed critical. Additionally, Smith is planning to halt capital projects, including the Neilson Library which has been under construction since 2017 and was expected to be completed this fall. According to President McCartney, even these efforts won’t fully close the gap.
Smith is considering summer furloughs for benefit-eligible staff who would not have sufficient work in a remote environment. It is developing voluntary retirement options as well to mitigate the 58 percent of operating costs that go towards salaries.
Hampshire College, which has been recovering from a spring 2019 financial crisis, estimated $1.2 million in lost revenue. “I am confident in Hampshire's future,” Hampshire College President Ed Wingenbach wrote in a letter shared on the school’s website April 20. “The financial plan is strong, but the disruption of a global pandemic requires revisions.”
Hampshire estimates a budget reduction of 10 percent to account for financial losses. Wingenbach announced he would take a pay cut of 50 percent, and Hampshire has yet to announce any hiring freezes or furloughs.
At Mount Holyoke, a financial planning group is continuing to meet and consult with an academic planning group about the financial impacts of different scenarios.
“We are facing continued financial uncertainties and pressure on our resources,” Stephens wrote. “The reality is that these are likely just the first of many difficult decisions that we may be compelled to make in the coming weeks.”