By Kate Turner ’21
On Tuesday, April 7, the Mount Holyoke College community received an update from President of the College Sonya Stephens briefing community members on the College’s financial situation. “Over this time period, we have focused on our emergency response and continuity of operations,” Stephens wrote. “We must now transition to managing the consequences of COVID-19 on the College.”
According to Stephens, the estimated cost to the College of COVID-19 currently stands at $7.6 million, though that number could grow.
Noting that the peak of infections is not expected in western Massachusetts until May, Stephens added, “This next phase will require no less of a collective effort and no less care, as, alongside other colleges and universities, and indeed other sectors, we try to plan in the midst of significant uncertainty, and for a potentially deep financial recession.”
This letter was followed by a second update to the community, sent on April 14, in which Stephens elaborated on some of the College’s plans moving forward.
“The economic impact of COVID-19 on the United States is already devastating,” Stephens wrote. “Despite Mount Holyoke’s exceptional resilience, and relatively strong financial position and liquidity, the rapid onset and enormous magnitude of this crisis have already significantly impacted the College and will likely continue to do so.”
Mount Holyoke’s main sources of revenue are tuition and fees, distributions from the endowment and gifts and grants for operating purposes. With the threat of the ongoing global pandemic, all three sources have been seriously threatened.
In particular, 60 percent of the College’s operating budget comes from tuition and fees. After already issuing room and board refunds, the College stands to lose even more if enrollment declines for the 2020-2021 academic year.
“The enrollment outlook is uncertain, dependent as it is on family circumstances,” Stephens explained. The possibility of economic recession also means that students may face “increased need for financial aid,” which will further constrict the College’s operating budget, 70 percent of which is spent on employees, payroll and benefits.
She added that “travel and visa restrictions” might also limit students’ ability to re-enroll in the fall of 2020 depending on the trajectory of the virus, which could disrupt plans to open as normal in the fall of 2020.
According to Stephens, the College has formed two new ad hoc committees to deal with the immediate and longer-term impact of the COVID-19 pandemic.
The first, the Academic Planning Group, “will develop contingency plans for the academic program at Mount Holyoke for the 2020/2021 academic year and present recommendations for next year’s curriculum to faculty, the Dean of Faculty, and the President by June 1,” Stephens wrote.
The group includes members of the Academic Priorities Committee (APC) as well as the COVID-19 Academic Planning Emergency Response team, previously constituted as an ad hoc subcommittee of the APC. It will be chaired by Vice President for Academic Affairs and Dean of Faculty Jon Western.
The second, a Financial Review Group, will advise the College “as we are forced to consider the severe economic consequences, and engage in a strategic and comprehensive review to identify cost savings and make difficult choices,” according to Stephens.
It includes members of Faculty Planning and Budgeting (P&B) and members of the Operations Policy Council (OPC). It will be chaired by Vice President for Finance and Administration Shannon Gurek.
Both groups include members of faculty, administration and several student representatives from SGA and other student leadership groups. The Financial Review Group also includes several representatives from College staff.
While these decisions are being made, the College has also extended its commitment to pay full- and part-time benefits-eligible employees from May 5 to May 22.
“We appreciate that many of you will have questions about what may happen after this date, and might have concerns about possible additional steps, including changes to employment,” Stephens wrote. “No other decisions have been made at this time, and this extended date gives us time to focus on these questions.”
Before colleges and universities across the country began to close their doors, Mount Holyoke’s Board of Trustees met on Feb. 27 for its annual winter meeting. There, they voted to raise the cost of tuition by $3,060 for the 2020-2021 academic year.
When asked whether students can expect to see an additional increase in tuition and fees as an emergency response to the financial losses Mount Holyoke has incurred as a result of the COVID-19 pandemic, a College spokesperson was unavailable for comment.
“Some have suggested that we draw from our endowment to cover anticipated shortfalls and to weather this financial storm,” Stephens wrote. “The endowment is not a reserve fund.”
She added, “It is already under stress as a result of the volatility of the financial markets and, as a result, will provide less revenue than anticipated to the FY21 operating budget.”
In Stephens’ letter, the College does not offer additional information on the direction the administration is taking to resolve these financial issues or make “difficult decisions” about its budget, including tuition and employee salaries and benefits.
“This is a difficult moment in the history of the College, and decisions to come may be even harder to make than those to date,” Stephens wrote. “You have my assurance that we will take great care in reaching these decisions, and that we will both consult and communicate often in the days and weeks ahead.”
“We are aware that, ultimately, responsibility for these decisions will fall to the officers of the College, and, as always, final approvals, including approval of the College’s annual budget, reside with the Board of Trustees,” she added.
On November 14, 2019, Massachusetts Governor Charlie Baker signed into law H.4099 An Act to Support Improved Financial Stability in Higher Education. The new law, in part a response to Mount Ida College’s sudden closing in the spring of 2018, increases state regulators’ authority to monitor higher education institutions’ financial strength. As reported in a Feb. 21 edition of the Mount Holyoke News, H.4099 also requires that colleges and universities in the Commonwealth notify the Board of Higher Education if they are facing financial situations “that may jeopardize the institution’s ability to fulfill its obligations to current and admitted students.” It is currently unclear whether any of the Five Colleges will notify the Board of Higher Education of their difficult financial situations resulting from COVID-19.
Mount Holyoke News reached out to the College for additional comment on the College’s losses, its plans regarding employee salaries and benefits, the potential tuition increase and the selection process for members of new ad hoc committees. No representatives were available for comment.