Over the past three fiscal years, Fordham has navigated the pandemic through significant reduction measures and an infusion of federal relief funds. Last year, thanks to higher-than-anticipated revenue—in large part due to the biggest first-year class in University history—and continued federal funding, the University found itself on stable footing. Now, with less than two months left in the fiscal year, the University continues to be in a good position, said Martha K. Hirst, senior vice president, chief financial officer, and treasurer of Fordham, at the Spring 2022 Budget Forum on May 13.

“We’ve come through fiscal year 22 really quite well—aided by a waning pandemic, but really aided by careful budget management and forecasting on the part of the finance team and all the budget managers across the University,” Hirst said. “I’m extremely grateful to them all.”

Reflections on the Past Year

In a Zoom presentation, Hirst and Nicholas Milowski, vice president for finance and assistant treasurer, offered final conclusions on the fiscal year budget that ends this June. 

Total net tuition and revenue grew beyond what the finance team had budgeted, thanks to the larger-than-average number of students that arrived at Fordham last fall, said Hirst. The fiscal year budget also benefited from federal COVID-19 relief, higher graduate school tuition and fees—specifically in the Gabelli School of Business and the Graduate School of Social Service, lower undergraduate discount rates, and lower health insurance premiums, she said. 

“This budget was built on a series of reductions in expenses that enabled us to stabilize the budget and have in-person classes and students in dorms and on our campuses in ways that we haven’t been able to experience in the prior two years. We end this year with a positive operating result that is $3.2 million,” said Hirst. “It’s not a very big number when you think about us being a half-a-billion dollar enterprise.”

A New Budgeting System

The fiscal year budget that begins this July will be unlike any other budget in Fordham’s history, said Hirst and Milowski. This new system—an all-funds budget, which the finance team has been building for more than three years—will include funds that haven’t been historically included in the operating budget. The all-funds budget will incorporate direct donor contributions and government grants in addition to the traditional operating budget. In other words, it will reflect all sources and uses of the University’s resources, said Hirst. 

“Direct contributions and grants are important revenue sources for us. They’re not huge, but they’re critical, and acknowledging them in our operating budget going forward will show our complete financial picture and allow for appropriate budgeting controls to be in place in those areas,” Hirst said. 

The Impact of Inflation on Student Tuition

One of the most critical drivers in the upcoming budget is inflation, which has been driving significant increases in tuition rates across the country, said Milowski.

Next year, Fordham will have an undergraduate tuition rate increase of 4%. Milowski said this is significantly lower than the most recent consumer price index, a widely used measure of inflation, which rose to 8.3% in April. Milowski pointed out that in the prior academic year, there was no increase in undergraduate tuition rate. He also noted that the difference between “sticker price” and net revenue per undergraduate full-time equivalent student shows that students save a significant amount of money through financial aid. 

“We’re giving most first-year incoming undergraduate students a 50% reduction off of their sticker price,” Milowski said. “We believe it to be very important for our mission, and we always wish that we can do more. But as Martha pointed out, there are so many pressures that are pushing us in different directions, that this is the place where we believe we can arrive at in a financially responsible way.” 

Combating Inflation by Increasing ‘Special Endowment Payout’

Next year, Fordham will also withdraw nearly $6 million from the portion of the endowment that supports the operating budget in order to close a substantial gap between anticipated revenues and expenses.

While crafting the annual budget, the University worked to close a $30 million gap between anticipated revenues and expenses through multiple actions, including refining enrollment and financial aid projections as well as increasing unrestricted fundraising. These efforts brought the budget 80% of the way toward closing the gap. The “special endowment payout,” will close that final gap, said Hirst. 

Hirst added that this is a temporary measure and an unusual step, but one that reflects the reality of today’s world.  

“In a year when we lose the federal funds we’ve been relying on and when inflation is climbing as it is, those funds from the endowment became necessary,” Hirst said. 

Maintaining an Affordable Education for Students

In conclusion, the fiscal year 23 all-funds budget proposes total revenues of $698.2 and total expenses of $698.2, said Fordham’s finance team. The principal drivers of revenue are forecasted to be the net undergraduate tuition revenue increase of $7.4 million, as well as an expectation of full housing occupancy, resulting in $11.3 million. The principal drivers of expense increases are salaries and benefits, the additional costs associated with operating the new campus center totaling $9.3 million, and a larger-than-normal increase in general expenses in anticipation of high inflation. In addition, the budget has a built-in inflation factor and a contingency budget of $5 million, which can aid in unanticipated expenses, said Hirst.

The budget is developed to manage the University’s financial resources so as to maximize their use and ensure we are investing them in the best ways to deliver on the promise of a Fordham education, said Hirst, while at the same time seeking to keep that first-rate educational experience as affordable as possible to students and their families.

“We’re Fordham University,” said Hirst. “We’re not going to do more in that regard than we absolutely have to, to be able to maintain the institution and grow in positive ways.” 

A full recording of the Spring 2022 Budget Forum is below: 

“The uncertainties that existed then rolled out in unanticipated ways throughout the course of the year, and some of them still pertain today. But, on balance, when we look back at fiscal year 21 from a fiscal point of view, we are very gratified by how well Fordham did,” said Martha K. Hirst, senior vice president, chief financial officer, and treasurer.

Several factors played a part in the positive assessment, Hirst said during the Zoom forum, which was attended by more than 300 members of the University community. Revenue from tuition was higher than predicted, even as the University increased the amount of financial aid it distributed. This was attributed to a higher-than-predicted undergraduate enrollment.

Another significant factor was an increase in housing revenue. Hirst noted that when the University set the budget, it did so under the assumption that campus residence halls would only be occupied half the year. In fact, Fordham was able to welcome students back to campus in the fall of 2020 for the whole school year.

Revenue from parking, conferences, and third-party rentals of campus facilities dropped, but government aid—chiefly from the Higher Education Emergency Relief Fund (HEERF) that was part of the American Rescue Plan passed by Congress in March 2020— helped cover a $13.2 million shortfall. That $13 million was the third of three portions, or tranches of funds the University received, for a total of $41.6 million.

In the end, revenue for the fiscal year 2021 was predicted to be $592.9 million but was actually $617.7 million.

“All in all, a combination of better-than-budgeted enrollments, more housing revenues, and federal stimulus money gave us an unanticipatedly strong revenue performance,” Hirst said.

However, expenses also rose by $17.4 million more than what had been budgeted. Some of the increase came from salaries and wages, as budgeted labor reductions were not carried out. Other increases came from higher meal costs due to students being on campus and COVID-19-related safety expenses. The latter, Hirst noted, was addressed by the budget’s contingency fund, which for the fiscal year 2021 totaled $13.5 million.

“It is a reflection of how important it is to have a contingency line in any operating budget, for unforeseen circumstances,” she said.

Ultimately, the University ended up $7.9 million in the black.

“That is an excellent outcome for us, given all that we encountered last year,” Hirst said.

Looking to the Future

When it comes to this year, Hirst noted that the biggest source of good news continues to be on the enrollment side, as this year’s first-year class is 750 students larger than the year before, which bodes well for tuition revenue. This is predicted to be offset by higher costs for teaching salaries, as well as the fact that the funds from HEERF will have been spent. Nicholas Milowski, vice president for finance and assistant treasurer, noted that the HEERF funds enabled Fordham to shore up its finances and avoid what would have been a shortfall in the fiscal year 2022 of nearly $10 million.

All told, total revenue for the fiscal year 2022 is forecast to be $671.7 million, while total expenses are forecast to be $668.7 million.

“This is a balanced budget at still a more modest level of expenditures than several years ago because we are working our way back from the pandemic, and we still have a lot of unknowns. We’re not back to normal yet,” Hirst said.

Travel and meeting expenses are a good example of the way the budget is slowly improving. Milowski noted that the line item, which plunged to $1.6 million in the fiscal year 2021 from $16.3 million in 2019, will dramatically rise again this year, but only to $10.2 million.

“We do recognize that it is important and that it is mission-critical. We want everyone to understand that we are restoring it as is absolutely necessary, but as you can see, we are still not able to anticipate or expect the same level of expenditure that we would in a normal year, which for us was three years ago,” he said.

Outlook for 2023

Inflation is a big concern for the future, and although she said it is expected to ease by this time next year, Hirst said that there are already plans to tap the contingency fund to cover expected increases in costs. One cause for optimism is the fact that Fordham is well-positioned to deal with rising energy costs.

“We have some utility contracts that are locked in for another year or so, so we’re going mitigate some of the utility increase that we otherwise would have, and that’s a credit to our facilities and administration team to have anticipated that,” she said.

One new cost that is expected to arrive is the operating expenses for the new campus center on the Rose Hill campus, which are estimated at $10.8 million a year. Undergraduate tuition, which was frozen during the pandemic, will need to be addressed as well, as the federal stimulus dollars that enabled Fordham to hold off on an increase will not be available again.

“We’ll continue to support students with significant financial aid, but there doesn’t seem to be a university or college around that isn’t raising tuitions this year, especially after freezing the undergraduate tuition rate, as Fordham did,” said Hirst.

“It’s one of the realities of the time we’re in.”

Educating for Justice

Through it all, Milowski said that all decisions will be based on Fordham’s current strategic plan, titled Educating for Justice. Major priorities in the plan include educating students as global citizens & transformative leaders for justice in the innovation age; excelling across the natural and applied sciences and allied fields to promote social change and equity; and cultivating a diverse, equitable, inclusive, caring, and connected community that promotes each member’s development as a whole person.

He cited the University’s new Ph.D. in computer science as an example of a development driven by Fordham’s strategic plan. Hirst echoed him, noting that “the lion’s share” of government-sponsored research is in STEM disciplines.

“It is exciting to contemplate that we can begin to grow STEM initiatives at Fordham, not only to attract dynamic students and faculty but also that there might be greater opportunities to compete for some government-sponsored research opportunities,” she said.

One of the brightest developments of Fordham’s financial picture is its endowment, which passed $1 billion for the first time in history this year. This amount is on par with Fordham’s peer and aspirant schools and bodes well for the future.

“It tells the outside world about our fiscal health. The strength of it helps us enormously when we’re going to borrow money, such as for the campus center, or to refinance some of our bonds,” Hirst said.

“Everybody at Fordham wins when we have a strong endowment.”

The full recording of the fall 2021 budget forum is below:

“We’ve navigated a path through the woods, but we are not out of the woods yet,” Martha K. Hirst, senior vice president, chief financial officer, and treasurer, told more than 300 members of the University community over Zoom. 

No Employee Furloughs or Layoffs

At the beginning of the pandemic, Fordham quickly pivoted from its original plans for the 2021 fiscal year and explored more than 15 possible scenarios based on two critical factors—loss of revenue from enrollment and on-campus student housing. The University ultimately managed more than $100 million in revenue loss and expense reductions through a series of budget actions, including a hiring and salary freeze and a temporary suspension of retirement match contributions for employees, said Hirst. But Fordham did not lay off or furlough a single employee, she added.

With two months left before the end of this fiscal year, Hirst and the finance team have closely monitored the difference in revenue and expenses between the budget adopted at the beginning of the pandemic and the current situation. Several factors, including higher-than-budgeted undergraduate and graduate enrollments, will generate $14 million more in revenue than budgeted. Although Fordham incurred $10.1 million more than anticipated in expenses, including student financial aid and COVID-19 operating costs, and will incur unplanned expenses for events like in-person graduation ceremonies over the next two months, the University’s likely $4 million operating margin is still “remarkable,” said Hirst. 

“I know it’s remarkable because I talk to fellow CFOs at other institutions and the rating agency teams who are rating our bonds,” Hirst said. “We are an unusual institution in having managed through as well as we did.” 

A 2022 Freeze on Undergraduate Tuition Rate and Increased Student Financial Aid

The operating budget for the upcoming fiscal year, which begins on July 1, is expected to benefit all members of the Fordham community. Benefits for Fordham students include two free summer courses for qualifying undergraduates; a freeze on the undergraduate tuition rate; federal stimulus funds to alleviate economic hardship; increased state aid to student recipients of TAP, HEOP, STEP, and CSTEP grants; and enhanced online programs for graduate and professional school students. For faculty and staff, benefits include the resumption of the retirement plan contribution match in April—three months earlier than originally anticipated—and, likely, modest salary increases.

To help students with affordability, there will be no undergraduate tuition rate increase across three undergraduate schools: Fordham College at Rose Hill, Fordham College at Lincoln Center, and the Gabelli School of Business. Some graduate schools—the Gabelli School of Business, the Graduate School of Education, and the School of Law—will have modest percentage increases, ranging from 2 to 3%, due to their unique needs and markets, said Hirst.  

The upcoming budget will also provide approximately $11 million more in student financial aid than this year, said Hirst. This fiscal year, Fordham provided $247 million in financial aid; next year’s budget includes $259 million. It is also expected to aid diversity, equity, and inclusion initiatives, said Hirst. 

“The most important way this budget invests in diversity, equity, and inclusion is in the financial aid budget: to be able to attract students of color to Fordham and recognize financial needs,” Hirst said. “While incoming first-year student deposit activity is strong, our enrollment team will be able to tell us more through the early summer as enrollments finalize. But the early picture suggests that the efforts that that team has made in attracting more students of color—particularly Black and brown students—are significant.” 

These positive projections are attributed to an expected boost in revenue from student housing and food services of about $35 million in the upcoming year from students who are choosing to attend the University full time and in person, said Nicholas Milowski, vice president for finance and assistant treasurer. In addition, a significant infusion of federal funds will provide financial resources to augment student financial assistance, as well as manage the costs of maintaining a safe and healthy environment for the campus community and surrounding neighborhoods.

‘Good News’ in a Challenging Year

Hirst and Milowski stressed that nothing is certain in the pandemic, even as the percentage of Fordham community vaccinations grows. There are several key milestones in the upcoming fiscal year, including the fall and spring student censuses, which provide student enrollment numbers and the final numbers for student tuition and housing bills. But there is reason for optimism, said Milowski. 

“We have seen some good news,” he said, “and we are happy about the prospects for this upcoming academic year.”

The finance team’s five-year forecast from 2022 to 2026 predicts that overall financial recovery will take some time. There will be several challenges ahead, including international travel limitations and community vaccination coverage. It is also likely that, with the continued momentum around diversity initiatives, student financial aid, and other initiatives, expenses are expected to increase at a faster pace than revenue over the next five years. In addition to recovery, it is critical that Fordham focuses equally on continual innovation and advancement in ways that will drive revenue growth and advance strategic initiatives, said Milowski. 

The University’s ability to manage the pandemic’s extraordinary fiscal challenges demonstrates that it is capable of making a full recovery, said the finance team. But they emphasized that the pandemic is constantly evolving, and it is important to stay versatile and prepared for any situation, positive or negative. 

“As we end the current fiscal year and begin a new one, we will proceed with care and a spirit of renewal,” Hirst said, adding that there will be another budget forum this fall. “We are excited to welcome back our students, to collaborate with colleagues across the University, and to explore new initiatives while exercising the same fiscal discipline that successfully brought Fordham through one of the most challenging years in its history.” 

The full recording of the spring 2021 budget forum is below:

Last week the chair of the Board of Trustees and I wrote to you to share with you the news of the University’s decision to temporarily suspend its contribution to the faculty and staff retirement plan from now till 30 June 2021. As some of you may know, negotiations with the Faculty Senate, Local 810 and Local 153 regarding that action and the state of the budget began in mid-September. Every pay period that passed without an agreement from all three groups reduced the amount of money saved by $800,000. Therefore, the University had to act sooner rather than later to close the substantial budget gap with which it is wrestling during the current difficult fiscal year. I write to you today to give you more background on our budget challenges, our priorities and our planning.

As I shared with you in the State of the University Address that I delivered in early September, Fordham initially faced a $105 million budget shortfall this year as a result of a number of factors, including additional costs related to its efforts to respond to the health and safety challenges caused by COVID-19, a significant decline in enrollment (especially on the undergraduate level), a corresponding decline in the number of students in University housing, and an increase in the number of requests for enhanced financial aid that we received from students whose families suffered substantial declines in income as a result of the pandemic. To close that significant gap, the University took steps that we believed would preserve the jobs of all of our faculty and staff. We froze salaries and hiring, and offered a voluntary separation program to members of the clerical and administrative staffs. In spite of these efforts, however, a multi-million-dollar gap remained.

The University had two hard alternatives from which to choose to close that gap: suspending the University’s retirement contribution for the last three quarters of the current fiscal year; or furloughing or laying off members of our faculty and staff. We believed, and continue to believe, that the second option would fall disproportionately on the most vulnerable members of the University’s workforce. Aside from being counter to Fordham’s ethos, doing so would weaken our ability to carry out our core mission, and further reduce our ability to attract students in a highly competitive higher education climate.

Faced with this difficult decision, and the need to balance the budget through judicious cuts to expenses, the University leadership decided that it would be more compassionate to temporarily suspend the retirement match than to introduce University-wide layoffs or furloughs at this time. In our conversations with the Faculty Senate, we stressed over and over again that the Board and I hope and intend to restore the withheld funds if and when the University’s finances are back on firm footing. To keep you abreast of the efforts that we will be making toward that goal, we will hold budget forums on both campuses each semester to update the Fordham community on our operating results and financial outlook.

I have heard four broad questions in response to the facts outlined above, why can’t the University:

• use the contingency fund?
• commit to repaying the retirement fund, with interest, over a set term?
• run a deficit during this emergency?
• spend money from the endowment?

The answer to these questions, and others like them, is stark: because we do not know yet how bad the pandemic-related crisis will be. We can, however, be reasonably certain there will be no V-shaped recovery for the University, not least because we enrolled a smaller-than-average first-year class this year, and our sense (based on the application flow that we are seeing during the current admissions cycle) that we will be lucky to match even that smaller entering cohort in the Fall of 2021. Since more than 90 percent of the University’s income is from tuition and other student sources, that means we are most likely looking at several years before our revenue returns to 2019 levels.

That, of course, assumes the pandemic will be fully under control by fall 2021. The truth is, we have entered a tunnel the length of which we do not know. We cannot predict when we will see full daylight again, because the course of the pandemic and people’s response to it are unknown, and at the moment, unknowable. With regard to the four questions I have heard raised in the course of the past few weeks, let me offer the following answers:

• The contingency fund is, for all practical purposes, the COVID-19 fund. We anticipate expenses for 40,000 more tests; the continued costs of ongoing COVID-19 risk mitigation efforts at our campuses; another semester (at least) of tent rentals at Rose Hill and testing centers at both campuses; and extra per diem salaries for testing and student health care.
• The University can’t commit to a set term for repayment of the retirement match, because we don’t know when there will be sufficient funds in the budget to do so.
• Likewise, it would be irresponsible to carry a deficit from this year into the future, when our financial challenges may not subside quickly.
• The vast majority of the endowment (not a single pool, but more than 1,000 separate accounts) is restricted by contract with our donors to the purposes for which they donated, largely financial aid and endowed chairs.

There are no additional funds nor other pools of money from which to draw. The University has already released more than 40 administrators and staff through a voluntary separation plan, and pared non-personnel items in the budget to essential levels necessary to preserve the quality of the student academic experience. I assure you that we carefully considered all available options before we made the difficult decision to suspend the University’s retirement contributions for the remaining two-thirds of the current fiscal year.

Few of us at Fordham can recall a more challenging time for the University, for higher education, and for the nation. I know how difficult this moment in our history is for many of you. As I enter my twenty-fourth year in your midst, however, I also know the depth of your love for and commitment to our beloved Fordham. And how could I not? I have seen and experienced your generosity of spirit over and over again at every turn.

Therefore, I firmly believe that just as we have faced and overcome the challenges of the past, and especially those that have come our way in the course of the past eight months, we can and will rise to the challenge of this moment. We can and will rise to the present challenges in the way that we at Fordham have always faced adversity and challenge: through our sense of shared purpose, our resilience, and the knowledge we are all shouldering the burden together to help Fordham deliver on its promise of a transformative education for our students.

Sincerely,
Joseph M. McShane, S.J.

Due to grave revenue shortfalls in the University budget associated with COVID-19, on Tuesday, October 27, the Executive Committee, acting on behalf of the Board of Trustees, directed that the University suspend its contribution to the University’s retirement plan effective for the November 6, 2020 payroll and extending through June 30, 2021. Even as it took this step, the Executive Committee expressed its firm hope/intention of restoring the money to the retirement plan when the University’s finances are back on solid footing after the crisis of the pandemic has passed.

As you know, when we entered the 2021 fiscal year the University faced a budget gap in the amount of $105 million. As you may also know, as a result of vigorous cost-cutting, the University was able to trim approximately $96 million from that figure. Even after taking these actions, however, the University still faced a stubborn $9 million gap in the budget. The Board of Trustees has taken this step in an effort to minimize other actions that could have a more direct effect on the core mission of the University. These actions could include faculty, administrator, and staff furloughs—actions that many other colleges and universities, including 16 of the 27 AJCU institutions, and New York schools including Barnard, Syracuse, and Rensselaer, have already taken. (Note the New York Times article “Colleges Slash Budgets in the Pandemic, With ‘Nothing Off-Limits,’” published on Monday.)

There are no means to accurately predict the course of the pandemic, nor the effect it will have on Fordham’s operations and finances in the months to come, even after there is an effective and universally available COVID-19 vaccine. However, the University continues to closely monitor every development that could have an impact on its community and mission, both now and in the future.

The Board of Trustees and the administration deeply appreciate the dedication, resilience, and resourcefulness of the faculty, administrators, and staff in serving our students during what we know is a very stressful period. We are committed to meeting Fordham’s educational mission while supporting our faculty, administrators, and staff as we navigate this difficult period together.

Sincerely,

Robert Daleo
Chair, Fordham University Board of Trustees

Joseph M. McShane, S.J.
President

We are all aware of the economic impact the COVID-19 pandemic is having on the nation, the region, and higher education.  Fordham, like other institutions of higher learning, is dependent on tuition, as well as executive and continuing education, as its major source of funding.  Enrollment projections for the Fall semester are uncertain.  While the extent of the economic impact is not yet fully known, Fordham has begun planning for a range of scenarios.   Therefore, the University has had to take a renewed approach at a realistic budget for next year, and find cost-cutting measures.

Adjustments to the 2020–2021 Budget – Guiding Principles

• Fordham will focus on strategies that enable us to retain all of its employees.
• The culture and mission of the University must be preserved.
• Budget adjustments should not undercut Fordham’s capacity to deliver on its strategic plan.

While many decisions and choices will come into sharper focus in the future, it is already clear that some actions must be taken immediately to align Fordham’s spending with the decline in revenue.

• With the cooperation of the Faculty Senate and the Unions, the University plans to implement a salary freeze for fiscal year 2021
• The University will be instituting a University-wide hiring freeze

We are still working to obtain a more complete picture of the financial conditions of the University, and we will be scrutinizing the FY21 budget to determine what other steps may be necessary to respond to the financial impact of the pandemic on our operations. We will continue to communicate with you as more information becomes available.

We recognize the strain and the disruption that COVID-19 has caused for every member of our community.  Challenges will continue to confront us in the days ahead, but we are confident that, together as a community, we will adapt to meet these new challenges as they arise.

We thank you for your flexibility, patience, and teamwork. Together, we will find our way through this crisis.

Sincerely,

Kay Turner, Esq., SPHR, SHRM-SCP
Vice President for Human Resources

The video above is from Hirst’s presentation in the Moot Courtroom at Fordham Law School on May 9. The slides from that forum can be found here.