To: Wellesley College Faculty and Staff
From: President Paula A. Johnson
Re: Confronting the Financial Challenges of COVID-19
Date: April 14, 2020
The speed and magnitude of the COVID-19 pandemic’s spread have been devastating across the United States and around the globe. In the face of this crisis, we have seen repeated acts of strength and resilience that give us faith in the humanity of our world.
It has been just over a month since Wellesley made the decision to move to remote instruction. In the intervening weeks, the actions our community has taken to protect people’s health and deliver an excellent education have been nothing short of heroic. Faculty, staff, and alumnae have rallied to translate our academic and student life programs to a virtual environment, to engage and support our students during this difficult time, and to reimagine the way we pursue the mission of the College.
We continue daily to monitor and respond to the evolving pandemic crisis in real time. Yesterday, we shared that we have made the difficult decision to operate our summer programs remotely. While we face many unknowns in the months ahead, we have begun planning for a range of scenarios for this fall and beyond.
What is clear from all of this work is that we will have to make consequential decisions with the best possible, yet imperfect, data. It is equally clear that this unprecedented crisis presents serious financial challenges to the College on several fronts:
- The pandemic, and our vigorous response to it, has had a significant negative impact on our operating budget. Increased costs associated with transitioning to remote instruction and decreased revenues as a result of room and board refunds and the cancellation of summer programs, together with our commitment to continuing to provide full salaries for administrative and union staff this semester, have created a deficit of $5 million to $6 million in our 2020 operating budget, even taking into account the limited federal support we expect to receive. As we look ahead to the next fiscal year, we will continue to experience financial losses related to the pandemic, and we will need to take concerted steps to address them.
- The College is likely to experience a decline in philanthropic support. Prior to this crisis, we were enjoying a strong year in charitable giving. However, philanthropy tends to decline during steep economic downturns, and recovery in philanthropy tends to trail behind economic improvement. We need to be prepared for decreased charitable giving.
- Our endowment has suffered a sudden and significant decline in value. The turmoil in financial markets and continued volatility will substantially reduce the availability of resources we draw on for our operating budget in the years ahead.
- Our students and their families are experiencing the painful effects of a near collapse in our national and global economy. The economic fallout and unprecedented increase in unemployment are certain to increase the financial aid needs of many of our students and their families, including the incoming class.
Wellesley enters this emergency well-prepared to meet multifaceted financial challenges thanks to the strength of our endowment, the generosity of our alumnae and donors, and the hard work we have done as a community over the past several years to achieve greater financial sustainability. However, it is clear that we will need to take significant steps immediately to confront looming budgetary shortfalls, while planning for longer-term structural changes to address the sustained financial impact.
As we confront these challenges, we will be guided by our values and the belief that Wellesley must emerge from this experience stronger, more resilient, and better prepared to advance our mission.
Our decision-making will be based on these key principles:
- We will maintain an excellent academic program and residential experience.
- We will uphold our commitment to inclusive excellence, supporting the financial needs of our students and being attentive to the economic circumstances of our community.
- We will act in the spirit of shared sacrifice and a willingness to embrace change.
- We will bring urgency, optimism, and transparency to this process.
As we move forward, the College’s Senior Leadership will lead our financial planning. We will consult with appropriate standing committees, including the Budget Advisory Committee. We will also create new working groups to formulate specific aspects of our response, including contingency planning for the next academic year. The Board of Trustees will partner with Senior Leadership to ensure the College’s financial sustainability and overall well-being both today and into the future.
While our response will evolve over time as new information about the pandemic’s impact becomes available, we are taking the following steps now to address the most immediate financial challenges:
- I will be taking a voluntary pay reduction of 20 percent through December 2020. Provost Andy Shennan and all members of Senior Leadership will take voluntary pay reductions of 5 percent to 15 percent for the same period.
- We are implementing a hiring freeze for faculty, administrative, and union positions through December 2020. Any exceptions to the freeze will require review by the provost’s budget committee and the approval of the president.
- We are implementing a salary freeze for faculty and staff. This means we will suspend all annual increases for FY21, except for faculty promotions in rank, raises governed by a collective bargaining agreement, and salary adjustments for certain non-tenure-eligible faculty. This includes suspending this year’s merit review process for tenured faculty. While we regret needing to freeze salaries, it is the only prudent step to take given the expected continued impact of the pandemic into the next academic year.
- While the College will remain open through the summer, a minimal number of students will be on campus and all programming will be remote. As a result, we anticipate instituting temporary part-time and full-time furloughs in some areas of the College. Employees will be able to use accrued vacation time to supplement pay during this period. Members of Senior Leadership will work with managers to determine furloughed positions while ensuring the necessary work of the College continues over the course of the summer.
- We will suspend “summer Fridays” this year. Those in positions that are not furloughed will be asked to work regularly scheduled hours during the summer. With approval of managers, vacation time can be used.
- Administrative staff will be required to schedule and take some specified amount of their accrued vacation time before June 30. Human Resources will be providing additional details to administrative managers later this week.
- We are asking all academic and administrative departments to restrict discretionary spending to the absolute minimum.
I recognize that these immediate steps involve real sacrifices, but they are essential to stabilize our current financial situation. As we get more clarity on the evolving impact of the crisis on the College, we will take additional steps as needed to improve Wellesley’s financial health. I will continue to communicate with you with honesty and transparency as we learn more and our response evolves.
Thank you for your understanding and fortitude during this difficult time. While much about the future remains uncertain, it gives me comfort and confidence to know that we will face this crisis together, as a community, united in our determination to sustain the 145-year mission of Wellesley College.
I leave you with my sincerest wishes for good health and safety for you and your loved ones.
