Colleagues,
There are several challenges facing higher education and Viterbo University. Like many small private higher education institutions, Viterbo is facing enrollment challenges and escalating operational and personnel costs in the wake of the pandemic and the ongoing decline of graduating high school seniors, often referred to as the “demographic cliff,” throughout the Midwest. For the current fiscal year ending June 30, 2024, we are projecting a deficit of approximately $5.5 million, up from last January’s projection of $2.6 million. Quasi-endowment funds will cover this deficit. We have managed a deficit budget for the last two years and project a deficit in 2024-2025.
There are several factors that account for the increase in the projected 2023-2024 deficit. These include lower than anticipated enrollment and retention, lower than expected student fee revenue, higher than anticipated tuition discounts (including from Pell Grant eligible students, teach out agreements from closed institutions, and higher use of employee tuition remission), higher contracted services costs (primarily food service), and increased healthcare costs.
Given the carry-over effects of a higher than anticipated 2023-2024 deficit and enrollment uncertainties, the leadership team and I have worked diligently over the last few weeks to adjust the budget for 2024-2025. This was achieved by reducing personnel expenses $1.9 million though elimination of certain open positions, freezing others, reducing some existing positions, eliminating our varsity Esports athletic program, and closing the Iowa Center in Des Moines. While this process has been difficult and challenging, it is necessary to scale our operations to current enrollment numbers. Following the stewardship example of our founders, the leadership team and I will continue our work through the summer to refine the budget and make necessary adjustments as needed.
The changes we are making are intended to ensure the sustainability of Viterbo in a rapidly changing environment while preserving our commitment to student success. In the last 5 years, overall student enrollment has decreased by 13%. The two-semester average of 2,551 students in 2018-2019 has decreased to a two-semester average of 2,226 students in 2023-2024. This decrease has necessitated an adjustment in our workforce to serve a smaller student body. This reduction in personnel expenses freezes two and eliminates 25 positions, impacting 13 employees and 14 vacant positions, effective June 28, 2024. These 27 positions account for approximately 3% of Viterbo’s current full- and part-time employees (excluding adjunct faculty). Recognizing the impact these decisions may have on our community, I want to assure you that we have worked hard to minimize the impact on our employees.
While numerous challenges exist in today’s higher education environment impacting Viterbo and other private universities, I want to reassure you that Viterbo remains financially stable - we have a healthy unrestricted endowment and little long-term institutional debt. This along with our mission, core values, and strategic plan will allow us to remain financially responsible. Viterbo University has been a leader in Catholic, Franciscan higher education for 134 years, and we will continue to prepare students as faithful servants and ethical leaders for generations to come.
Pace e Bene
“Peace and All Good”
Sincerely,
Rick
