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April 7, 2020

Dear members of the Mount Holyoke community,

The coronavirus pandemic has brought many changes to our campus and our lives over the last month and, with the peak of infections expected in Western Massachusetts in May, we are still prioritizing safety, wellness, and physical distancing, even as we turn our attention to important questions regarding the future.

The COVID-19 actions that we have taken—moving to remote learning and work; continuing compensation for all employees through May 5, whether or not they are able to do their work remotely; giving premium compensation for student and staff employees engaged in proximal in-person work on campus; offering credits, refunds, emergency funding and a transitional allowance and some employment for our students—as well as the physical distancing and closures imposed by our local and federal government, as well as by leaders of other nations, all have an impact on our diverse community and on our financial circumstances. I am deeply grateful for the work of so many, and for the care and compassion that has been expressed in the course of that work.

Over this time period, we have focused on our emergency response and continuity of operations, and we must now transition to managing the consequences of COVID-19 on the College. 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.

Our Financial Situation

Mount Holyoke has three main sources of revenue: tuition and fees (which make up 60% of our operating budget), distributions from the endowment, and gifts and grants for operating purposes. A balanced budget is always our goal. With fiscal discipline, we have achieved that goal by a narrow margin for the past three years, and had anticipated that we would do so again this year.  

We are fortunate to have an endowment that has been carefully and strategically managed by an exceptional investment committee and consultative resources, and that will now be overseen by a dedicated chief investment officer who has long experience with our portfolio. While the value of our endowment increased over recent months to its highest level, the volatility of the stock market reduced its value in February and March by about 15%, and greater uncertainty and further falls are likely over the next two quarters at least. The purpose of the endowment is to provide support for future students at the same level, adjusted for inflation, as it does for our students today. This intergenerational equity is protected by financial policies that are designed to address such moments of market turbulence.  

Our current budget situation is triply challenged:

• The enrollment outlook is uncertain, dependent as it is on family circumstances; there is increased need for financial aid in a recession; there are travel and visa restrictions; and we do not know the exact duration of the pandemic or its consequences, and that may force us to adjust the start of our usual academic calendar.
• A decline in the endowment corpus has a direct impact on the amount available for spending. While we may see this as the most stable piece of our operating revenue, we should prepare for further declines in returns, as markets remain uncertain.  
• The history of giving in previous recessions tells us that, while our donors remain generous and loyal, their economic circumstances are also changed. Foundations are also impacted by a decrease in the value of their endowments, and their priorities sometimes change to meet evolving and immediate needs. Therefore, while we will continue to seek philanthropic support for Mount Holyoke’s distinctive mission, we must also be prepared for challenges in our fundraising program.

Furthermore, activities that generate additional revenue for the College are largely tied to events. As you know, all events at Mount Holyoke have been canceled through May 31, 2020. We do not know when they will resume. External organizations are canceling the conferences and seminars they had planned at Mount Holyoke this summer, and the kind of family occasions often hosted here on campus are also being postponed.

We have planned for a moment when reserves might be needed, and for investment in our strategic priorities. However, such contingency funds and strategic reserves fall far short of what a public health emergency of this scale and a recession of this magnitude may require. And so we must think about all of these possibilities as serious eventualities, immediately cutting expenses for the remainder of this fiscal year, freezing open positions, and planning (to the extent that we are able) by developing scenarios for the year ahead.

Difficult Decisions

The coronavirus has already required us to make difficult decisions. There is no certainty about the timeframe of this pandemic and its consequences—and there are no quick or easy solutions.

On March 21, we froze all open and unfilled positions for 30 days, with one or two approved exceptions in the academic division, and we anticipate that we will extend that hiring freeze through the end of this fiscal year. Wherever possible, we are looking to redeploy existing staff to support operational needs.

From now until June 30, there should be no non-essential expenditures, in order to offset the estimated cost to the College of COVID-19, a cost that currently stands at $7.6 million.

As we enter the next phase of our work, managing the consequences of this pandemic, the decisions will be even more difficult. Very soon, we will have to determine how we shall confront new budgetary challenges related to FY21 and beyond, weighing decisions about:

• Whether we will move forward with capital projects, and, if so, how we will prioritize them, including consideration of the practicalities of accomplishing them, given current constraints;
• The necessity of reducing expenditures, and what such reductions will mean for our employees, payroll, and the benefits we offer, since these expenses constitute approximately 70% of our budget; and
• How, in this moment, we will elevate mission-critical priorities and investments.

Transparency about our financial situation has always been my commitment to you, and the financial sustainability of the College is a pillar of our current strategic plan. We have a collective duty of care for the institution and its members, and now need to make timely and effective decisions in as collaborative a way as possible. We will share more in the coming days about how representatives of faculty, staff and student governance structures will be engaged in these deliberations. We welcome their participation, and 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.

The College’s leadership team and I will continue to share information via email, virtual town halls and other forums as we gain clarity on the important decisions ahead. We invite your questions and suggestions via covid19info@mtholyoke.edu. Thank you for all that you are doing, for your dedication to Mount Holyoke, and for your help and support as we navigate these uncertain times and address these financial challenges. 

Sincerely, and with my very best wishes for your good health and that of your loved ones,

Sonya Stephens
President