The president of The Catholic University of America announced on Tuesday a $30 million “structural deficit,” and has asked university personnel for ideas to generate revenue and cut costs in the coming year.
University President Peter Kilpatrick cited decreasing tuition revenue and increases in expenses as the cause of deficit spending for five of the last seven years.
Kilpatrick, who took office in July 2022, said the university has made plans to address its financial situation through budget cuts and potential revenue growth opportunities.
He also asked the university community for ideas to balance the budget for the next fiscal year, sharing a Google document as a way of gathering input.
A university spokesperson told The Pillar that “[l]ike many universities nationwide, Catholic University faces financial pressures that require decisive action.”
While acknowledging “significant challenges,” the spokesperson also noted that “administrative departments have already reduced their budgets by a combined 12%, and we have identified ways to save more than $20 million in expenses.”
The Catholic University of America’s financial reports show decreases in enrollment over the past several years, although student numbers are now starting to rise.
Financial reports also show significant new investments, totaling nearly $130 million in increased net property and equipment in recent years. The school recently opened a new nursing school building and major solar farm project.
The university spokesperson told The Pillar Thursday that those expenses were approved by the university’s board of trustees, and largely funded with donor money, apparently outside the university’s ordinary operating budget.
Still, in a Dec. 3 email to members of the CUA community, Kilpatrick said the university “faces a $30 million structural deficit that requires immediate attention.”
The spokesperson declined to comment on whether the deficit represents a threat to the viability of CUA’s operations, but acknowledged that the university has “an ongoing financial imbalance that is built into the basic operating model” and that the deficit “won’t be resolved without permanent reductions in the university’s financial obligations” — meaning wholesale, but not yet determined, budget cuts.
“The core of our financial challenge lies in the revenue we earn from tuition, which has declined by 24% since 2018,” Kilpatrick wrote.
“During this same period, our costs have continued to rise, with instructional expenses increasing by 12% and student services by 53% (this latter number includes not only student life and athletics expenses, but also enrollment management, admissions, and marketing and communications).”
“Over the past decade, we have used financial reserves and special endowment draws to maintain operations as we saw our revenues decline and our expenses grow. These reserves are now depleted, and we can no longer rely on them or large special endowment draws to address our structural challenges,” he said.
Last month, Kilpatrick announced the creation of two committees to oversee proposed budget cuts and revenue growth opportunities.
“I want to emphasize that we have already identified potential solutions that could address approximately half of our target without severe impact to our core mission,” he said.
“These include reducing our planned January 2025 salary increase pool from 4.0% to 2.5%, implementing a selective hiring freeze, and finding $8-9 million in non-personnel spending reductions.”
He added that the university is looking into avenues of revenue growth, especially in graduate studies.
“We see significant potential in developing new online master’s programs and expanding our online and hybrid offerings,” he said.
University figures show low enrollment numbers in recent years with graduate numbers being particularly hard-hit.
Overall, enrollment dropped from 5,956 total students in 2018 to 4,968 total students in 2022 – a decline of more than 16%. Graduate enrollment during this time period has dropped by 25%.
But a university spokesperson noted that this year’s total enrollment is 5,243, the second year of enrollment growth.
“The good news is that we did see a significant increase in both undergraduate and graduate applications last year, continuing the strong upward trend in interest we’ve observed over the past several years. This sustained growth reaffirms Catholic University’s appeal as an ideal place to pursue a four-year undergraduate degree or advanced graduate study,” the spokesperson said.
In his Dec. 3 email, Kilpatrick said CUA’s “undergraduate enrollment target remains stable at 850-900 students, though we must work together to improve retention and yield from our admissions pipeline.”
CUA financial records also suggest major recent investments, indicating that the university has seen a $128 million increase in net property and equipment in the last few years.
In the fiscal year ending April 2019, the university’s net property and equipment totaled $259,754,000. By April 2023, that number had risen to more than $387,907,000.
CUA’s 990 filings show more than $80 million in payments to construction companies in the fiscal year ending April 2023.
Addressing those payments, the university spokesperson said they were board approved, emphasizing that “the Board of Trustees reviews and approves all investments annually.”
“Two of the three construction priorities for the fiscal year ending April 2023 were paid for primarily with donor money. These include the new state-of-the-art building for the Conway School of Nursing — a school that is growing, and a profession that is in very high demand — and the Garvey Dining Hall — a gift from an anonymous donor that filled a longstanding need. The third priority was for deferred maintenance projects, which includes updating our historic Caldwell Chapel to ensure it is fully accessible, and code and safety improvements in many of our older buildings.”
The spokesperson also noted that the urban solar array completed this past year will generate additional revenue through the sale of solar renewable energy credits, beginning in year five of the solar facilities arrangement. That earning potential could be up to $4 million per year, the university claims.
According to a source close to the university, CUA is discontinuing its room-and-board scholarships for student “residence ministers” – a group of student ministers who live in residence halls and minister to the people who live there – and will consequently be ending its residence minister program.
Asked to confirm the discontinuation of the program, the university spokesperson said, “Campus Ministry continues to expand student engagement and leadership across campus, and it will continue to work with Residence Life to support students in the residence halls, despite the loss of room-and-board scholarships for some students.”
In his email, Kilpatrick stressed his aim for a collaborative effort in balancing the budget. He asked members of the university community to contribute ideas for cutting costs and increasing revenue.
“Our Board of Trustees stands firmly behind us and has committed to investing in our future once we address these structural issues,” Kilpatrick wrote.
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