The COVID-19 pandemic has drastically impacted governments, businesses, and individuals hit by economic repercussions of the ongoing outbreak. Loomis Chaffee’s finances are no different. The school administration expects a negative return for the endowment and less revenue from the summer program than budgeted; however, they have already begun taking measures to protect the school’s finances for next year.
As of May 24, 5,311,089 confirmed cases of COVID-19 have been reported worldwide with 1,657,212 in the United States. According to Business Insider, the national economic situation is, in many ways, worse than the Great Recession of the late 2000s: the 14.7% unemployment rate in April sits well above the 10% peak of the recession-era. On May 16, over a total 38 million initial unemployment claims were filed in a nine-week period.
Despite the global struggles, Loomis remains in good financial shape due to strong admission results and a reserve mainly used for maintaining the campus.
“Loomis went into this crisis caused by the COVID-19 pandemic in a financially strong position,” Head of School Dr. Sheila Culbert said. “We have an excellent admit rate and yield, our reputation is strong, we have outstanding faculty and staff, and we provide an excellent education. We also have a reserve for replacement to take care of our buildings. All of which positions us well for the current situation,” she added.
Along with the expected endowment decrease and a loss in summer program revenue, the school has also repaid $1 million in tuition refunds and credits for the spring term. Boarding students who have applied for tuition rebates received $2,500 while day students received a rebate of $750.
In order to protect next year’s finances, the school has taken the following measures: implementing a hiring freeze (in other words, not hiring any more faculty to fill open positions)\; reallocating money from the reserve to the operating budget\; refinancing the debt in order to lower the school’s service costs\; and reducing professional development, travel, departmental costs, and the capital budget which pays for building maintenance. The school has also decided against increasing any salaries for next year, and Dr. Culbert will take a pay cut.
There are still many uncertainties for the future. The school has not made any decision yet about tuition for the 2020-2021 school year.
“I should be clear that even in the best of times, tuition does not cover the full cost of the education we provide, and we have a lot of fixed costs,” Dr. Culbert said. “We did offer parents the option of donating their refund and credit to the school and we were pleased with the response.”
The discussion and decision-making process relies on the Board of Trustees which, along with Dr. Culbert, leads long-term planning for Loomis Chaffee’s future as an academic institution
Each year, the school prepares a balanced budget and shares it with the Board of Trustees in January and May. Then, the trustees make decisions about tuition, financial aid, salaries, benefits, the capital budget, and the draw from the endowment. Following the outbreak of COVID-19, the school and Board of Trustees discussed a range of options to bring the budget back into balance.
“Those conversations are ongoing,” Dr. Culbert said.
In the end, the financial status of Loomis will depend on the global and national economic situation. As states begin to reopen, businesses will return to normal as the economy is revitalized.