Brendan W. Clark ’21
Trinity College has announced that, as a result of the COVID-19 crisis, the College is expecting appreciable financial losses in current and forthcoming years, with a loss of between $7 and $10 million projected for FY 2020 alone. In a separate announcement earlier in April, the College indicated that the endowment had suffered a loss of 20% in March, representing an estimated $120 million reduction.
The announcement from President of the College Joanne Berger-Sweeney Wednesday afternoon indicated that the crisis will have a serious and negative impact on the College’s traditional revenue sources this year and next.
Berger-Sweeney stated that, for FY 2020, she expects a “significant (multimillion dollar) deficit,” which is “estimated at more than $7 million.” Berger-Sweeney added that the College hopes to mitigate this loss via a broad approach which includes utilizing “federal stimulus, reduced spending, and other savings.” Berger-Sweeney added that even with these changes, Trinity anticipates severe financial losses. In the immediate period, she added that the College will use its “limited cash reserves to fill that gap.”
The College, on the recommendation of the Planning and Budget Council, is considering its losses “over a 15-month period rather than our usual 12-month fiscal year.” Berger-Sweeney stressed in her email that “it is clear that all of our [the College’s] traditional revenue sources are likely to be significantly and negatively impacted by this pandemic.”
In an email to faculty and staff on Mar. 31, Acting Dean of the Faculty Sonia Cardenas and Vice President for Financial Affairs Dan Hitchell added that the budget shortfall would be “between $7 million and, on the high end, $10 million” for FY 2020. The most significant factors for that shortfall, added Cardenas and Hitchell, were “student room-and-board refunds and a projected shortfall in gifts.”
Refund amounts for room and board have not yet been announced and were taking longer than expected, according to an email from Hitchell on Friday, Apr. 10. Berger-Sweeney had previously indicated in a town hall last week that credits would be issued by the end of last week.
The President added that the College is likely “to have substantial losses” in FY 2021, though continued that at this time she cannot provide an “accurate estimate” due to the variability of COVID-19. The pandemic’s effects, Berger-Sweeney continued, will “significantly affect our financial resources for many years to come.” Despite the variability, she added that she “knows our next fiscal year will be more challenging than our current fiscal year.”
According to the Mar. 31 email, Trinity’s endowment had lost over 20% of its value by the end of March. That would indicate an endowment loss of at least $124 million, assuming the endowment has not grown since 2018, the most recent year for which data was available. Trinity is not alone in this loss, according to Cardenas and Hitchell, who added that “all colleges are facing remarkably similar challenges.”
Berger-Sweeney cited several actions the College has taken and may take in the next several months to further mitigate the financial impact of COVID-19. These include the suspension of employer contributions to employee retirement plans, beginning Apr. 1, 2020 and continuing through June 30, 2020. Employees will continue to maintain the ability to individually contribute to their plans. Berger-Sweeney also indicated that the three-month suspension of retirement benefits will impact the “most highly compensated individuals,” who “will lose the largest contributions from the college.”
While not announcing any salary cuts, Berger-Sweeney indicated that any future decision will be “progressive…affecting the highest paid employees the most.” Berger-Sweeney also committed to a “5 percent salary reduction, effective now through June 30.” The Tripod’s calculations for the President’s three month salary waiver, based on FY 2018 data from Trinity’s IRS 990 filings, would place the cut at approximately $7,600, out of total reportable compensation of $732,658. The Tripod clarified this with Chief of Staff to the President Jason Rojas, who indicated that the reduction is “relative to compensation for the remaining three months of the fiscal year” and does not represent a 5% reduction on her total annual salary.
Berger-Sweeney added that her 5% contribution will “be on top of any sacrifice that I ask from others.” She stated that the decision to reduce employee benefits “seemed a better option…than reducing salaries or instituting layoffs, or furloughs.” This decision, she added, permits employees to “preserve their own cash and maximize their personal financial flexibility.”
The Tripod previously spoke with Rojas on the possibility of broad salary cuts. Rojas indicated that the College’s Planning and Budget Council and the president’s cabinet, with the Board of Trustees, are “discussing a number of possibilities and planning for a wide variety of scenarios.” Rojas added that at that time it was not “appropriate to comment on any specific decisions that may or may be made” out of respect for the “budget making process and for all stakeholders involved.”
Trinity has not laid off any employees and has not reduced pay for staff as of Apr. 15. Berger-Sweeney’s Wednesday email added that recent decisions are made now “to preserve, to the best of our ability, our Trinity College workforce through June 30, 2020.” Berger-Sweeney did, however, reference anxiety among employees about future changes to employment after June 30, which she added “could mean temporary furloughs or permanent layoffs.”
Rojas told the Tripod that the College has “maintained staffing levels,” adding that “most employees, both faculty and staff, are now working remotely.” The College’s facilities provider—ABM—has also so far maintained staffing levels. Chartwells, the College’s food service provider, “made decisions specific to their business to operate at staffing levels that correspond to the level of services they provide,” added Rojas. The Tripod previously reported that Chartwells had laid off some employees and agreed to provide health benefits for those impacted through the summer.
Additional mitigation measures, according to the email from Cardenas and Hitchell, include “refinancing current debt and taking buildings offline in the short-term.” The Mar. 31 email also affirmed that Trinity “remains quite fortunate from a financial perspective,” having a “larger endowment than many colleges, a strong balance sheet, and robust cash reserves.” Trinity’s cash and cash equivalent reserves, as of June 30, 2019, were $16,108,715, according to the College’s most recent consolidated statement.
Berger-Sweeney’s Apr. 15 email also announced a hiring freeze on new employees through June 30, 2020 and the suspension of capital projects “not related to immediate, life-safety matters through June 30, 2021.” The hiring freeze had been in effect since the end of March, according to Cardenas’ and Hitchell’s email.
The President added that the College would not aim to “withdraw funds from our endowment to cover anticipated shortfalls.” She added that the “endowment is a strategic asset,” designed to provide a “steady, reliable income stream to support specific activities.” While she did not foreclose the possibility of the Board of Trustees drawing “some additional funds from the endowment in the future” to alleviate extraordinary costs, Berger-Sweeney stressed that “spending decisions today must be balanced against the needs of tomorrow.”
Berger-Sweeney added that Trinity “will look different after this pandemic” and that, despite this, we are “all Trinity, and we will create our bright future together with compassion and care.”