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St. Louis University to cut costs as enrollment and physician practice struggle

Students cross Grand Boulevard on St. Louis University's campus Tuesday, Nov. 13, 2018.
File Photo | David Kovaluk | St. Louis Public Radio
Students cross Grand Boulevard on St. Louis University's campus Tuesday.

Updated at 7 p.m. with additional details and comments — St. Louis University is implementing more cost-cutting measures as fiscal problems persist, even after trimming its workforce last year.

The private, Catholic university is facing a double blow of fewer students and less revenue from its doctors, resulting in a projected $30 million deficit by 2023.

University President Fred Pestello outlined the monetary challenge in an email to faculty and staff Monday afternoon, and additional details were shared with employees during a Faculty Senate meeting today.

"This is going to be one of the most trying times for the university," professor Doug Rush, president of the Faculty Senate, told colleagues.

SLU’s 12,649 enrollment is 638 fewer students than five years ago. Incoming freshman needed more financial aid than anticipated as well.

SLU is giving away $50 million more in grants and scholarships than it did five years ago — both in total aid and, in an effort to bolster enrollment, to students with lower ACT or high-school grades, according to Acting Provost Mike Lewis, flatlining tuition revenue.

The university’s vice president for enrollment left the school this month.

Making matters worse, SLU’s physician practice “saw a sudden and significant loss” of patient care revenue, while simultaneously experiencing “a sizeable increase in expenses” from the transition to a new electronic health records system, according to Pestello. The practice, known as SLUCare, is running a deficit.

An anonymous $15 million gift covered up an $8 million spending gap and staved off more draconian cuts this fall.

“Even more challenging, based on current assumptions, are our financial projections for fiscal years 2020 and beyond, with the possibility of substantial shortfalls,” Pestello wrote.

St. Louis University President Fred Pestello greets people before a ribbon cutting for a new residence hall on Aug. 12, 2017.
Credit File | Ryan Delaney | St. Louis Public Radio
St. Louis University President Fred Pestello greets people before a ribbon cutting for a residence hall on Aug. 12, 2017.

A university spokesman declined to comment beyond the president’s message.

To deal with the financial downturn, Pestello announced a hiring freeze across the college and medical practice. SLUCare is enacting cost-cutting measures while exploring ways to increase revenue.

Future cuts at the university are likely. On the table is eliminating academic programs and the faculty that teach them.

“There are going to need to be some hard decisions made for St. Louis University going forward on academic programs,” said Rush, who teaches in the College of Education.

A 2 percent annual raise for all staff and faculty could also be canceled.

SLU, celebrating its 200th anniversary this year, eliminated 120 employee positions in March 2017, at the time citing the need for a tighter budget on fewer students and less federal grant money.

The current fiscal crisis is “comparable” to 2017, Rush said, but will hurt academics more.

Previous budget cuts and restructurings happened by way of outside consultants and special committees, which faculty complain results in a lack of transparency. Lewis pledged more involvement of professors in the discussion this time.

Colleges and universities across the Midwest are facing a precarious future as demographic trends point to smaller class sizes and states decrease funding for public institutions. The University of Missouri-St. Louis, St. Louis Community College and Southern Illinois University-Carbondale have all made cuts as enrollment and funding dropped in recent years.

At the same time, SLU just had its best fundraising year ever. It collected $98.7 million total, helped by a $27 million gift from the Chaifetz family and $50 million from the Sinquefield family. It has a $1.2 billion endowment.

“Even with these financial challenges, we are a fiscally sound and resource-rich university,” Pestello told employees.

A roughly $775 million budget for the fiscal year starting in July 2019 is due around February.

Follow Ryan on Twitter: @rpatrickdelaney

Ryan was an education reporter at St. Louis Public Radio.