2021-22 Operating Budget Summary
On Saturday, September 25, 2021 the Board of Managers adopted a revised 2021-22 operating budget. The revised budget reflects actual enrollment for the fall semester and the updated endowment spending rate based on the endowment’s estimated market value as of June 30, 2021. The revised budget provides a blueprint of anticipated expenditures that will allow Swarthmore to return to normal operations as the pandemic subsides.
There are several elements to the revised budget worth highlighting:
Term Bill | Financial Aid | Endowment | Gifts and Grants | Other Income | Operating Expenses | Compensation | Benefits | Non-Personnel Expenses | Contingency | Capital Budget | Transfers | Debt Service
On-campus enrollment is projected at 1,618 for the year, with an average of 53 students expected to participate in off-campus study abroad programs. The 2021-22 cost of attendance (term bill) for full-paying students is $73,206. These costs include tuition, room, board, and mandatory fees, and represents an increase of 2.95% over the 2020–21 fiscal year.
The budget underscores the return of students to campus and Swarthmore’s commitment to its need-blind admissions policies and meeting the demonstrated need for its students. Approximately 56% of our students will receive need-based financial aid from the College, with an average award of $52,700 per aided student for 2021–22.
The 2021-22 spending rate is based on the endowment’s estimated June 30, 2021 market value. The budgeted spending-rate calculation has four components: base operations, financial aid, capital renewal and replacement, and debt interest. In order to meet the current needs of the College and to preserve intergenerational equity, the College’s spending policy is designed to maintain a spending rate between 3.5% and 5.0%.The revised operating budget assumes a spending rate of 3.65%.
The category includes annual giving to the Swarthmore Fund and federal and state support for programs. The budget for the Swarthmore Fund was changed back to the pre-pandemic level of $5 million for FY 2021–22.The expected level of federal and state support will revert to the typical level of support of $567K, with no expected changes in federal support for student work study and institutional support from Pennsylvania.
The approved budget anticipates an increase of certain line items. Revenues from application fees have grown as a result of the increase in student applications.The rental income for housing rentals is expected to increase by inflation while the income from faculty mortgage interest continues to decrease. Departmental income activities, including facility rentals, summer student housing, dining operations and sales at the Campus and Community Store remain constant.
The College’s compensation for faculty has a long-standing practice of using peer data to determine market-based adjustments for continuing faculty. Consistent with prior practice, salary data by rank for each school is obtained through the American Association of University Professors’ annual faculty salary survey. Based on the work of the Faculty Compensation Committee, a joint committee of faculty and Board members, the reference group was recently updated to a new group of 14 schools.
The approved operating budget includes a total pool of 2.5% for staff salary and wage increases for continuing employees and an adjustment of the staff minimum wage to $15/hour for non-student hourly employees. The budget includes adjustments to base salaries to reflect salary pools for staff position reclassifications, replacements, promotions and retention.
The 5.5% increase in the benefits budget is the result of continued increases in health insurance costs and increases to salary-based benefits, like the retirement plan. In 2021–22, the College anticipates 4.4% of incremental costs for medical coverage. Retirement plan allocations and employer tax payments are anticipated to increase consistent with the rate of salary increases. Tuition benefits growth is commensurate with the annual increase of tuition. Retiree medical benefits have increased because of the rise in the number of retirements in recent years. In addition, there are one-time increases to the budget for disability, work-life assistance, life insurance, and down-payment assistance programs to reflect the recent year’s actual benefit expense.
The return to normalized operations coupled with continuing pandemic uncertainty have increased non-personnel costs. For the 2021-22 year, excluding the Inn at Swarthmore operations, the College has reinstated spending in this category by $10.5 million. Highlights of non-personnel expenses include:
Highlights of non-personnel expenses follow:
- Bookstore, cost of sales: The Campus and Community Store’s cost of sales includes purchses for the Textbook Affordability Program, which provides an allowance for each student to purchase required texts and course materials.
- Equipment: he equipment budget has been reduced from our FY 2020-21 budget since anticipated equipment needsin both facilitie and IT during the pandemic did not arise.
- Facilities operating Expenditures: Facilities operating expenses were increased due to a reclassification from the capital budget for faculty housing maintenance costs.
- Food service, cost of sales: The food service expenses budget has been restored to the FY 2019-20 pre-pandemic level and revised upward due to enrollment level increases and expanded for OneCard expenses for off-campus dining.
- Off-campus study: The increase of off-campus expenses reflects updated enrollment of students in off-campus study programs in the fall semester and anticipated continued participation in the spring.
- Travel and professional development: Travel budgets have been restored from our FY 2020-21 budget, representing a gradual build back to pre-pandemic level. The restoration includes full restoration of the travel expense budgets for Athletics and 75% of pre-pandemic travel budgets for other departments. The College will continue developing policies and procedures regarding travel with an emphasis on the health and safety of travelers.
- Services, supplies and other: The College continues to include a central budget for Covid-19 testing to account for the changes to testing policy on campus.
- Student payroll and fellowships: The budget includes a restoration of pre-pandemic student wages budgets as well as an upward adjustment based on the College’s hourly student worker compensation study. Student employment is expected to take place as usual in the fall semester. Further review into the wage classifications for student employees will take place during the year.
The Contingency is being reduced by $500K from the FY 2020-21 budget with the expectation of fewer unanticipated expenses. Overall, the operating contingency represents approximately 1% of the College’s estimated expenditures.
As noted previously, the College has reclassified non-capital expenses associated with faculty housing maintenance to facilities operating maintenance.
Transfers from reserves includes annual support for scholarships from donor-designated restricted funds. Additionally, the Board of Managers approved the use of funds from the 2020-21 operating surplus held in reserve to support 2021-22 operations.
The College’s debt is all fixed-rate, and the principal and interest expenses are the College’s contractual obligation. The debt service budget revises the interest costs to $12.3 million, with the $6.3 million principal payments.