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Interim Financial Measures to Address COVID-19, May 2020

To: Students, Faculty, and Staff
From: President Val Smith
Subject: Interim Financial Measures to Address COVID-19

Dear Students, Faculty, and Staff,

When we initially moved to modified operations in March, I never imagined that we’d still be isolated from one another at the conclusion of the academic year. I suspect all of us are, in our own ways, struggling with the continued uncertainties brought about by the pandemic: When will we see each other again? When will we be able to gather with our friends and loved ones and resume the routines so many of us took for granted? 

At the same time, as I reflect on this spring, I am perhaps more inspired than ever before. I continue to marvel at the ways in which this community united amid an unprecedented global crisis to ensure that the College would meet its commitment to educating our students. 

I realize that questions abound. While I cannot yet answer all of them, as I look back at how we have risen to meet the challenges of this moment, I am confident that we will continue to uphold our mission and values, and our decision making will continue to be based on the following principles: 

  • We will hold paramount the health and safety of our students, faculty, and staff members.
  • We will continue to deliver to our students the highly engaged, intellectually enriching educational experience that is foundational to all that we as a College do. 
  • We will make decisions about College finances and operations with empathy, compassion, and humanity and work to maintain operational continuity and retain employees to the greatest extent possible.   

This letter contains important information on a number of topics related to College finances. I recognize that the level of detail and amount of information may be overwhelming. In addition to this email, we have updated our COVID-19 resource page with the relevant information. I also want to take this opportunity to announce that we will host a virtual town hall later this month during which you will be able to ask questions of me and other members of the President’s Staff. We will share more details on this event — including the date and format — as soon as possible. 

You can follow these links to read this information on the College website, or you can continue reading below.

Board of Managers Meeting and Interim Budget

On Saturday, we concluded our May Board of Managers meeting, which focused primarily on the myriad implications of the COVID-19 pandemic for the College. One outcome of the Board meeting is the adoption of an interim budget, which was formed with the guidance of the Financial Study Group. Taking this incremental approach positions us to be nimble in reacting to rapidly changing circumstances that are out of our control, and it also allows us to move forward based on what we know while acknowledging all that we cannot predict. Until we have a clearer picture of what fall enrollment will be — which we don’t expect to know until late in the summer — we won’t know the extent to which this global crisis will affect the College’s financial standing.

But this much is certain: It has already taken a significant toll. In the past two months, the College has spent nearly $7 million in unbudgeted funds to support our community through this initial response to the crisis. Those efforts include helping students identify and travel to a safe alternative to campus housing; providing emergency food assistance to low-income students; offering students and families pro-rata refunds for room and board; continuing to compensate employees regardless of their ability to work due to disruptions related to the pandemic; and several other initiatives. Meanwhile, the estimated market value of our endowment has dropped nearly $200 million, as described in more detail below.

Our financial strength relative to many other colleges and universities has allowed us to mitigate the effects of the pandemic on our campus community. Nevertheless, we recognize that we must steward the College’s financial resources carefully. In keeping with the principles noted above, and given the uncertainties that remain, we are taking a number of short-term, proactive measures designed to help offset the financial impact of COVID-19 and reduce to the greatest extent possible its effect on our employees in the future. Those steps are detailed below. We also must acknowledge that we cannot rule out having to make additional, more difficult decisions in the future that could lead to a reduction in staffing levels, depending on a variety of unknown factors, such as the duration of the virus, government restrictions on travel, and, again, our fall enrollment numbers and the financial aid needs of those students.  

Endowment Spending

College and university endowments such as ours are often misunderstood to be a resource from which we may draw as needs arise. Nothing could be further from the truth. We rely on income from our strong endowment to fund more than half of our annual operating budget. The size of the endowment reflects the historical generosity of donors and is intended to support the mission of the College in perpetuity. Legal and policy restrictions constrain how much endowment income may be spent each year. 

To support our current needs without putting at risk the endowment’s ability to ensure intergenerational equity, Swarthmore spends between 3.5% and 5.0% of the market value of the endowment each year to support College operations. In the past five years, we have spent $387 million — the equivalent of 20% of the current market value of the endowment — in support of the College’s mission.

Between Dec. 31, 2019, and March 31, 2020, our endowment lost nearly $200 million, or about 10% of its value. That decline in market value reduces the amount of money available to the College to support its budgetary needs.  

Faculty and Staff Wages

There will be no pay increases for continuing employees for the coming year. Though this was a difficult decision, faculty and staff compensation is the College’s largest annual expense, and taking this action will reduce growth of the budget by nearly $2 million, thus helping us preserve jobs for faculty and staff.

Staff Hiring

Until further notice, there will be a freeze on filling vacant staff positions for positions posted after March 1, 2020. Some exceptions for certain positions that are critical to the needs of the College may be made with the written approval of the member of the President’s Staff who oversees that area, and in consultation with the senior staff as a whole. Faculty searches may proceed. 

College Travel

We are extending the restriction on most College-sponsored travel through Dec. 31, 2020. We will reevaluate this policy for the spring 2021 semester. While we recognize that travel has important benefits for faculty research, staff development, and other functions of the College, this restriction is a prudent way to preserve College resources, particularly given that federal policy may continue to limit travel for the foreseeable future. Some limited exceptions may be considered, but they must be approved by the appropriate member of the President’s Staff.  

Additional Reductions in Non-personnel Expenses

The interim budget includes one-time reductions of approximately 10% to most categories of non-personnel expenses during FY 2020–21. Detailed instructions on meeting these reductions will be provided by the Budget Office by the end of the month.

Study Abroad

Given the uncertainty of travel in the coming months, Swarthmore students will not be permitted to study abroad in the fall semester. We hope to be able to allow study abroad in the spring under safer and more certain conditions. In the meantime, we will continue to seek to understand, communicate with, and remain engaged with the wider world. The Off-Campus Study Office will be working with the Provost’s Office to plan for spring study abroad if possible, and to facilitate the exchange of virtual guest lectures across countries and continents with Swarthmore faculty. The Off-Campus Study Office will reach out to students with additional information once those details are available.  

Employment Under Continued Modified Operations 

As mentioned above, we are prioritizing the continued employment of as many individuals as we reasonably can while also working to mitigate both the significant financial losses the College has already experienced and those we anticipate. At this point, we are fortunate to be able to avoid furloughs and layoffs, but we cannot rule out having to make additional, more difficult decisions in the future that could lead to a reduction in staffing levels.

Our extension of modified operations and our work to address those financial challenges will affect staff members in the following ways: 

Regular Full- and Part-Time 12-Month Employees

At the onset of the disruption brought about by the pandemic, we committed to compensating employees through May 31, including those who are unable to work due to special circumstances related to COVID-19 and those whose work is unavailable to them due to the College’s reduced operations. We are extending that practice to all regular full- and part-time 12-month employees through at least June 30.

Please note that regular full- and part-time 12-month employees for whom work is not available due to the College’s ongoing modified operations may be reassigned to perform other duties.

Non-Benefits-Eligible “Casual” Employees

Since moving to modified operations in March, the College has continued to compensate non-benefited or “casual” employees based on average hours worked, and we will continue to do so through May 31. Effective June 1, non-benefits-eligible casual employees will be paid for hours actually worked. If work is not available to casual employees, those individuals will not be paid.   

Staff Members in 9- and 10-month Positions and Summer Employment

We previously announced that in-person activities on campus are canceled through at least July 31, which means there will be far fewer opportunities for work during the summer. This change primarily affects our employees in 9- and 10-month positions who ordinarily are hired to work in similar or new roles during the summer months. These individuals should note the following: 

  • The College will cover its portion of your health benefits as it does each summer.  
  • We encourage employees whose summer hours are reduced or eliminated due to the cancellation of summer programming to apply for unemployment compensation. While eligibility is determined solely by the Commonwealth of Pennsylvania’s Office of Unemployment Compensation within the Department of Labor & Industry, we understand that employees with reduced or eliminated work hours may be eligible to apply for unemployment compensation, including federal dollars available as part of the CARES Act. 
  • The College will continue to look for opportunities to hire these individuals during the summer, provided work becomes available and the individuals are willing and able to return. This could be in their current role or in a redeployed position that is needed to support the mission of the College.

Again, to be clear, we will continue to fully compensate regular full- and part-time 12-month employees whose work involves direct support of summer programming through at least June 30, but those individuals may be reassigned to different shifts or duties in order to support the modified needs of the College. This is a temporary move intended to support the needs of the institution, with extreme care for as much continuity for employees as possible.

If you have questions about employment under our continued modified operations, please contact Human Resources.  

Stay-at-Home Order and Remote Operations

As you’ve likely seen, the Commonwealth of Pennsylvania has begun a phased approach to reopening parts of the state. You can read a detailed account of those plans on Gov. Tom Wolf’s website. For our purposes, I want to note two things: 

  • Given the number of cases in southeastern Pennsylvania, where we sit, our region is expected to be the last to see the easing of restrictions. We are still in the “Red Phase,” which means that the governor’s previous stay-at-home order and other restrictions remain in place.
  • Though our decisions will be informed by guidance from state and federal officials, the College will ultimately act in what it believes are the best interests of the health and safety of our campus community. That may mean that we remain largely in a remote-working environment beyond when government restrictions are lifted for Delaware County and the surrounding areas. Such decisions will rely on the best-available public health information and will be evaluated on an ongoing basis.          

Academic Continuity

The Academic Continuity Group (ACG) recently completed its work and made its recommendations to me and the members of the President’s Staff. We have begun reviewing those recommendations, and we plan to share with you the details of how we plan to move forward with the start of the coming academic year in mid- to late June. In the meantime, the ACG plans to issue a high-level overview summarizing how it went about its work, and what it heard from the hundreds of students, faculty, and staff members with whom the group communicated to help formulate the recommendations.

Capital Projects

Given the decrease in the endowment’s value and the uncertainty of what lies ahead, for now we are reducing the annual capital renewal and replacement budget by more than $5 million, from $13 million to $7.5 million, for the upcoming fiscal year. We will concentrate on projects with an immediate impact on academic mission, student life, and infrastructure needs. If the budget situation improves over the next six months, we will propose revisiting the projects that were removed from consideration through this process.

The following is a summary of the primary items that are included in the interim capital renewal and replacement budget for FY 2020–21:

Endowment-Funded Capital Projects

  • Academic mission ($2.5 million), including classrooms and laboratories in Singer Hall, the Science Center, and Lang Performing Arts Center.
  • Facilities infrastructure ($1.6 million), including engineering and pre-construction work for a backup generator plant, enabling work for Lang Music Hall, and a variety of stormwater-management, roof-replacement, and repointing projects.
  • Information technology infrastructure ($1.4 million), including improvements to data networking, academic program support, and enterprise services.
  • Space studies and planning ($475,000), including funding for detailed studies for buildings slated for restoration and renovation.

Gift- and Bond-Funded Capital Projects

In addition to the capital renewal and replacement projects funded by the endowment, there are several gift-funded and previously bond-funded projects that are nearing completion, already underway, or scheduled to begin this summer. These projects include Singer Hall, the Lang Music Building, and the Dining and Community Commons.

COVID-19 Emergency Assistance Fund

Clearly, the College is facing unprecedented financial challenges. We do not know what the future holds, either for the College itself, or for us as individuals, and that level of uncertainty only exacerbates fears and anxieties. In response to this situation, Provost and Dean of the Faculty Sarah Willie-LeBreton, Vice President for Finance and Administration Greg Brown, and I will be donating 10% of our salaries over the next six months to establish a fund to support members of our campus community who are adversely affected by the College’s necessary response to the COVID-19 pandemic. Other highly compensated employees, both faculty and staff, who are moved to do so will be able to join us by designating a percentage of their salaries to be donated to this effort. We will share more specific information about this effort in the weeks ahead.


In this difficult moment, I find inspiration in the resilience of the Swarthmore community. Students, faculty, staff, and alumni have displayed a commitment to our mission that reassures me that Swarthmore will reemerge from this crisis as strong as ever. You have demonstrated flexibility and compassion, even under the pressures of a global pandemic. Thank you for your many contributions to the College. Be safe and well, and I look forward to seeing you virtually soon and in person as soon as that is possible.