St. Joe’s offers employee buyouts to cope with a deficit

St. Joseph’s University offered a buyout to some faculty and staff Monday as part of a plan to help close what its president said was “a small deficit” resulting from the school’s acquisition and integration of two other colleges over the last three years.

“Those were two financially struggling institutions, and doing those acquisitions has put us for the last couple years into a small deficit position,” Cheryl McConnell, president of St. Joe’s, said during a 15-minute phone interview Monday.

She was referring to mergers with University of the Sciences in 2022 and last year with the Pennsylvania College of Health Sciences in Lancaster, which allowed St. Joe’s to add nursing programs.

“What we did, which was fully appropriate, was to bolt on most of the programs and systems [from those colleges] for stability in the student experience and allow for essential systems integration,” she said. “But now that we’re two years in … we need to reorganize the university with a one-university mindset.”

McConnell declined to disclose the size of the deficit in the university’s approximately $300 million budget or how many employees were approached about buyouts but said they were “widely offered.”

She said there is no target number that the university is seeking. Asked whether there would be layoffs, she said: “That depends on the nature of voluntary separation plan results.”

McConnell also described the situation during a recent Zoom call with staff at the 8,614-student university, which straddles the Philadelphia-Lower Merion border.

“We’re working with the board of trustees to make sure we get out of that deficit situation,” she said during a video clip of the meeting shared with The Inquirer. “We’re going to have to do things quite differently, and we’re going to have to be really bold, and we’re going to have to be clear-eyed about the challenges that are facing us.”

» READ MORE: St. Joe’s puts properties on its University City campus up for sale

St. Joe’s is far from alone in its belt-tightening.

The University of Pennsylvania earlier this month announced a hiring freeze and other cuts, including reducing admissions to its graduate programs, as the school fears losses in federal funding under President Donald Trump’s administration. Princeton, Harvard, Stanford, and Duke were among other universities that also have announced hiring freezes, according to CNN.

Other local schools are cutting back as a result of longer-standing financial challenges. Drexel University, facing a budget crunch, laid off 60 professional staff employees in November and said it was cutting and freezing some salaries and benefits. And Pennsylvania State University is planning to close some of its Commonwealth campuses amid a drop in enrollment there and the university’s efforts to close a deficit by this summer.

McConnell noted on the Zoom call that there are hiring freezes at other universities amid federal scrutiny of the higher education sector that threatens funding. St. Joe’s is not immune, she said. The school does not have a hiring freeze but is being careful with hiring, she said.

» READ MORE: Penn, bracing for federal funding cuts, orders a hiring freeze and other changes

“We’re just going to have to restructure a lot of things at our university” to deal with “what is now a new era of higher education,” she said.

During the interview, she said that how the university is restructured will depend on the results of the buyout offer and will become clearer this summer.

“Our fundamentals are really strong, when I think about how we have grown as an institution,” she said. “Our revenues are substantially up. … Our discount rate is very reasonable. I would prefer the hand that we have vs. almost any other competitor.”

She is scheduled to attend a faculty senate meeting Friday to discuss the effects of Trump’s executive orders and other concerns that faculty may have. The university has “a small potential impact” in regard to loss of funding as a result of the orders, “but it’s not significant,” she said.

Penn, in contrast, already had $175 million in federal funding frozen by the Trump administration because, a White House official said, it allowed a transgender swimmer to compete on the women’s team several years ago. Penn is also facing the loss of about $250 million in National Institutes of Health funding.

On the Zoom call, McConnell also cited some “warning signs” about retention of students this spring and said it is “important to be as frugal as you can through the remainder of this year.” During the interview, she explained that more students had graduated in December than anticipated, meaning there is smaller spring enrollment.

St. Joe’s, like many other colleges, lost some enrollment during the pandemic, but last fall said it had nearly a 20% increase in overall enrollment following its merger with the health sciences college.

The university is attempting to sell its entire University City campus, which it acquired when the school merged with USciences. The year St. Joe’s acquired it, the campus was valued at nearly $288 million.

The university is still reviewing offers on the campus, a spokesperson said Monday.

According to a 2022 bond filing, the university said it would use proceeds from any sale or lease to pay $170 million of USciences’ debt and move additional funds into the endowment.

St. Joe’s intends to keep its health professional graduate student programs there and lease back buildings as needed if the whole campus is sold.

In November 2022, St. Joe’s announced its intention to move undergraduate programs and students from the USciences campus to the main Hawk Hill campus, which the school said would create a better sense of community.