Dear Faculty and Staff,
As we begin the planning process for FY2028, we want to take a moment to update you on the College's financial position and share our progress on investing in College priorities.
We want to start with some broader context. We are fortunate in many ways. First and foremost, we are fortunate to be part of an institution known for its academic excellence and the success of its students. This is a direct reflection of the work you do every day.
We are also fortunate to benefit from decades of strong governance, financial leadership and careful stewardship of the College's resources. This has allowed Pomona to weather turbulent times while continuing to make significant investments in our academic mission.
That remains true today. Thanks to exceptional investment returns, early success in our fundraising campaign, and thoughtful budget management across the College, we have made meaningful progress on several important priorities:
- Strengthening our academic program: We have authorized 18 faculty recruitments above departures since 2022, putting us on a path to achieve our best student-to-faculty ratio in recent history.
- Advancing faculty salaries: We have improved our approach to benchmarking faculty salaries to account for cost-of-living differences among peer institutions and are accelerating salary increases to advance our longstanding commitment to rank among the top three.
- Supporting students and affordability: We have launched new student support programs for course materials, laptops and dental insurance, while making substantial investments in financial aid. As a result of our sustained commitment to affordability, the net cost of attendance for most families is lower than it was a decade ago.
- Investing in our campus: We have begun construction of a modern academic and residential complex—the Center for Global Engagement—to replace the 60-year-old Oldenborg Center.
We have been able to make these investments while maintaining the financial discipline that has long been a hallmark of Pomona. All three major credit rating agencies recently reaffirmed our AAA ratings with stable outlooks, an increasingly rare distinction in higher education as fewer than 10 institutions nationally hold AAA ratings from all three agencies. Our financial policies and approach to budget management are among the strengths recognized by the agencies.
Positive news aside, we recognize we need to plan for significant challenges ahead.
We cannot assume that investment returns will continue at the exceptional levels of the past three years. We know that financial aid expenditures are likely to grow faster than tuition revenues, that healthcare costs continue to rise at a concerning pace, and that our aging facilities will require increasing investment. The cumulative effects of recent inflation on goods and services, compounded by global economic disruptions, are adding further pressure. Simply put, like many of our peer institutions, we continue to face the challenge of operating expenses growing faster than revenues. While our operating margin remains positive, it is among the thinnest we have experienced over the past decade.
At the same time, we want to continue advancing important priorities such as our multiyear effort to strengthen faculty salaries and bringing air conditioning to residential spaces that do not have it today.
Balancing these financial pressures with our commitment to continued investment reinforces the need to build on and expand the multiyear savings and reallocation program we launched in 2023. This means continuing to look for opportunities to slow expense growth, make better use of existing resources, and develop new sources of revenue. We are particularly focused on opportunities to expand the use of Bridges Auditorium and campus facilities for conferences and other events.
The purpose of this work is not simply to balance our annual budget. It is to ensure that we can continue investing in the people, programs and facilities that make Pomona exceptional. Expanding this effort will be an important topic in our area budget conferences this spring.
FY2028 Budget Planning Assumptions
We have developed our initial revenue projections for FY2028, which establish the resources available to support next year's budget. As a reminder, more than 90% of the College's operating revenues come from two sources: the annual payout from our endowment and enrollment-driven tuition and fees, before financial aid. Our revenue outlook remains stable, with strong recent investment returns allowing for somewhat higher-than-normal growth in the endowment payout.
On the expense side, our budget is driven primarily by compensation and benefits. We have incorporated funding to support continued progress on faculty and staff salaries, along with anticipated substantial increases in health benefit costs. For non-compensation expenses, we are asking departments to identify efficiencies that will allow budgets to remain flat year over year. We recognize that holding these budgets flat, while costs continue to rise, effectively represents a reduction in purchasing power and will require difficult choices in some areas.
We will also be advancing the fifth year of our savings and reallocation program. Our efforts will include pursuing new revenue opportunities, reviewing growing restricted fund balances to identify resources that can appropriately relieve pressure on unrestricted budgets, and participating in a Claremont Colleges shared procurement initiative to identify purchasing savings. We will also work with departments to identify additional opportunities to improve administrative processes, reduce costs and make more effective use of our resources.
Even as we manage these pressures, we intend to continue investing in our academic and institutional priorities. In the coming weeks, we will release a plan addressing the questions raised by the Faculty Inflation and Budget Advisory Committee. We will also launch a new Claremont Colleges housing demand study this month, an important step toward developing a long-term housing strategy that could address one of the most significant financial challenges facing our employees while also strengthening our ability to recruit and retain outstanding faculty and staff.
In addition, we plan to launch a new Middle-Income Access initiative, supported by bridge funding while we raise the long-term resources needed through the Originals Campaign. We will also develop an accelerated plan to expand air conditioning in our residence halls.
This is an ambitious agenda. Achieving these goals while maintaining the College's financial strength will require thoughtful choices, continued financial discipline and strong partnership across our community.
Additional details on these budget assumptions are included in the FY2028 Budget Planning Guidelines, which will be distributed and reviewed during budget kickoff meetings and training sessions that begin today. These sessions will be offered both online and in person, as outlined in the Budget Office's October 26 email.
Continuing the Conversation
This year, we would also like to create more opportunities for small-group discussions about the College's budget. We want to hear directly from you about the opportunities you see, the challenges you are experiencing, and your ideas for making the best use of our resources. We also hope these conversations will provide an opportunity to share more context about the College's finances and answer questions you may have.
Beginning in January, our Vice President, Chief Operating Officer, and Treasurer will host informal box lunch budget discussions every Friday from noon to 1 p.m., with space for 20 participants each week. These conversations will be open to faculty, staff and students. More details about how to participate will be shared soon.
Thank you for all that you do to make Pomona such an extraordinary institution and for your continued partnership in ensuring its strength for generations to come.
Yours sincerely,
G. Gabrielle Starr
President, Pomona College
Brent Carbajal
Interim Vice President for Academic Affairs and Dean of the College
Jeff Roth
Vice President, Chief Operating Officer, and Treasurer