A Message Regarding the Proposed Financial Plan

To the Members of the Faculty and Staff of Georgetown University

Dear Colleagues:

Next week, I will present the University’s five-year financial plan to Georgetown’s Board of Directors for approval.

Despite the signs of economic growth in recent years, the current environment facing higher education is as uncertain as any we have faced since the financial crisis in 2008. Just last month, Moody’s, the credit ratings agency, downgraded its outlook for the entire U.S. higher education sector from stable to negative, saying this “negative outlook reflects mounting pressure on all key university revenue sources, requiring bolder actions by university leaders to reduce costs and increase operating efficiency.”

The pressures on revenue sources for the higher education sector are due to an uncertain economic climate, federal budget difficulties and the disruptive forces of technology on our industry.

Given this context for Georgetown, and higher education as a whole, I wanted to make you aware of steps the University plans to take to put us in the best possible financial position for the future.

A host of issues challenge our ability to curb the rising cost of education. Nationally, costs for food, energy and health care continue to rise; students and their families are overburdened with loans; and a weak labor market makes it difficult for many graduates to find employment.

Georgetown also faces an unprecedented level of uncertainty over tens of millions of dollars that we receive annually from federal research funding. These funds are threatened by the possibility of a federal budget sequestration if Congress does not act by March 1.

If the sequester is not lifted, a projected $85 billion reduction in federal spending will occur that will have a direct economic impact on our region. The D.C. area is home to thousands of federal employees, whose salaries have already been frozen for the past two years as they face the possibility of further furloughs and layoffs.

To address this economic instability, our University leadership has worked to develop a proposed course of action for our institution – one that we believe strengthens our competitiveness, maintains our financial stability and continues our commitment to ensuring the broadest possible access to a Georgetown education.

To that end, we have developed a plan designed to eliminate our current operating deficit of $19 million by 2016. This will strengthen our ability to take advantage of new opportunities open to us now and in the future.

To reach this goal, the five-year financial plan I am proposing to the Board of Directors includes:

These are very difficult decisions. As we make these hard choices, we are also working to minimize the impact of projected increases to benefits such as parking, health care and day care. This plan will help ensure that we are not only adjusting to the economic climate, but leading in our sector. It will allow us to continue planned strategic investments in infrastructure and facilities, technology, and academic growth, as we strengthen our institution for future generations.

In addition, we must continue to make these strategic investments in order to compete globally for faculty and students. We will continue to look at new ways to drive down costs and increase efficiencies. We will continue to harness the extraordinary talents and resources of our community. And we will continue a master planning process to guide our growth and development.

I am grateful to the academic leadership involved in helping to create this plan. An improved financial position of the University will reflect the collective efforts of each and every member of our University community. I am deeply grateful for the contributions each of you makes to Georgetown every day.

You have my very best wishes.


John J. DeGioia