May 2020,
Dear WRA Community,
As businesses make their plans to re-open, we are hard at work here to ensure not only a safe start to our 2020-21 school year but one that is robust, rewarding, and in no uncertain terms, Reserve.
Part of this planning process includes preparing for the continued financial impact of covid-19 to Western Reserve Academy. I, along with our Chief Financial and Operating Officer, and members of our Board of Trustees have developed plans to ensure the fiscal sustainability of WRA not only in the short term, but into the distant future.
Our reality is that all revenue sources could see a significant reduction in 2020-21. With only 66% of the cost of education being covered by tuition, WRA relies heavily on the annual draw from the endowment, only 6% of which is unrestricted, along with annual giving support, and income from summer and auxiliary programs, most of which will not be able to be offered this upcoming season.
At the same time, there will be new costs for initiatives that will need to be put in place to ensure the delivery of a quality WRA experience that also follows best practices for physical distancing. These are in addition to all other operating expenses which include, but are not limited to, salaries and benefits for over 150 Full-Time, Part-Time, and seasonal employees as well as over $9M in financial assistance with some level of support going to over 56% of our students.
As we look ahead to the preliminary budgeting models for 2020-21, all operational department budgets were reviewed in detail and expenses that could be reduced or eliminated without impact to our student experience were identified and will be implemented. Included in this process was the announcement of a salary freeze for the 2020-21 school year.
Additionally, while the most recent capital campaign was very successful and provided for the construction or renovation of spaces like Seymour Hall, Wang Innovation Center, and the President's House as our new home to the Admission Office, WRA has existing debt from earlier construction projects that were not fully funded by donors. In order to reduce the burden on the unrestricted portion of the endowment, which is the sole source of funding for annual debt service payments, we are in the process of refinancing this debt to more favorable terms.
Another source of funding to support the ongoing mission of WRA will be the use of Federal Funds that were made available through the Small Business Association and the Payroll Protection Program as part of the CARES Act. After careful review of the guidelines of this program, and with the full support of the Board of Trustees, we determined that acceptance of these funds was a fiscally responsible decision. Although approved for a larger amount, WRA will only be accepting funding that directly qualifies as support for employees' continued payroll and benefits. It is because of the dedication and commitment of an amazing group of faculty and staff members that we are able to build relationships with our students that last well past their time in the classrooms, on the fields, or on stage. We believe in recruiting and retaining this level of talented individuals who can share the Reserve story with students past, present, and future. These funds will assist in our commitment to people and program.
It is my sincere hope that this information gives you the comfort and assurance that Western Reserve Academy is being prudent in the management of our resources while remaining committed to our students. Appreciating that you, too, are likely navigating similar conversations in your businesses, organizations, and homes, I thank you for your partnership and understanding during these challenging times.
To those families who currently have children enrolled, we are so grateful for your trust in us and promise to deliver an enriching WRA experience. To our treasured alumni and other friends, your continued support and encouragement are true testaments to that which makes our community both resilient and remarkable.
I look forward to sharing more of our plans in the coming weeks. Until then if you have any questions regarding the finances of WRA, please feel free to reach out to me or to Tom Arnold, our Chief Financial and Operating Officer. We would be more than happy to speak with you.
Sending excitement for that which is to come,