One of the dire repercussions of the COVID-19 pandemic has been a worldwide economic crisis, which was ignited by the global stock market crash that began in late February. Inevitably, this crisis has taken its toll on Deerfield’s finances as well.
“The pandemic does create stress because of the decline in the market value of [Deerfield’s] endowment,” said Chief Financial Officer Keith Finan.
Fortunately, however, “[the] endowment has performed well relative to markets overall,” said President of the Board of Trustees Brian Simmons.
Amid the financial crisis, Deerfield still maintains a significant amount of cash and liquid investments. Because of this, “the endowment remains in a strong position to support our people, program, and facilities,” said Mr. Simmons.
With the pandemic escalating in the United States during Deerfield’s spring break, the majority of the operations for the 2019-2020 school year were unaffected. When discussing the timing of the crisis, Mr. Finan said, “being this far into the school year, the impact is manageable.”
On April 10, Deerfield announced to parents and guardians via email that it was offering “spring term rebates” of $2,700 and $1,100 to boarding student and day student families, respectively. According to the email, the exact amounts were calculated by considering the average cost of meals per day and the average cost to clean and maintain dormitory facilities.
Support from the endowment typically covers one-third of the school’s operating expenses, with the rest funded by tuition and annual gifts. Addressing the impact of spring term rebates on the endowment, Mr. Finan said, “The rebate creates a slightly [greater] need for support from the endowment to cover operations fully.”
In a further effort to alleviate the stress of the pandemic on the Deerfield community, Head of School John Austin announced during an employee meeting that, “unless circumstances dramatically change,” the Academy is committed to paying all employees through the summer as it prepares to open. In addition, Dr. Austin noted that Deerfield has neither made plans nor intends to make plans to furlough or cut jobs.
In order to fulfill such objectives, the Academy has frozen non-essential hiring, minimized travel to only critical trips, and remodeled its budget with assumptions that reflect changes in revenue and expenses. Elaborating on Deerfield’s effort to mitigate the impact of the current and continuing economic tolls the pandemic has caused, Mr. Simmons said, “We have examined all areas for opportunities to reduce expenses without creating hardship for employees or detracting from our program in the long-term.”
In regards to the remodeled budget for the 2020-2021 school year, Mr. Finan said, “We have identified savings from operations for the upcoming year, but these savings are ones that will not significantly affect any programs or departments.”
While the COVID-19 pandemic has affected The Academy and its community in a number of ways, “the overall impact on Deerfield’s finances this fiscal year is very manageable,” said Mr. Simmons.