May 13, 2021

Dear Colleagues,

Entering the COVID-19 pandemic a year ago, we knew that the near-term financial outlook was serious for Drexel and other universities across the nation. We responded by enacting revenue-growth and cost-reduction measures and by securing additional forms of liquidity to support the University and its ownership interest in St. Christopher's Hospital for Children. Now, as we look forward to a more normal campus life, it is clear these measures, as well as the commitment of our faculty and professional staff, have safeguarded Drexel's financial position, as well as enabled the University to thrive in many ways. The good news, as we slowly emerge from this pandemic, includes:

• We were able to provide in-the-classroom and hybrid learning, research opportunities, and creative activities to keep our students engaged and on-track in pursuit of their degrees.
• Unlike many peer institutions, Drexel had no job losses due to the pandemic.
• Prudent risk management and well-positioned investments enabled us to grow the value of our endowment assets by approximately 20.4 percent from March 2020 to March 2021, which will help future investment opportunities in our students, faculty and staff. The combined Drexel and Academy endowment now stands at approximately $930 million.
• The strong base of support from alumni and other Drexel allies has propelled the Campaign for Drexel to $696 million, within reach of its $750 million goal.
• Graduate enrollment grew by 2 percent, helping to offset a dip in our 2020 undergraduate enrollment.
• With the oversight of the Office of Government and Community Relations, in collaboration with our partners, the University has secured approximately $140 million in additional federal and state government financial relief for Drexel, its affiliates and our students.
• And despite one of the most challenging recruitment climates ever faced by higher education, we have received 3,167 deposits for the incoming fall 2021 class.  After conservative summer melt assumptions, we expect to welcome 2,800 first-year undergraduate students in the fall — a 21 percent increase from the 2020 incoming class and 200 students above the 2,600 enrollment target.

Acknowledging that these successes could not have been possible without the collective hard work, dedication and sacrifice of our faculty and professional staff, we made it a top priority for our fiscal year 2022 (FY22) planning to restore the University's 403(b) matching program and merit increases — and today, we are pleased to announce that at its May 5 meeting, the Drexel Board of Trustees approved a balanced, all-funds operating budget for FY22 that does just that.

Effective July 1, 2021, the University will fully restore the employer contribution to the 403(b) retirement plan at the previous levels of up to 9 percent maximum for employees under 50 and up to 11 percent maximum for those 50 and older. The FY22 budget also includes a 2 percent merit pool.

In addition to restoring these benefits for FY22, the trustees also supported our recommendation to make a one-time payment to applicable faculty and professional staff members based on a 2 percent merit pool that was missed from January 2021 through June 2021. This payment will be applicable to faculty and professional staff members who were employed at Drexel before July 1, 2020, and have received no salary increase since that time. The lump sum payment will be added to your June pay as a gesture of thanks for keeping the University strong and resilient during these challenging times. While we know the payment does not match the level of sacrifice, it is intended to recognize your ongoing dedication to Drexel and its mission.

FY22 Budget Outlook

We are grateful for your partnership as we have all adjusted to a new normal of expense management, purchasing, travel, hiring and overall budgeting. The proactive steps we took to balance the fiscal year 2021 budget have kept Drexel on strong financial footing despite lower revenues and increased expenses stemming from the pandemic. With a continued focus on prudent expense management, strategic investments and efficient operations, we believe Drexel will realize significant gains in the coming years. But this transformation will take time. As you know, the implementation of the Drexel 2030 Strategic Plan and Anti-Racism Task Force recommendations are just getting started, and COVID-19 remains with us.

To achieve the FY22 balanced budget, we will pursue additional pandemic-related state and federal funding and fundraising opportunities, but it will also be necessary for each academic and administrative unit to provide temporary savings at or near the levels provided in FY21. The Budget and Planning Office will be following up with each unit to identify the temporary savings for FY22.

As we ramp up in-person operations, we will need to continue making significant investments in information technology (primarily to address data security and website development), necessary COVID-19 investments to ensure continued safety, and related infrastructure enhancements. In addition, the budget allows for key faculty and professional staff hires and other investments needed as part of the Strategic Plan implementation.

Long-Term Strategies

Through the Strategic Plan and the annual budgeting process, the University is reviewing investment strategies for FY22 and beyond. We will prioritize investments around revenue-generating and reputation-enhancing initiatives. We have realigned Responsibility Center Management rules and parameters to incentivize the creation of high-quality, market-driven programming to enhance enrollment, and to expand research. We will also continue to examine and streamline Drexel's administrative operations to support collaboration, improve student services and enhance organizational effectiveness.

Fully realizing that our Strategic Plan's goals will require resources, we are developing a significant, multi-year, multimillion-dollar academic investment plan. This investment will further enhance our academic enterprise through key faculty hires and program funding, additional resources within our student support services, and funding for our faculty's and professional staff's personal and professional development. These investments are critical to supporting the following strategies:

• Academic and Administrative Efficiencies: Review schools and administrative departments to identify opportunities for greater alignment and efficiency (e.g. integrating units, centralizing services, etc.). Assess permanent work-from-home scenarios to maximize space and minimize lease expenses.
• Program Review and Enhancements: Critically examine academic programs to determine areas of both underperformance and growth. Strengthen existing programs that align with the mission and goals of the University and eliminate programs that do not, with the long-term goal of growing enrollment and improving the student experience.
• Undergraduate Enrollment Strategy: Commit to a long-term strategy to stabilize undergraduate enrollment while also considering the gross and net tuition price and financial aid strategy.
• New Program Opportunities and Innovation: Invest in new areas that are critical to remaining competitive in the field of higher education, including online undergraduate education, expansion of hybrid programs and a comprehensive lifelong learning strategy. Leverage external partnerships to respond to market needs.
• Research Expansion: Take advantage of our R1 status and continue to grow research, scholarship and creative activities. Leverage our expertise to develop partnerships, enhance societal impact and attract students, faculty and staff to Drexel.
• Fundraising: Ensure fundraising efforts are aligned with the Strategic Plan and highest impact opportunities; balance need for current use/budget relieving funds with efforts to build endowment and support capital priorities.
• Faculty and Professional Staff Investment: Accomplishing the above strategies will require an operating model that can fully support our faculty and staff's professional development, the University's employer match of the 403(b) contribution, and a merit model to appropriately compensate our people.

Moving Drexel Forward

We understand that you have already made many sacrifices and hard decisions to help get Drexel to this point. We should all be encouraged by the progress we have made together and the blueprint we have developed for our future — with your ongoing collaboration and leadership — to chart an exciting path forward for the University. Thank you for your unwavering commitment to Drexel.

Sincerely,

John Fry
President

Helen Bowman
Executive Vice President, Treasurer and Chief Operating Officer

Paul E. Jensen
Executive Vice President, Nina Henderson Provost and University Professor