Catholic University layoffs aim to stabilize budget ahead of ‘demographic cliff’
How will Catholic colleges survive a coming enrollment crisis?
The Catholic University of America laid off 66 employees Monday, as the university aims to address a $30 million deficit announced to university stakeholders in December.
While the layoffs come after several years of deficit budgets, the university’s president told The Pillar that Catholic colleges and universities need to reconsider their financial and business models, to face the serious enrollment crisis reshaping American higher education.
—
“Today, with a heavy heart, I must inform you that we have implemented the concluding phase of our comprehensive financial resiliency plan, which unfortunately involves the elimination of 66 active staff positions across various departments, accounting for 7% of our workforce,” CUA president Peter Kilpatrick announced in a May 19 letter to university staff.
“The restructuring process we have completed today is significant. We did not take the easy path, but I am confident that we took the right one,” Kilpatrick added.
The letter explained that the layoffs were one component of a multi-tiered approach required to balance the university’s operating budget, with a 10% reduction required to offset the $30 million deficit.
In addition to reducing staff, administrators reduced retirement contributions and planned raises, aimed at raising revenue through new degree programs, and offered buy-outs to some faculty.
“With these essential changes complete, we stand on solid financial ground for the first time in years,” Kilpatrick wrote this week. “Now we can channel our energy toward strengthening our academic programs, enhancing the student experience, and fulfilling our founding mission to give to the nation, the Church, and the world its very best citizens — our graduates.”
Kilpatrick also emphasized the university’s hope for sustained enrollment growth, to tackle the mounting budget problems at the university — which is uniquely connected to the U.S. bishops’ conference, as the national pontifically chartered university in the U.S., with several ecclesiastical faculties.
In December, The Pillar reported a $30 million deficit in the university’s operating budget, which came after a multi-million dollar operating deficits for several years — caused, the university said, by 10 years of declining enrollment revenue — “due to the history of low enrollment, an increased necessity for need-based aid, growing price sensitivity on the part of families, and aggressively rising costs,” according to a Dec. 2024 university communication.
Since 2018, tuition revenue has declined 24% at the university, contributing to the deficit budgets in five of the last seven years — creating a fiscal crisis for an institution Kilpatrick called a financially “enrollment-driven institution.”
Karna Lozoya, the university’s vice president for communications, told The Pillar this week that because administrative costs rose as tuition revenue dropped, a “misalignment between revenue and expenses led to deficit spending, which we successfully addressed with our budget cuts.”
The layoffs were all administrative staff positions, not teaching or academic positions, Lozoya said. And she said the university does not anticipate more layoffs.
But “unfortunately, it was not possible to reduce our operational budget by 10% without also eliminating staff positions,” she told The Pillar. “These were difficult but necessary decisions to ensure our long-term financial health and sustainability. “
Lozoya added that the cuts have “placed the university on solid financial footing for the first time in years.”
But if its balanced budget depends on ongoing enrollment growth, it’s not clear how long CUA will remain on that firm footing, given the looming “demographic cliff” facing all colleges and universities in the U.S.
The cliff is caused by a drop in the U.S. birth rate that began in 2007, and has continued in a historic slump since.
Many Americans born in 2007, now 17 or 18, are set to begin college in the fall.
There will be 3.9 million 18-year-old high school graduates in the U.S. this year, but that number will decline each year for the next 15, and remain significantly lower for the foreseeable future.
The decline in births means that colleges are competing for a smaller pool of applicants — at a time when places like Catholic University need to raise their enrollment if they’re to meet rising costs.
Declining birth rate portends the prospect of longer-term economic decline in the U.S., but for colleges that problem is acute, and will continue to get sharper, as the number of 18-year-olds who graduate annually from high school is set to decline by 13%, nearly half a million people, by 2041.
The slump comes after U.S. colleges and universities already experienced a collective 15% drop in enrollment between 2010 and 2021, the most recent year for which statistics are available.
Since March 2020, 79 public and non-profit U.S. colleges have closed or merged, with researchers predicting 80 more college closures over the next few years.
Catholic colleges are not exempt from the trend: between 2016 and 2024, at least 21 Catholic colleges closed, merged, or announced coming closures or mergers, with most in the northeast and midwest.
As his own university faced its layoffs, CUA’s President Kilpatrick told The Pillar this week that his institution is not alone.
“Our situation reflects financial challenges faced by many Catholic universities nationwide,” Kilpatrick explained. “The headwinds facing Catholic higher education are serious and require a fundamental reconsideration of the university’s traditional business model.”
For Kilpatrick, that shift in business model involves more degree programs in business and data science, touting the university’s recently earned status as a top-ranking R1 research university, and leaning into the university’s distinctive Catholic identity — strengthening campus ministry programs in recent years, and adding an evangelization focused degree.
It is hard to say what that strategy has actually meant for enrollment — or how the university’s Catholic identity affects student choices.
In 2018, the Chronicle of Higher Education asked whether Catholic University’s religious identity — with same-sex dorms and a distinctly Catholic curriculum — was scaring off prospective students, while the university needs to boost enrollment.
On the other hand, Catholic University has won plaudits from some experts and observers recently, for a renewal in Catholic identity and mission on campus, and has gained attention from some Catholic families who might have otherwise sent their students to other campuses with reputations for strong Catholic culture.
Still, university enrollment has declined by more than 800 students since 2016, from 6,076 that year to presently 5,243. During that period, enrollment hit a low point with 4,968 students in 2022, and has since climbed by 275 students.
By some metrics, the enrollment decline is consistent with national trends, which makes extrapolating a cause of the drop, or any sense of its meaning, difficult.
For her part, Lozoya said that a strong Catholic identity is both the university’s mission, and relevant to its bottom line.
“First, we will always and only be a faithfully Catholic university,” she said.
As to the university’s Catholic identity, Lozoya said that “our fastest-growing schools are the ones that have leaned into and developed distinctly Catholic identities. For example, the Columbus School of Law’s applications are up 50%, and the Conway School of Nursing and the Busch School of Business will welcome some of their largest classes this fall.”
“The key to attracting students is to build great programs on the rich heritage of the Catholic intellectual tradition, and we are doing just that with great success,” Lozoya added.
Whatever the cause, Catholic University’s goal is now to reverse the national trend, by realizing ongoing growth in enrollment to stabilize budgets.
Kilpatrick has emphasized online graduate degrees and hybrid programs as a key strategic goal.
But he also told The Pillar that his institution’s Catholic identity is part of its plan to withstand a declining pool of potential applicants.
“As the demographic cliff approaches, Catholic universities will need to clearly articulate the distinctive value of a Catholic education, while also pursuing financial sustainability, creative collaborations, and academic innovation to thrive in this challenging landscape. Having a solid financial foundation will enable us to do just that.”
“We take our role as the bishops' university seriously, and are grateful to have been founded by Pope Leo XIII. Our steadfast commitment to our founding mission as the National University of the Catholic Church in America is why we have sought to address our structural budget deficit so aggressively,” Kilpatrick added.
With an overblown undergraduate tuition of $58,000 a year, it is not surprising that Catholic University of America is receiving a decrease in students attending. I know that part of that tuition is reduced for most students either for their GPA or their financial need, but it still will be difficult for CUA to compete with universities (often considered more prestigious) which charge less than $30,000 and even less than $20,000 a year. For example, I was thinking late last year about my high school senior son applying to CUA, but found the cost of tuition prohibitive. I noticed that the universities which are becoming successful in getting more students are the ones who are already preparing for the demographic cliff by aggressively recruiting high school students from around the country and being more generous with financial aid, while trying to improve retention of the students who come in by supporting them in their education instead of weeding them out. This retention can be done through promoting tutoring through the college, additional sessions prior to finals where reviews are made or practice tests are administered, and a supportive atmosphere where students feel that faculty and staff want them to succeed in college. Not making the classes easier or letting people pass who haven't learned the material, but instead giving generous support to students to succeed which helps bring in more students, retains most of the students who enroll, and subsequently recruits their siblings and other future students based on their reputation for student support. Good Catholic identity goes a long way, but being of assistance to students in their academic struggles is no less of an issue to consider by CUA and other Catholic colleges in order to be more successful in their recruitment plans.
There are some colleges that are combining liberal arts academics with trades training. Something that could appeal to the majority of high school grads who don't go into academia - if it is affordable.