Swarthmore’s 2025-26 fiscal year budget includes slightly increased spending and pay raises, with some cuts to research, travel, and food expenses to ensure flows from the endowment do not surpass the college’s 5% cap. The year-long budget comes after an interim, three-month summer budget was enacted to avoid longer commitments during uncertainty surrounding an endowment tax decision and threats from the federal government. Although Swarthmore’s endowment tax was cut to 0% from 1.4%, and the college has not faced significant federal research grant cuts, the full-year budget is fiscally disciplined.
In this fiscal year, Swarthmore faculty and instructional staff will receive pay raises — which were frozen in the interim budget — ranging from 2.3% and 4.6%, in line with previous years’ raises and cost-of-living adjustments. Other staff received pay increases in the interim budget, due to a promise from the college. They will also receive back pay, accounting for the interim budget freeze. “These increases reflect the College’s long-standing commitment to pay faculty 102.5% of the average of our peer institutions,” wrote President Val Smith in an email announcing the budget following the Sept. 19-20 meeting of the college’s Board of Managers, during which it was approved.
Spending from the endowment is set to be $130 million this year, representing 4.8% of the total endowment. These funds make up about 60% of this operating budget, according to Vice President for Finance and Administration Rob Goldberg. The proximity of the endowment spending rate to the college’s 5% cap, and Pennsylvania state law’s 7% cap, prompts caution in spending, especially as operating costs continue to exceed revenue. Swarthmore’s endowment spending percentage has fluctuated in the past fifteen years between 4.25% and 4.8%, but increased a percentage point from 3.25% to 4% in those years. Faculty have been asked to reduce requests for food, travel, and professional development. In addition, health insurance premiums for most employees will rise due to skyrocketing plan costs. Swarthmore absorbs about 91% of healthcare costs, but the rising costs have outmatched spending limits. According to Goldberg, students should not see an impact from budget cuts, and faculty hiring will continue.
“We were worried in the spring about all this volatility and the fact that the markets were reacting largely to the tariff announcements. But they rebounded, and the endowment did okay, which helps with the spending rate,” Goldberg said in an interview with The Phoenix. “But we can’t rely on that going forward. We’re in a very uncertain economic period.”
Other sources of revenue for the budget include tuition revenue and alumni donations to the Swarthmore Fund, which are on the rise. Not in the budget is the $42 million cumulative gift from Roy ’70 and Linda Shanker, which Chair of the Board Koof Kalkstein ’78 announced on Sept. 24. As a pledged estate gift, the donation will not impact Swarthmore immediately. For now, Goldberg sees the donation as a vote of confidence in Swarthmore’s mission and a potential catalyst for further fundraising.
“We’re proud of the donor and that he thinks so highly of the college and his experience at the college, and subsequently, how he wants to enhance the student experience and the faculty experience at the college,” Goldberg said. “And that’s really the power of the gift. It’s not so much the financial thing today. It’s more like what it says about his confidence in the college and what that means potentially for other donors.”
Despite the cutbacks, Goldberg stressed Swarthmore’s mission can continue thanks to the budget.
“[The budget] is really meant to protect the mission of the college, and largely guided by the principals in Swarthmore Forward and the strategic plan. Those are the things that are guiding us in this budget.”
