Provost Addresses Future of College's Budget

Author: Ronald Liebowitz

In his memorandum in Nov. 2002, President McCardell reported on the financial challenges facing the College as a result of the current national economic downturn and the related decrease in the value of our endowment. He also outlined the general approach that the College administration would take to deal with these challenges.
The College's most immediate response to the increased financial pressures was to look to our fundraising programs -- and to our alumni/alumnae and friends -- as a source of additional revenue. Consequently, we have increased our fundraising goals, over the next two years, by approximately $30 million beyond our original plans. These new resources will be additions to our endowment, and will generate more funds to support our operating budget.
However, because more vigorous fundraising alone cannot compensate for the full impact of the economic downturn, the effect of which would leave us with an estimated $11 million deficit in fiscal year 2005 if we did not tackle the challenge, it has also been necessary to make significant reductions in the budget.
The executive council of the College (members of the council are listed at the end of this letter) has been working for the past several months to evaluate various options for reducing the budget -- options that have come from departments all over campus.
We have been guided in our discussions and deliberations by our focus on students, by a commitment to retain need-blind admissions and meet the full need of students offered admission, by the desire to maintain the excellence of our core academic program, and by the importance of preserving a sense of community on campus. This last principle echoes President McCardell's position in his November letter to the community in which he stated we would not balance next year's budget by laying off staff members.
While it is crucial that we all understand the seriousness of the College's financial condition, it is also important to know that the College is not in the midst of a financial crisis. The endowment, though reduced in value, is still substantial, and its strength has allowed the trustees to authorize a temporary increase in the amount we draw from it to support the operating budget. Our current work and financial planning is designed to ensure that our reliance on the endowment declines over the next five years, so that our spending rate -- the percentage of the average value of the endowment we use each year--returns to five percent by fiscal year 2009.
We have not instituted across-the-board measures that would have imposed percentage cuts on all programs and departments. Instead, we have worked with individual departments and directors, identifying activities that could be reduced in scope to produce the savings needed to balance the budget. As a result of this process, we have developed financial projections for the next six fiscal years (from 2004 to 2009) that balance the budget without compromising the College's ability to provide an excellent educational experience for our students.
It has been a difficult process to decide which budget-saving measures to recommend to the president, but I am fully confident that the actions we have taken will be both effective and responsible.
The measures we recommended to be incorporated into next year's budget are listed below in summary form. Some of these measures increase College revenues, while others reduce the budget. In the next few weeks, department heads, supervisors and budget administrators will provide more detailed information about specific decisions, along with the impact they will have on College operations.
Revenue enhancements: increase fundraising goals (for the endowment) by $30 million over the next two years; increase student enrollment to 2,350 one year earlier than planned; selective implementation of fees for non-College use of facilities.
College-wide efficiencies: extend the life cycle of some College equipment; replace some print publications with online publications.
Streamline events/programs: suspend, for the time being, off-campus winter term courses; reduce the number of all-campus large gatherings; limit Snow Bowl shuttle to a Friday-Sunday schedule; provide fewer amenities for Commencement and other campus-wide events.
Departmental efficiencies: implement budget reductions in printing, travel, office supplies, and catering across College offices; reduce College overtime by 10 percent.
Staffing: scrutinize, at both the Vice Presidential level and on the Staff Resources Committee, requests to fill vacant positions or to renew term positions; approve fewer requests for new staff; reduce projected salary and benefits pool from levels established before the economic downturn.
Reserve for Maintenance and Modernization: reduce the amount of funds set aside for maintaining and modernizing the College's physical infrastructure from approximately $7 million to $6 million; this change will still leave Middlebury in the top tier of colleges in terms of the level of funding set aside for maintaining and modernizing infrastructure.
These are examples of the kind of reductions we have recommended to the president. There is more to be done. The economic climate will remain uncertain for some time. It will be the responsibility of all of us who serve this institution to continue the efforts we have begun to streamline our operations, while preserving our core programs and activities.
During the past few months, many of us have had to take a close look at what we do and how we do it. We achieved our goal of producing balanced budgets by focusing on things we considered to be non-essential to our core mission, and without laying off any staff members. We were compelled to begin evaluating the effectiveness of our programs and their centrality to our core mission, and of devising efficiencies that would permit us to accomplish our mission with fewer resources. This process, still ongoing, will also permit us to emerge from our financial challenges fiscally stronger and with our attention focused closely on the most important things we do.
As we work together as a community, I am confident that, if we are mindful of the fiscal health of the College, and mindful of opportunities to conserve our resources, we can preserve the excellent educational opportunities that make Middlebury the distinguished college it is, and of which all of us are a part.
Sincerely,
Ronald D. Liebowitz
Provost


Members of the Executive Council

Kristen Anderson
Phil Benoit
Rebecca Brodigan
Eric Davis
Barbara Doyle-Wilch
Betsy Etchells
David Ginevan
Ann Hanson
Sally Holland
Mary Hurlie
Robert Huth
Ronald Liebowitz
Drew Macan
Robert Schine
Mike Schoenfeld

Editor's Note

This letter was originally intended for publication in the Feb. 12. edition of The Middlebury Campus. The letter appears here in the same form as it did in a student-wide e-mail distributed Feb. 12.