Budget deficit forces job cuts

Author: Kelly Janis

The College is mobilizing to cope with an anticipated $9 million to $10 million budget shortfall for fiscal year 2010, eliminating at least 100 staff positions and weighing cuts or changes to auxiliary operations such as the Snow Bowl, golf course, bookstore and The Grille.

The losses are a product of diminished philanthropic support in light of the global financial crisis, as well as a dramatic decline in the value of the College's endowment, which supports 25 percent of the budget.

"Our long-term financial model assumes a nine percent annual return on the endowment, but instead of growing, our endowment shrank by 19 percent between July 1 and Nov. 30," President of the College Ronald D. Liebowitz wrote in a Dec. 22 message to the College community.

The extent of the decline is expected to reach 25 percent by the end of the College's fiscal year in June. This marks the second time in two years that the endowment return has been negative. Current projections suggest a flat return for next year, according to Vice President for Administration and Chief Financial Officer Patrick J. Norton.

"The impact to our operating budget will therefore be felt for longer than three years," Liebowitz wrote, "and, because deficits compound each year, it is crucial that we make reductions sooner rather than later."

To this end, the Budget Oversight Committee (BOC), which convened in the fall to recommend budget cuts to the president, is increasing its number of meetings from one to two a week during the Winter and Spring terms.

Some of the measures it is considering are drawn from the 150 to 200 cost-cutting ideas submitted online by members of the College community. Norton said that although those suggestions are reviewed and "taken very seriously," many of them - such as using less paper, or adjusting the thermostat - are dealt with on the local level, rather than being put before the committee.

"We want to deal with big ticket items, where we can get the most bang for the buck," Norton said.

Chief among these items are auxiliary operations such as The Grille, The Juice Bar, The Snow Bowl, Ralph Myre Golf Course, The College Bookstore, catering services and the new student social space at 51 Main Street.

"The budget provides a tremendous subsidy to keep these units operating the way they're operating," Norton said.

As a result, discussions of how to make them more profitable are underway.

"There will be some changes," Norton said. He predicted that the majority of them - particularly in the case of the Snow Bowl and golf course - will be rooted in matters of management and pricing, rather than drastic overhauls of service.

As the College's vice presidents exercise a process of "prioritization" to extract five percent of all discretionary spending from their budgets, there may also be changes made to social events and other components of student life. The social life on campus may have to be altered if students do not want to see the comprehensive fee rise yet again.

"We're not going to be raising tuition a huge amount to cover this shortfall," Norton said, but added that determining the comprehensive fee is "a part of the budget process" and remains to be seen until a meeting with Trustees in February.

In an effort to approach the situation from what Norton called "a position of strength," College officials are seeking silver linings to the budget troubles.

The "financial challenge FAQs" on the budget office's Web site suggest, for instance, that spending cuts may accelerate the achievement of carbon neutrality "if the ultimate reductions are made in areas that typically contribute to the institution's carbon footprint."

Norton reported that the "shiny, new" $11 million biomass facility behind the Service Building is already burning wood chips. When it is fully functional by the end of the month, he said, it will "get us a long way toward carbon neutrality."

"We would look at any financially positive ideas around carbon neutrality, for sure," Norton said. "If it makes economic sense, we would look at any idea."

Recommendations will be made public on the College's Web site as they are approved. Norton said he expects the first batch to be posted shortly.

"We're trying to be as open and honest and transparent around this process as is possible," he said.

Nevertheless, members of the nine person committee of administrators, faculty, staff and students have been instructed to remain tight-lipped.

Although Assistant Banquet Chef Patricia McCaffrey initially agreed to an interview, she later declined.

"Regrettably, we were all reminded this morning that only Patrick Norton, the committee chair, is to be the spokesperson for the committee," she wrote in an e-mail. "All interviews are to be referred to him. About all I can say is that I am Staff Council President this year. That is why I was asked to be on the committee to represent staff. Sorry - I cannot comment further."

The remainder of the committee's members were similarly unavailable for comment. Norton said later that his role as sole spokesperson was intended to ensure that the group's message is consistent, and that confidential items are not leaked to the public. He will continue to relay this message to the community in a series of open meetings planned for Winter Term.

Some members of the Student Government Association criticized one such presentation given in the fall. A Nov. 6 article in The Middlebury Campus noted that "certain senators expressed reservations about the glib and polished nature of the presentation, and skepticism about the large volume of information thrown at the joint session in a short period."

"I get the feeling they're trying to sell us on something," senator Annie Weinberg '10 said after the meeting.

Norton laughed when the passage was recited to him. He said he took "polished" as a compliment, and acknowledged that there are bound to be critics of the plan.

"We didn't want to make the presentation less informative," he said. "What I heard from some students is that they were thankful we didn't dumb it down for them. As far as selling? It's all there. We're being as transparent as we can. It's definitely not a sell job."

Norton called the committee's evaluation of recommendations "a good process," and suggested it might continue, in some form, in the future.

"Obviously, we're doing this under the duress of the financial challenges," Norton said. "But maybe when we're not under duress, we could do it as well."