COVID-19 Updates: Fall Semester

A Financial Milestone

May 21, 2019

 

Dear Members of the Middlebury Community,

As some of you know by now, this month the Middlebury Board of Trustees approved a budget for the upcoming fiscal year that projects an operating surplus for the first time since 2012. This is an important milestone for our institution.

It also is a shared accomplishment. While we have benefitted from extraordinary leadership on the part of my senior staff in this journey (more on that later), our success, ultimately, is due to the work and ownership of our staff and faculty. Together, you have made hundreds—probably thousands—of decisions in the course of your work that prioritized our educational mission and brought our expenses into line with our revenues.

For all you have done, I thank you.

I want to share a bit of perspective on the progress we have made. In the fiscal year that ended June 30, 2016, just three years ago, Middlebury’s deficit reached $16.7 million. On top of that, we used $5.9 million in supplemental funds from the endowment. Put simply, we spent $22.6 million more than we took in that year.

There was no choice but to act boldly. In September 2016 we shared with you a plan called The Road to a Sustainable Future. It contained a number of specific actions—most of which we have taken. Given the toll on our community, we determined last year that we needed to accelerate our work toward financial sustainability. Next year’s surplus comes a year earlier than we initially planned. And it comes with a true 5 percent draw from the endowment with no extraordinary funds taken from reserves.

It is important to recognize the effort this took. This process has been both lengthy and challenging, and caused many in our community significant uncertainty and discomfort. Thanks to your participation, the process was successful.

Next fiscal year, our total expenses, including salaries, benefits, non-salary expenses, depreciation, and interest, will be $300,000 less than in FY 2016. The largest change will be in compensation, including benefits. It is important to note that we achieved the compensation savings entirely through attrition and incentive separations. Even though separations may not have been what some had originally planned, I am deeply appreciative of all the work that made it possible to avoid involuntary layoffs. David Provost, Karen Miller, and Jeff Cason, who have led us so admirably through this process, will write to you shortly with more information about the results of the Incentive Separation Plan and the Faculty Incentive Retirement Plan.

We are all profoundly grateful for everyone’s efforts and the impact those efforts will have on ensuring Middlebury’s long-term financial sustainability. Maintaining our secure financial footing will require continued care and attention. The Board of Trustees will consider a proposal at the fall meeting that will require the administration to submit a budget each year that shows an operating surplus. Any proposed deficit would require a supermajority vote of approval.

As we move toward the end of the academic year and Middlebury College’s 218th Commencement Exercises, I thank you again and wish you a restful, warm, and sunny summer.

I am proud to be part of this community.

 

Yours cordially,

Laurie Patton
President

Office of the President

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Middlebury College
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president@middlebury.edu