09/08/08: Letter to staff & faculty colleagues
September 8, 2008
To Staff and Faculty Colleagues:
I hope your summer was both productive and restorative, and that we now collectively begin the academic year energized as we welcome the students back to campus.
I am writing to outline plans we are developing to address the financial challenges brought on by what has now become a global economic slowdown. Middlebury is not immune to the greater national and global economies, and we therefore need to respond to the current economic downturn in a disciplined and thoughtful fashion. We want to prepare for what appears will be a prolonged period of low or no growth; by most accounts, a recovery is likely to take two years, and so the processes and plans we put in place need to extend beyond the current fiscal year.
Fortunately, we will address these financial challenges from a position of strength. Our institutional reputation is excellent, applications and selectivity are at record levels, and fundraising has reached all-time highs. Yet, despite the College’s strong financial foundation, the effects of a declining or stagnant stock market will reduce the level of support the operating budget receives from the endowment, and a prolonged economic slowdown is sure to have an impact on charitable giving to the College. Thus, two of the College’s three main sources of revenue are likely to decline and fall short of the targets we had set in our multi-year financial model. The third major source of revenue, the comprehensive fee, cannot be increased to the level necessary to cover our expected revenue shortfalls.
Over the course of the next eighteen months, we will be looking at ways to reduce operating costs across the institution. We will curtail planning for major renovation projects. The McCullough and Proctor renovations are well underway, but ongoing discussions about other projects will be limited. Any new construction project will need to be fully funded by donors, and must include additional endowment support so the maintenance and operations of the new structure will not have a negative financial impact on our operating budget. Similarly, as was the case with McCullough social space, any renovation project that moves forward will need to be fully funded, either by donors or through the College’s maintenance and renovation reserves, which are funded annually for the sole purpose of maintaining and modernizing our campus infrastructure.
There are certain areas whose funding will be protected. We are committed to maintaining our need-blind financial aid program and to providing the highest standards in student services; we are committed to continuing a competitive compensation program for faculty and staff based on performance; and we are committed to investing in programs recommended in our strategic plan that are intended to strengthen us in the future. At the same time, because of the expected decline in revenues over the next few years, the pace by which we will implement some recommendations in the strategic plan will be slower than originally planned.
I have asked our vice presidents to begin working with senior managers in their respective areas to identify ways to reduce expenditures from our operating budget. I will be engaging Faculty Council, Staff Council, and Student Government leaders to discuss the formation of a campus-wide committee that will help provide ideas and make recommendations on how best to reduce spending. We will also be looking to the larger community for ideas and suggestions by hosting open meetings throughout the year. In the past, some of the best ideas on how to realize savings have come from individual faculty, staff, and students. I encourage you to get involved and to share your ideas as we work together to meet the financial challenges ahead.
While this particular downturn in the economy appears to be deeper and broader than we have experienced in recent years, I am confident that, working together, we will ensure our financial equilibrium by closely reviewing our expenditures and focusing our resources on the College’s priorities. In advance, I thank each of you for your participation in and commitment to this process, which will strengthen Middlebury both today and in the future.
Ronald D. Liebowitz