10/08/08: Letter to the College community
To the College Community:
Since my memorandum to the campus on September 8 regarding the economy, much has changed in the financial world. While I noted several challenges we anticipated with the onset of a global economic slowdown, I now feel we need to take some immediate steps to ensure the short- and long-term well-being of the College. I am including a lengthy “questions and answers” document with this memo that I hope will answer some of the questions you might have about College finances.
Although we are in a relatively strong position compared to most institutions of higher education, the impact of the current turmoil in the markets is now being felt throughout higher education. Nobody is immune.
Our financial health relies on our level of spending and three revenue sources: endowment performance, fundraising, and revenue from our student comprehensive fee. We can’t predict the results of the first two revenue generators, though they are likely to be less than previously planned, and there are limits to how much we can and want to raise the third—our comprehensive fee. We do, however, have control over our spending.
Therefore, in addition to the recommendations I anticipate coming from the campus-wide committee to be convened by our chief financial officer Patrick Norton, we will institute, effective immediately, a hiring freeze on all but the most essential staff positions. We will also reduce travel for College business, and limit significantly the use of outside consultants and contractors. Finally, although we remain committed to the additional faculty positions recommended in the College’s strategic plan, the pace for adding these positions is likely to be slower than originally planned. In addition to these measures, we expect that all members of the College community—faculty, staff, and students—will exercise restraint and responsibility in their use of College funds.
We may need to take additional steps in the coming weeks and months, as developments seem to be surfacing every few days that challenge our financial position—the most recent of which is the shortage of cash available to many colleges. The cash shortage has been exacerbated by the status of the Commonfund, a fund used by more than 900 colleges and universities including Middlebury to invest cash for short-term needs. Fortunately, we are well-positioned when it comes to access to cash, and so the Commonfund problem is a minor inconvenience. However, this kind of development, unpredictable and really unfathomable just three weeks ago, requires us to operate prudently and to implement the aforementioned policies.
Our goal in the coming months is to ensure the long-term financial health of the College without diminishing the quality of a Middlebury education. For more than 207 years the College has addressed financial challenges in responsible ways and emerged stronger each time. By taking steps now, we are acting in that same tradition.
Thank you for your understanding and support.