How have the size of the college budget and the distribution of funds among the big pieces of the pie changed historically, over the last 15 or 20 years?
College expenses for FY2009: $231 million
The largest percent increases over that time were in the areas of financial aid, academic support and student services.
Percentage of the 1995 expense structure:
Instruction: 26%
Academic support: 09%
(Includes the library)
Student services: 10%
Financial aid: 13%
Institutional support: 13%
(Administration, financial services, management)
Sponsored activities: 08%
(grants and research centers)
Auxiliary enterprises: 21%
(retail operations that provide products or services for a fee)
Percentage of the 2009 expense structure:
Instruction: 26%
Academic support: 12%
Student services: 12%
Financial aid: 17%
Institutional support: 16%
Sponsored activities: 01%
Auxiliary enterprises: 16%
Annual average increase over the past 15 years:
Instruction: 6.6%
Academic support: 9.2%
Student services: 8.0%
Institutional support: 8.6%
Financial aid: 8.9%
Sponsored activities: -5.2%
Auxiliary enterprises: 4.7%
How have the size of faculty and staff (and square footage of real estate) changed during that time?
Faculty: in 1994-95, the number of faculty FTE’s (full time equivalents) was 181.5. In 2008-9, it was 222, for a growth of 22%
Staff: staff positions increased from 584 FTE’s to 1008 FTE’s, for a growth of 73%
Square footage: 1.54 million square feet to 2.24 million square feet, for a growth of 45%
How much has the student body grown?
What percentage of the College’s annual expenditures is faculty compensation? Staff compensation?
How do these percentages compare to other, similar institutions?
Amherst
Faculty: 18%
Staff: 34%
Bowdoin
Faculty: 21%
Staff: 35%
Smith
Faculty: 25%
Staff: 35%
Wesleyan
Faculty: 21%
Staff: 25%
Williams
Faculty: 21%
Staff: 28%
How much does it really cost to educate students/majors in various divisions or departments? If there are differences, do grants offset them?
The cost of educating students within individual departments and divisions is a function of overall staffing, equipment, requirements for the major(s) offered by the department, and physical infrastructure relative to number of students who take classes in each area.
We don’t customarily break down costs by department or division, but when looking at the costs as outlined above, the most expensive division per student in this regard is the Arts division, followed by Natural Sciences. The lowest cost per student is found in Humanities and Literature departments.
Grants in the sciences do add revenue, and offset some of the equipment costs, but not all of it. Some of the revenue is not budget-relieving but directed towards activities specific to the grant project.
Indirect cost revenues for all departments in McCardell Bicentennial Hall (Biology, Chemistry, Computer Science, Geology, Geography, Math, Physics, Psychology) for FY09 was $384,991. These funds are used to support the “facilities and administrative” costs of providing a supportive research environment (including utilities, library, general purpose supplies, administration, etc.).
How much do 'auxiliary operations' figure in the budget? What is the cost of 51 Main? The Snow Bowl? Golf Course? Performing Arts Series? Which of these are funded by designated gifts or endowments?
Auxiliary operations are forecast to lose $682,000 in FY 2010. This is down from a loss of $1M in FY 2009, and we are working actively on further reductions.
The Snow Bowl is forecast to lose $325,000 and the Golf Course is forecast to lose $300,000 in FY 2010.
Net cost (cost minus revenue) for the Performing Arts Series is $70,000/year, excluding the staff time to support the series.
51 Main Street is forecast to lose $77,000 in FY 2010 (July 1, 2009 through June 30, 2010), including all costs: staffing, rent, inventory, etc. After a slow start, it has reached close to break-even status in September, October, and November.
51 Main Street is fully funded by a designated gift – therefore, past and projected deficits (for 2010it is $77,000) are 100% funded and its deficit does not affect our operating budget.
How much does Winter Term cost, and what would we save if it were dropped? Is it really 'on the table'?
Winter Term is part of the required instructional year, so if we eliminated it, we would need to add four weeks of instruction to the fall and spring terms. Many fixed costs would be the same, but the greatest savings would come from closing down the campus for a given period. Given the summer program calendars, we are limited to how much we could save heating costs by staying closed in January.
The major additional costs of Winter Term relate to the visiting faculty hired. We hire fewer than in the past, as we have cut back on some course reductions, but we would save approximately $150,000 by eliminating visiting faculty, assuming that the faculty who get WT off in a given year do not get a semester course off, but instead teach a 3-2 load. (It is worth noting that many WT visitors are faculty spouses/partners, and that eliminating WT would remove this teaching opportunity). Some of the 100 or so WT courses we offer each year would need to become semester courses. Another cost-saving approach would be to raise the cap on course size in WT, which is relatively low compared to semester course caps.
Eliminating WT would be a major curricular and calendar decision, and such a change in the instructional calendar would have to be voted on by the faculty and approved by the Board. It is not “on the table” as a straightforward budget-cutting option.
How much would Middlebury save by eliminating the Commons? For example, by eliminating the Commons houses and converting them to student residential academic interest houses? What is the cost of course releases for faculty commons heads?
Much of what happens within the Commons structure would still need to happen even if we did not organize our residential life into five Commons: we would still have student affairs deans, a residential life staff, a structure for programming, etc., and we would still need to select, train, and mentor res life staff, have others advise students whose advisors are on leave or leave the College, etc.
The additional costs derive from the somewhat richer level of staffing associated with having five Commons offices (with five administrative assistants rather than 2 or 3 such as we would have in a centralized dean’s office), and from the presence of five faculty Commons Heads who live in College-owned residences. The total cost of the course releases granted to the heads = 2.5 FTE, for a total cost of $100,000-$250,000/year, depending on whether those FTEs are replaced with single courses or with full-time non-tenure track faculty. The “cost” of the houses at this point, given that we own them, depends on what alternative use we could make of them. Town zoning ordinances currently prevents our using most of them for student residences, and from having more than three live in any one house. If we did house three students each in the three houses where that might be possible, the net revenue would be $300,000 (incremental tuition minus necessary renovation). If we charged our faculty heads rent for all five houses, we would regain $72,000/year.
Were we to eliminate the Heads positions and the Commons houses, we would need to either eliminate programming associated with those venues, much of which supports the academic program, or transfer that programming and the hosting of events to other locations and individuals. Faculty who currently use the Commons Heads and houses as a resource for events associated with their courses, departments, and programs would need to find alternate ways of hosting such events.
We would also want to distribute other responsibilities of the Heads, for example their work with residential life staff, to other individuals at the College.
What is the lifetime financial impact to individual faculty members of a two year salary freeze? How much money was actually saved by freezing staff and faculty salaries?
A faculty member earning $75,000 who does not receive an annual 4.5% increase for 2 years over a 20-year period foregoes $117,000 in present value. The loss is much less significant for faculty members who are farther along in their careers.
Most of our peer institutions, including the wealthiest, instituted similar freezes, so we are not necessarily at a competitive disadvantage relative to other liberal arts colleges, but the individual loss is real.
Two years of freezing staff salaries saved $4.3 million, and the freeze on faculty salaries saved $2.7 million, for a total of about $7 million.
What is the actual cost of the College’s faculty leave program? How much would we really save if the program were scaled down?
The leave program actually saves money on a yearly basis, as faculty on leave are on reduced salary and most are not replaced with additional faculty FTE’s, but with built-in FTE’s already on the faculty. Large departments all have built-in leave replacements; they are staffed beyond need, with an assumption that 1, 2, or 3 faculty will be on leave in any given year. If we reduced the frequency of leaves for faculty, we would need to adjust the FTE count through attrition, as we would have excess faculty on campus teaching. That attrition would be done by reducing the number of faculty who teach part-time (fewer than four semester courses/years) and are not in tenure-track positions.
How much of the College budget is spent on athletics?
$4.8 million, or 2% of the budget. Of this amount, about $4.13 million supports varsity athletics.
How much does it cost per student to fund a varsity sport?
$5,142
How much of this is devoted to large and/or expensive sports like football or skiing?
Football: $5,457 per student
Skiing: $10,176 per student
How much has been cut from this budget?
9.5% of the non-salary budget, or $83,000, which has led to fewer overnight trips, fewer athletes traveling with teams, the reclassification of crew as a Level II club sport, a reduction in travel costs for men's and women’s basketball, and a reduction in the hours of operation of some of the athletic facilities.
And how has athletic staffing changed over the last decade?
Since 1996, the athletic staff has grown by approximately 13 FTEs. This number includes 6 faculty head coaches, 6 staff coaches, and 1 support staff member. Staff growth in athletics has taken place as the College has added sports, converted internships to regular staff positions to conform with Fair Labor standards, assumed supervision of some club sports, and shifted the responsibilities of a select number of head coaches who formerly coached two sports, but now focus on a single sport.
How many teams are “fully endowed”?
Many teams are supported by endowments, and one, lacrosse, has its program/operating budget fully endowed (not including the coaches’ salaries.) Many teams also receive gifts to support specific costs and activities.
Are the Carnival fireworks really paid for by students? Have students been asked to consider alternative uses of these funds?
Yes, the Carnival fireworks are paid for by funds that come from the Student Activities Fee, which all students pay at the beginning of the academic year and which supports a wide range of extracurricular programs. This fee is assessed by the students—literally, it is student money--and has no connection to the College budget. Student leaders are very aware of our current budget challenges, and by participating on the Budget Oversight Committee, they have revisited their funding priorities in several areas. It is unknown at this point whether they will have fireworks this year.
Is maintaining a commitment to diversity too expensive now for the College?
That depends on the College’s priorities, and how one considers the cost of diversity. There is no doubt that recruiting a diverse student body has an impact on financial aid costs. It is difficult to say what price you can put on a socioeconomically diverse student body in terms of the quality of education and work experience for students, faculty, and staff. But recruiting and matriculating diverse students is only part of a diversity initiative. One also needs to have programmatic and staff support to ensure that the diverse students we do matriculate succeed.
What about diversity initiatives other than financial aid, like Carr Hall and the Dean for Institutional Diversity (will we ever see another one?) and outreach for non-white students and faculty?
Several offices are involved in supporting our diversity efforts, and will continue to do so. The question of whether we will have another chief diversity officer has been on the minds of many, and the administration gets more inquiries about this than any other of the open positions in the administration. We would like to fill that position if we can find an excellent candidate for the reasons stated above: a commitment to diversity includes creating the right environment in which diverse students can excel and therefore benefit individually and contribute to the life and vibrancy of the campus.
Has the consolidation of lunch spots (closing Redfield Proctor and Rehearsals, and concentrating on the Grille) had a positive effect on the overall revenue picture for 'auxiliary enterprises'?
Yes. As a result of the closing of Redfield Proctor and Rehearsals, the deficit for auxiliary enterprises will be reduced by $145,000 for FY 2010.
How do non-undergraduate programs, and programs that take place away from the Middlebury campus (Monterey, the Language Schools, Bread Loaf School of English, MMLA) affect the budget? Would we be better off (financially) without Monterey?
The non-undergraduate programs and the programs that take place away from the Middlebury campus achieved a surplus this past year. Individual Schools Abroad can, from year to year, show a deficit, largely as a result of the weak and changing dollar relative to the Euro, but collectively, our eight Schools Abroad routinely add to the College’s bottom line. From the non-dollar perspective, we are seen as leaders in this important and growing academic program.
The Language Schools also operate at a surplus, even when we affix an overhead charge that at virtually all other campuses is not assessed, meaning the Language Schools help to pay for the new infrastructure we have even though all of it was built specifically for our undergraduate, regular-year needs. They also justify many year-round jobs for staff, which otherwise would be 9/12ths or less than full-time. Most important, perhaps, is the prestige the LS bring to the College, and have, for the past 90+ years. In addition, the 11,000 graduate degree holders from the LS have sent and continue to send their very best high school students to the College, which is a hidden benefit of the Language Schools.
The Bread Loaf School of English usually operates at a surplus, though the cost of maintaining and updating the physical plant is significant and will be for a number of years. Some of its four campus locations are more expensive to operate than others. Like the LS, the School of English brings prestige to the College, as the faculty that teaches at Bread Loaf is among the finest assembled for a specialized graduate literature program, and the work that graduates (largely secondary school teachers) of Bread Loaf do in our inner city schools and rural southern schools to improve the teaching of English is remarkable. Because its graduates are secondary school teachers, they serve as informal, and very effective, recruiters for Middlebury College all over the country.
The Monterey Institute of International Studies achieved a surplus the past two years. In addition, the Institute adds $21 million in net assets (assets less liabilities) to Middlebury’s consolidated financial position.
Monterey’s annual budget operates completely independently from that of Middlebury College. That is, Middlebury does not subsidize Monterey’s operations with endowment, gifts, or tuition revenues, and Monterey must generate its own revenues from its students’ tuition, gifts, and its own endowment sources. Former College employees who now work at Monterey, and those who are working there for an extended period, are paid for by Monterey. When Middlebury’s staff do work on behalf of Monterey, Middlebury receives payments through service agreements. The average payment/month is we receive from Monterey for such work is >$75,000/month, or $925,000/year. The added work the staff do for Monterey operations has been factored into the SRC’s staffing analysis and helps to preserve jobs in specific areas at the College.
Finally, the positive financial impact of the non-undergraduate programs, and in particular the Language Schools and Monterey, extends to philanthropy. In the past 4 years, gifts/pledges to the College due to the Language Schools or Monterey included three $10 million donations, two $5 million gifts, and a number of commitments at the $500,000 level. These gifts all came directly to Middlebury, are to be used to support undergraduate programs along with Monterey and the Language Schools, and would not have happened were it not for those non-undergraduate programs.
If we increase the number of students studying at Middlebury Schools Abroad, will additional revenue be generated, and if so, how much?
As with students studying on campus, this depends on how much financial aid a student receives. As on the Vermont campus, a full pay student adds net revenue to the college's bottom line. The amount depends on the operating costs at each School Abroad. Some of our Schools Abroad operate at a deficit, largely due to high fixed costs, particularly related to rental of space, benefits mandated by the state, etc. Each additional student, however, adds to the bottom line, and each School Abroad has a "break even" point in terms of number of students: Schools with higher fixed costs require a greater number of students to break even. Adding students from other institutions to Middlebury Schools Abroad is especially good for the bottom line, since these students are the equivalent of full-pay students, and if they receive financial aid, their home institution pays this aid. Overall, each additional full pay semester student adds at least $1,000 to the bottom line, and Schools Abroad operated at a net surplus during FY09.
If we increase the size of the student body by, say, 40 students, what would be the net financial gain? If we lose money on each student, would it save money to reduce the size of the student body?
An increase of 40 students would realize a gain of $1,450,000. This takes into account the average amount of financial aid we provide for students. Reducing the size of the student body would not save money given that many of our fixed costs, especially in facilities, require a particular student body size to cover costs. Since at some level, and to some break point, each incremental student adds rather than requires added costs, growing the student body is the best way to increase net revenues, but there are other costs a growth in the number of students would generate.
The College made a big commitment to achieve carbon neutrality by 2016. How does the push to carbon neutrality affect the budget? Is it expensive, or is it a cost-savings measure?
It need not add pressure to the budget, and in fact can help our budget. The biomass system cost $12 million. At $2.00 per gallon of fuel oil and $38.50 per ton of wood it will pay for itself in about 8 years.
At those same dollar amounts for fuel, biomass will save us $1 million per year on the reduction of about 1 million gallons/year, and will generate $800,000 of new money into the local economy through purchase of woodchips. Other carbon reduction plans we are looking at will also save money in the long term, and any initiative we are considering today will need to meet some financial standards in terms of a payback period and break even point.
Why can’t we simply trim a bit from every category?
Last year, all departments were required to cut their discretionary budgets by 5%. Theoretically, we could move forward with additional across-the-board cuts, but we believe it makes more sense to approach these cuts strategically, and make sure that our budget allocations are in line with institutional priorities. Not all areas and programs are beginning the exercise in the same position in terms of funding levels or in meeting the needs of their programs. While distributing the cuts equally may sound like a safe approach, weakening the institution on all fronts by cutting across all areas could prove riskier than making decisions, difficult though they may be, about where to focus our energies.
We have a sizeable endowment. Why should we engage in painful cost-cutting, when we could continue to balance the budget for many years by simply keeping the spend rate a bit higher over the next several years?
The purpose of an endowment is to preserve the institution and the core program of the institution to the extent possible. There are well established “spending” rules—that is, how much of the endowment an institution can draw for use to support the operating budget each year—based on the premise that the endowment must retain its value to support the institution, and on what is known as “inter-generational equity.” Many states set a ceiling of spending for non-profits that equals 7% of the endowment’s value. A 5% spend rate ceiling is standard in higher education. How one generation of Middlebury administrators, faculty, staff, and students use and benefit from the endowment greatly affects future generations, and the goal is to preserve the opportunities for future generations through careful stewardship of the endowment. We would not have the relatively large endowment we have today if it were not for the great care the treasurer, president, and board took in ensuring low spend rates during the 1950s-1980s. We have spent at a higher rate from our endowment than our peers since the mid-1990s, largely to support our campus’ infrastructural expansion and improvement, the growth of the faculty and staff, the improved financial aid program, and the much more competitive salaries for faculty and staff. To once again spend beyond what is recognized as prudent management for the long-term well being of the endowment (5% of the value/year) would place the endowment and the institution at greater risk.
The recession is a temporary downturn. Given that stock markets (and endowment earnings) are likely to recover in the next few years, why do we have to make permanent changes? Can’t we just tighten our belts for a few years and weather this storm?
No, not unless we want to repeat all of this five or ten years from now. All of our revenue projections in terms of salaries, improved financial aid, increased funding for programmatic support, and the increased cost of maintaining our campus infrastructure have fallen short, and that gap will take a very, very long time to make up. So, while the markets may look good at any one time, the overall loss of institutional wealth is significant and leaves a continual gap in our revenues. Based on our 2006-07 projections, our endowment today (FY2010) should have been $1.06 billion. Instead, it is around $750 million. That $300+ million deficit generates a $15 million shortfall each year to support our operating budget—that is, $15 million less than we projected and planned on, and we therefore need to make cuts. Any growth in the endowment now adds to the endowment, but does not close the gap of the missing revenue. In addition, some things external to the College will have an impact on our access to revenues: fundraising will take a while to recover, as those who had been planning to support the College lost significant wealth and need to wait to see how their assets fare before committing to support the College; access to relatively cheap credit is a thing of the past; and the tax laws are predicted to change, with the likely impact being fewer benefits to large donors who contribute to non-profits.