01/29/09: An update from the president on College finances and the budget planning process
To the Middlebury College Community:
I write to provide an update on College finances, and to let you know where we are in the budget cutting and budget planning process for next year.
Throughout this process, we have been guided by the goals outlined in our Strategic Plan. However, given financial circumstances, it has become increasingly clear that we will need to slow the pace at which we achieve these goals, including our plans to increase the size of the faculty and implement several associated curricular reforms. I will soon be meeting with the Educational Affairs Committee to discuss how we might revise our hiring schedule and the implications of doing so.
We have made great progress toward our goal of identifying and reducing expenditures by $20 million over the next several years. Suggestions from the community and President’s Staff have gone to the Budget Oversight Committee (BOC). Some of them have been forwarded to me for approval, while others are still under consideration. By acting on these recommendations, along with maintaining our hiring freeze, carefully managing our salary pool for next year, and reducing non-salary expenses, the College will save $10 million, bringing us halfway toward our goal.
Our efforts to reduce the projected budget deficit will continue this spring through the ongoing work of the BOC. In addition, we will offer to eligible members of the staff a voluntary early retirement program (ERP), which will help us meet our attrition goals and lead to further budget reductions. Information on the plan will be sent to staff on Monday, February 2.
These initiatives will address our projected deficit in a significant way. However, there is no clear sign that the bottom of this global financial crisis has been reached, and so our efforts to reduce spending will have to continue next year and perhaps beyond, depending on when the financial markets and economy recover.
I will continue to update our community on our thinking and plans as we continue to monitor and respond to the global recession. For now, however, I turn to the plans we will be pursuing in the more immediate future.
The economic downturn has made it very difficult for many colleges and universities to increase compensation in the coming year, especially those that rely significantly on income from their endowments to support their operating budget. Bowdoin, Brown, Wellesley, and most recently, Williams have announced that they will forego salary increases next year, with few or no exceptions. Harvard and Yale, the wealthiest schools in the country, have capped salaries for next year: faculty and staff at Harvard’s Faculty of Arts and Sciences will receive no salary increases, and raises for faculty and staff at Yale will be capped at a maximum of 2 percent for those earning $75,000 or less, with lower merit-based caps ($1,500) for employees with salaries greater than $75,000.
Though we are committed to competitive salaries for our faculty and staff, and recognize their importance in hiring and retaining the best faculty and staff, we believe it would be unwise to raise salaries this coming year as if it were business as usual, especially when the cost of living has not increased significantly (0.1 percent) since December of 2007. We will provide a 2% raise for employees who earn $50,000 or less, but hold flat the salaries for those who earn above $50,000. In addition, all members of President’s Staff, which includes 16 colleagues, will take at least a 2.5% reduction in salary. Vice presidents will take a 5% cut, and my salary will be reduced by 10%. This will be the second year in a row that the vice presidents and I have not received a salary increase.
Since December, the BOC has forwarded twelve recommendations to me, and I have accepted them all. Some require further discussion. Those accepted recommendations are, in no particular order:
1. Staff attrition goals: the College will pursue the goal of reducing staff by at least 10% of current levels through attrition by 2011. This means we are aiming for a reduction of at least 100 staff positions.
2. Financial aid: the College will adjust the family contribution as well as the academic year work expectation for students receiving financial aid. These changes will be phased in one year at a time, beginning with the class of 2013. Current students will not be affected by this change.
3. Financial aid for international students: for the coming year, the College will reduce the amount of financial aid set aside for incoming international students. The reduction in aid for the first-year class will likely result in a decrease in the number of international students in the entering class. Despite this expected decline, the overall number of international students in the student body will continue to exceed the College’s goal of 10%. In addition, the projected amount of financial aid committed for international students next year ($8 million) will still be higher than the average amount of aid awarded over the past three years ($7.5 million/year).
4. First-year orientation: the College will eliminate the MiddView program, including the overnight camping trips known as MOO. In its place, the College will develop an orientation program that is cost-effective and makes good use of the resources available on and around the Middlebury campus.
5. Curricular: the Educational Affairs Committee will begin a discussion to reduce the expense of Winter Term.
6. Course releases for faculty: The Faculty Council will work with the Educational Affairs Committee to recommend to the administration how to reduce at least 35 faculty “course releases.” This change will add courses to the curriculum and make unnecessary the filling of seven replacement faculty positions, which will provide budgetary savings.
7. Golf Course and Snow Bowl fees: the Director of Business Services will work to reduce the discounts we provide to employees and other friends of the College for the use of these facilities. These changes will be introduced during the summer of ’09 and the winter of ’09-’10.
8-12. Dining and Dining Events: The following changes were recommended in order to reduce the scope and expense of dining services on campus. These reductions have staffing implications that are summarized at the end of this section.
8. Beginning in Winter Term 2010, Atwater dining hall will no longer operate as a regular College dining hall, and instead will become a special events venue to host dinners and receptions associated with campus lectures, the language table program, student social events, and other activities. When Atwater ceases to function as a regular dining hall, the renovated and expanded Proctor and a slightly expanded Ross will be the venues for the student meal plan.
9. Dining Events will reduce significantly the number of events it supports on campus by eliminating the current “right of first refusal” policy, which means that event hosts will be given additional flexibility to contract with outside caterers and thereby make the best use of their resources. In addition, dining events will be newly priced to reflect the true cost of providing services, including overhead expenses (e.g., space usage, fuel and electricity, management oversight, plus other indirect costs associated with running dining events operations).
10. The College will close Rehearsals Café, effective immediately, in order to reduce operational costs at that location. Staff members who work at Rehearsals will work at other dining locations.
11. The faculty and staff lunch venue will move from its temporary location in the CFA to the Crest Room in McCullough. Although this change will limit the ability of student organizations to use the Crest Room during the morning and lunch hours, students will have access to the space in the late afternoon and evenings.
12. The hours of operation for the Grille/Juice Bar will be reduced to reflect demand. Staff will be moved to other dining locations.
When Atwater dining hall changes its function in January 2010, fewer staff positions will be needed to operate the College’s dining services, which could lead to an involuntary reduction in the work force. It is important to emphasize that the College will adhere to the guidelines outlined in our Reduction in Force (RIF) policy in overseeing the staffing changes in this area. I also want to stress that this reduction in service—and staff—may not result in layoffs. Atwater’s change in function is eleven months away, and between now and then dining managers will be working with other College administrators, as well as the Staff Resources Committee (SRC), to reorganize their staff and to identify other employment opportunities on campus for colleagues currently working in Atwater who are not able to shift to other open positions in dining services.
In short, while we have reluctantly come to the decision that we must decrease the size of the dining staff in order to reduce the budget, we are committed to supporting the people in those positions by working with them to identify alternative career options and doing all that we can to avoid layoffs. If we have not met our attrition goals by January 1, 2010, we will notify the College community of our intention to reduce the dining staff by a specific number. At that point, we will follow our RIF procedure step-by-step, continuing to provide staff with alternatives to an involuntary reduction in force.
We will be posting a list of frequently asked questions (FAQs) on the College’s Web site that explains in further detail how the RIF procedure will be implemented, if necessary.
Early Retirement Program
We will offer a voluntary early retirement program to staff members who have met certain age and length of service criteria. Early next week, the College’s Chief Financial Officer Patrick Norton will send an e-mail to staff providing details about the ERP. Although we risk losing valued employees along with considerable institutional memory by offering this option, we believe that this program will give staff members additional flexibility in planning their retirements while at the same time achieving necessary position reductions through voluntary means.
We have scheduled a series of meetings, the first of which will take place on February 5 and 6 in McCullough, to answer questions people have about these specific initiatives or anything related to the College’s approach to the ongoing financial challenges. I hope to see many of you at these meetings.
I want to thank the students, faculty, and staff members of the BOC for their hard work on a very difficult task. And I want to thank each of you, once again, for all you are doing for the College, as well as for the patience you have shown through this process, as we work through these difficult times together. As I have said in my previous communications, the College has come through a number of difficult periods throughout its 209-year history. And although these are, in many ways, unprecedented financial times, our institution is prepared to meet the challenge. The College is blessed with loyal and dedicated alumni and friends, whose support has been so essential to our success. But along with this vital external support, meeting the current challenges will require from all of us an institution-wide perspective on the changes we need to enact, and a genuine commitment to sharing the burdens and sacrifices that are inevitable in these times.
I am confident that our community will rise to the occasion and will, in fact, succeed in preserving, through this difficult period, the excellence of Middlebury College.
Ronald D. Liebowitz
President of Middlebury College