Chapter Six: Finances & Strategic Planning Priorities

In reviewing the resources needed for planning initiatives, we frame our initial discussion in terms of three major and resource intensive strategic priorities:

1. Increase financial aid to provide better access to Middlebury and thereby enrich the educational environment for our students.

2. Expand the faculty to support intensive student-faculty interaction.

3. Develop further and plan to complete the Commons as the cornerstone of residential life.

A significant part of Middlebury College's strength today derives from wise and prudent fiscal management of the College over many decades. The College has operated with balanced budgets that provide funds to care for our relatively large and stunningly beautiful campus in Middlebury, thereby avoiding the challenges of deferred maintenance that have plagued many colleges. Middlebury has carefully managed a growing stream of gifts to the College, so that their long-term capacity to support programs for which they were intended has been maintained even in times of high inflation. These practices, as well as the remarkable generosity of the College's alumni and other supporters, have allowed our endowment to grow to three-quarters of a billion dollars at the end of 2005. Annual giving from our more than 22,000 alumni body reached a record-high participation in 2005.

It is also important to acknowledge, however, that the dozens of ambitious recommendations contained in this report will only be possible in the context of an equally ambitious fund-raising program. We are optimistic and excited about the prospect for success in this area, given our superb development staff at the College and the many ways in which Middlebury merits such support. But the community will need to keep in mind that the package of proposals here will depend upon substantial increases in the endowment and operating funds and that they will need to be phased in as additional resources become available.

This chapter of the planning report outlines financial assumptions that will guide the use of College resources to achieve these planning initiatives, and it prioritizes those recommendations that require significant resources. All planning recommendations reviewed in this chapter were introduced in earlier chapters, and we include some recommendations beyond the three summarized above primarily as illustration of initiatives having significant costs attached.

A core objective in using College resources is to maintain balanced annual operating budgets that reflect the goals of the strategic plan under a set of realistic and prudent financial assumptions. By 2009 these budgets should return our rate of spending on the endowment to the traditional level of five percent. The budgets should continue to reflect Middlebury's strong commitment to its people; providing both adequate financial aid to meet the full assessed need of all aided students including our 10 percent international student population, as well as competitive compensation for faculty and staff. These budgets should also continue to reflect the College's strong commitment to its facilities, providing adequate resources for the ongoing maintenance and modernization of the College's buildings. Our ability to address other planning initiatives depends in part on managing budgets that first satisfy these important needs.

The College's annual revenue derives primarily from three sources: comprehensive fees, income from invested funds, and gifts and grants to the College. To balance the budget, the College will continue to charge families a competitive comprehensive fee, and it will need to supplement this revenue with increasing levels of endowment income and annual gifts. Budget planning on revenue growth that is dependable and sustainable reduces risk and the potential for negative outcomes.

• The College will continue to have balanced operating budgets.
• The budget will provide competitive salaries and benefits for all employees.
• The College will continue its commitment to need-blind admissions and to meeting the assessed financial needs of students who qualify for financial aid.
• The budget will include adequate provisions for maintenance and modernization.
• The comprehensive fee will remain the primary source of revenue for operating the College.
• The endowment spending rate will return to five percent by fiscal year 2009.
• We assume that our invested funds will provide a nine percent annual return.
• We assume a six percent annual increase in the annual giving fund and alumni giving participation rates even higher than the record 55 percent rate just achieved.
• New gifts, increased fee and endowment revenue, and budget reallocations will provide for the incremental operating costs associated with strategic planning initiatives.
• New capital projects recommended in the plan will be considered either when the project provides an economic payback (e.g., biomass project), when all associated costs for approved projects are covered by new gifts, or after the spending rate on the endowment has returned to five percent. 

Seeking New Resources

The strategic plan identifies initiatives that will require additional resources beyond those projected in the current planning model. The model already assumes a growing revenue stream derived from gradual increases in the comprehensive fee, a nine percent annual return on the endowment, and a steadily increasing level of giving to the College. To carry out our most ambitious planning recommendations requires that the College launch an equally-ambitious fund raising campaign that can help in meeting both our ongoing annual needs and the new initiatives identified though the planning process.

The time is right to return our attention to the human dimensions of Middlebury. The highest priorities identified in the strategic plan are to ensure financial access by all students to a Middlebury education, and to enhance faculty-student interactions. We advance these priorities, recognizing that the College has succeeded in building a superior physical infrastructure to support teaching and learning.

The third substantial funding priority—the completion of the Residential Commons physical infrastructure—will be done in three phases. The first phase will focus on the programmatic needs of the Commons and will begin immediately. The second phase considers building new student residential space and renovating certain residence halls. The third phase completes the decentralized dining portion of the Commons program. Phases two and three will occur as financial capacity permits. These phases could be accelerated as a result of significant additional endowment performance or restricted gifts beyond current expectations.

We outline the three strategic priorities with their associated costs in more detail below. Approximate costs appear first as the eventual annual increments to the operating budget, and then either as increases in the endowment needed to generate the funds to support the incremental annual operating costs, or as capital costs for new construction. Note that operating costs are those incurred each year, and they would thus need to be incorporated in the College's annual budgets. Given a spending rate on invested funds of five percent, a $1 million new expense in the annual operating budget would require $20 million in new endowment if investment income were the only source for the new initiative's ongoing support. Capital costs are large expenses that we incur once, such as when we replace a boiler to heat the campus or when we build a new residence hall. Some capital initiatives, such as a new building, increase operating costs because of their upkeep and maintenance needs.

These three major priorities, as well as other priorities identified in this strategic plan, will be undertaken as financial capacity permits.

Strategic Priority #1: Increase financial aid to provide better access to Middlebury and thereby enrich the educational environment for our students.

Eventual Incremental Annual Cost to the Budget: $5 million.

If this initiative were to be funded fully from endowment earnings, the endowment would have to increase by $100 million.

Increasing the level of financial support available to students having demonstrated need is our top priority because we believe matriculating the students we accept is the best way to increase quality and diversity, broadly defined, and thereby create the richest learning environment for our students. Within this priority we include

• Increasing endowment support for grants and scholarships
• Increasing the size of grants in financial aid packages in order to reduce the size of student loans
• Limiting the amount of debt that students from the neediest families are expected to assume
• Expanding access to internships for students who could not otherwise afford them
• Providing financial aid to support winter term off-campus study

Strategic Priority #2: Expand the faculty to support intensive student-faculty interaction.

Eventual Incremental Annual Cost to the Budget: $4.25 million.

If this initiative were to be funded fully from endowment earnings, the endowment would have to increase by $85 million. 

Providing additional resources to support the faculty in strengthening teaching, reducing class size, fostering continued close interactions with students, improving opportunities for student advising and mentoring, and implementing specific curricular changes is also a top priority. This item supports

• Maintaining competitive compensation to attract and retain an outstanding faculty
• Adding 25 faculty members
• Increasing funding for faculty research and development
• Providing additional funding for faculty-student collaborative research

Strategic Priority #3: Develop further and plan to complete the Commons as the cornerstone of residential life.

Eventual Incremental Annual Cost to the Budget: $4.6 million.

If this initiative were to be funded fully from endowment earnings, the endowment would have to increase by $92 million. The additional capital costs are approximately $90 million. (This estimate is based on the most recent estimates for the cost of completing the Commons infrastructure. A committee will provide a more detailed assessment of the Commons' needs, and the estimate is likely to change as the program is tested and refined over time.)

Continuing to address the goals for the Commons, including the eventual completion of the Commons infrastructure, is our next priority. We envision

• Phase 1: Enhancing Commons programming each year and addressing access to existing senior housing
• Phase 2: Adding upgraded housing for seniors through renovation and new construction
• Phase 3: Building Commons dining for Brainerd, Cook, and Wonnacott Commons.

In addition to the three highest strategic priorities, other important planning initiatives also have associated costs. Designated gifts will meet some of these needs, and other initiatives can be handled through the annual budget process and the reallocation of existing resources. We present below cost estimates for planning initiatives in three categories with specific illustrative examples. Other important planning initiatives that make fewer or no demands on financial resources are not listed here.

Additional priorities and costs for initiatives identified below
Incremental Annual Cost to the Budget: $1 million. If this initiative were to be fully funded from endowment earnings, the endowment would have to increase by $20 million. The additional capital costs are approximately $5.1 million.

Staff support, development, and professional growth
• Maintain competitive compensation to attract and retain an outstanding staff
• Expand professional development and educational opportunities for staff
• Increase staff diversity

Bread Loaf School of English, Bread Loaf Writers' Conference, Language Schools, and Schools Abroad
• Increase the availability of financial aid
• Improve salaries for faculty
• Create a Robert Frost Writer-in-Residence faculty position to strengthen ties between the Bread Loaf School of English and the undergraduate college.

Enhancing our commitment to the campus environment
• Install the biomass energy facility
• Implement strategies to meet our carbon reduction goals, for example, by reducing energy use for transportation
• Make the campus more ADA accessible, with a goal of universal access
• Make the campus more pedestrian-friendly

Financial Capacity and a Wise Use of College Resources

The combined estimated costs of all the strategic planning initiatives identified above create an incremental impact on annual operating budgets of approximately $15 million which, given the limited discretionary resources available in our budget, is a significant increase. The total capital costs of the projects needed to support these initiatives, along with the incremental endowment dollars necessary to support these initiatives on a yearly basis, is approximately $392,000,000. These amounts leave no doubt about the magnitude of the challenges we face, both in terms of attracting generous support from our alumni and friends, and strengthening the performance of our endowment.

The strategic plan identifies many initiatives that require significant resources beyond those now projected by our current ten-year planning model. We will need to schedule the introduction of new initiatives to match the availability of financial resources. Progress with planning initiatives will come at a pace that can be supported and sustained by the addition of new resources or the reallocation of existing resources. We recommend the following strategies to support the planning priorities.

• Introduce the changes in financial aid packaging one class at a time, beginning with the class that enters in fall 2007.
• Expand the faculty gradually, perhaps at a rate of about three or four positions per year, beginning in fall 2007. In addition to allowing new funds to be raised to support this initiative, this gradual approach avoids the displacement in the community that accompanies rapid expansion.
• Provide support for the Commons system in phases, with programming initiatives accomplished before undertaking the construction of new residences or dining facilities. New construction will only begin as the required financial resources become available, and needs for improved residential space will be met before we add the dining components to the remaining three Commons.
• Make other budget decisions that are consistent with both the relative importance of the initiative and the availability of College resources.
• Develop a fund raising plan for increasing our financial capacity as an essential part of the implementation of new planning initiatives.
• Pursue those strategic initiatives identified by the planning process sooner than expected if and when large restricted gifts make it possible to do so.

The Planning Steering Committee and the President's Staff acknowledge the imaginative contributions and the hard work of all the members of our planning task forces and other planning committees. The reports submitted by these groups in May 2005 provided the foundation upon which this planning report was built. They will also serve the College community well in the coming years in other venues. We are deeply indebted to all those named below.

Task Force on Campus Facilities and the Environment

• Glenn Andres, Christian A. Johnson Professor of Art
• Scott Barnicle, Atwater Commons Dean
• Lisa Boudah, Director of Public Safety
• Pieter Broucke, Associate Professor of History of Art and Architecture (chair)
• Kateri Carmola, Assistant Professor of Political Science, C. A. Johnson Fellow in Political Philosophy
• Norman Cushman, Director of Facilities Services
• Nan Jenks-Jay, Director of Environmental Affairs, Senior Lecturer in Environmental Studies
• Jodi Litchfield, ADA coordinator
• Thomas McGinn, Project Manager, Facilities Services
• Clare O'Reilly '05
• Stephen Trombulak, Mead Professor of Biology and Environmental Studies
• Win Wassener, Consultant to Facilities Services
• Lisa Ayers, Manager of Events Scheduling and Information (advisory)
• F. Robert Huth, Jr., Executive Vice President and Treasurer (co-liaison)
• Jennifer Nuceder, Course Scheduler (advisory)
• Maria Stadtmueller (advisory for College Advancement)
• John Tenny, Chairman of Middlebury Board of Selectmen (advisory from the Town of Middlebury)
• Michael Wakefield, Maintenance Electrician, Facilities Services (co-liaison)

Task Force on Commons and Student Life

• Katherine Smith Abbott, Visiting Assistant Professor of Art History, Co-Head of Ross Commons
• Douglas Adams, Director, Center for Campus Activities and Leadership
• Carolyn Barnwell, '06
• Stanley Bates, Professor of Philosophy
• M. Eli Berman '07
• Thomas Corbin, Assistant Treasurer and Director of Business Services
• David Edleson, Dean of Cook Commons
• Marichal Gentry, Associate Dean of the College
• Ann Craig Hanson, Dean of Student Affairs (member and liaison)
• Augustus Jordan, Director of the Scott Center for Spiritual and Religious Life
• Gary Margolis, Director of the Center for Counseling and Human Relations
• Bettina Matthias, Assistant Professor of German
• Robert Ritter, Head Football Coach, Assistant Men's Lacrosse Coach
• Timothy Spears, Dean of the College, Professor of American Literature and Civilization (chair)
• Patricia Zupan, Professor of Italian, Head of Cook Commons
• Matthew Biette, Director of Dining (advisory on dining)
• Rebecca Brodigan, Director of Institutional Research (advisory)

Task Force on the Composition of the Student Body

• J. MacLeod Andrews, '07
• Murray Dry, Charles A. Dana Professor of Political Science
• Miguel Fernandez, Associate Professor of Spanish
• Roman Graf, Associate Professor of German
• Susan Levine, Alumni and Parent Program and 50th Reunion Coordinator
• Kathy Lindsay, Associate Director of Admissions
• Michelle McCauley, Associate Professor of Psychology (chair)
• Patrick Norton, Controller
• James Ralph, Professor of History
• Russell Reilly, Director of Athletics
• Dena Simmons, '05
• Susan Watson, Associate Professor of Physics
• Rebecca Brodigan, Director of Institutional Research (advisory)
• Michael Schoenfeld, Vice President for College Advancement (liaison)

Task Force on the Curriculum in the Liberal Arts

• Susan Campbell, Dean of Faculty, Associate Professor of Psychology (chair)
• Robert Cluss, Dean of Curriculum, Professor of Chemistry and Biochemistry
• Katharine DeLorenzo, Field Hockey Coach, Assistant in Physical Education
• Nancy Fullman, '07
• Peter Hamlin, Associate Professor of Music
• Brett Millier, Reginald L. Cook Professor of American Literature
• Christian Keathley, Assistant Professor of Film and Media Culture
• Alison Byerly, Vice President for Academic Affairs, Professor of English (liaison)
• Michael Geisler, Dean of Language Schools and Schools Abroad, Professor of German (advisory)
• Sheldon Sax, Director of Education Technology (advisory for technology)

Committee on Experiential Learning

• Jessica Holmes, Assistant Professor of Economics
• Remy Mansfield, '06
• Diane Munroe, Coordinator for Community Based Environmental Studies
• Robert Prigo, Director of Program in Teacher Education, Professor of Physics
• Jaye Roseborough, Executive Director, Career Services (chair)
• Tiffany Nourse Sargent, Director of the Alliance for Civic Engagement

Committee on International Study and Languages

• Ian Barrow, Associate Professor of History
• Jeffrey Cason, Associate Professor of Political Science (co-chair)
• Armelle Crouzières, Associate Professor of French
• Kathleen Foley-Giorgio, Associate Dean of Student Affairs and Director of International Students
• Michael Geisler, Dean of Language Schools and Schools Abroad, Professor of German (co-chair)
• James Maddox, Director of the Bread Loaf School of English
• Ana Martinez-Lage, Associate Professor of Spanish
• Carrie Reed, Associate Professor of Chinese
• Allison Stanger, Director, Rohatyn Center for International Affairs, Professor of Political Science

Committee on the Natural Sciences in the Liberal Arts

• Scott Buckley, '07
• Robert Cluss, Dean of Curriculum, Professor of Chemistry and Biochemistry (chair)
• Marcia Collaer, Associate Professor of Psychology and Neuroscience
• Noah Graham, Assistant Professor of Physics
• James Larrabee, Professor of Chemistry and Biochemistry
• Sallie Sheldon, Professor of Biology
• David West, Associate Professor of Geology

Committee on the Arts

• Penny Campbell, Lecturer in Dance
• Christa Clifford, Operations Manager, Center for the Arts
• Eliza Garrison, Instructor in History of Art and Architecture
• Peter Hamlin, Associate Professor of Music
• Sujata Moorti, Associate Professor of Women's and Gender Studies
• Eric Nelson, Professor of Studio Art
• Paul Nelson, Boardman Professor of Mental and Moral Science
• Edward Perry, Fletcher Professor of the Arts
• Jeffrey Rehbach, Library and Information Services, Director of Chamber Singers
• Richard Romagnoli, Professor of Theatre
• Liza Sacheli, Marketing Manager, Center for the Arts
• Richard Saunders, Director of the College Museum (chair)
• Penny Upson, Administrative Associate, Center for the Arts
• Greg Vitercik, Professor of Music
• Susan Walker, Associate Director for Internships, Career Services Office
• Johnathan S. Woodward '06

Task Force on Faculty Resources

• Jason Arndt, Assistant Professor of Psychology
• Alison Byerly, Vice President for Academic Affairs, Professor of English (member and liaison)
• Eric Davis, Professor of Political Science
• F. Robert Huth, Jr., Executive Vice President and Treasurer
• Kathryn Morse, Associate Professor of History
• Eric Nelson, Professor of Studio Art
• Michael Olinick, Baldwin Professor of Mathematics and Natural Philosophy
• Carol Rifelj, Dean for Faculty Development and Research, Fulton Professor of French (chair)
• Christopher Watters, Heinz Given Professor of Premedical Sciences
• Andrew Wentink, Curator of Special Collections and Archives
• Frances Farnsworth, Coordinator of Sponsored Research (advisory on grants)
• Sheldon Sax, Director of Education Technology (advisory for technology)

Task Force on Institutional Change and Culture

• Kristen Anderson, Budget Director
• David Donahue, Associate Dean of Library and Information Services
• David Dorman, Professor of Mathematics
• Barbara Doyle-Wilch, Dean of Library and Information Services
• Mary Hurlie, Senior Director, Administration and Organizational Effectiveness (co-chair)
• Nan Jenks-Jay, Director of Environmental Affairs, Senior Lecturer in ES (co-chair)
• Beverly Keim, French School Coordinator
• Andrea Lloyd, Associate Professor of Biology
• Thomas Corbin, Assistant Treasurer and Director of Business Services (advisory)
• F. Robert Huth, Jr., Executive Vice President and Treasurer (liaison)
• C. Drew Macan, Director of Human Resources (advisory)

Committee on Staff Diversity

• Phil Benoit, Director of Public Affairs
• Barbara Doyle-Wilch, Dean of Library and Information Services
• Marichal Gentry, Associate Dean of the College
• Roman Graf, Professor of German (co-chair)
• Jennifer Herrera, Assistant in Academic Administration
• Mary Hurlie, Senior Director, Administration and Organizational Effectiveness (co-chair)
• C. Drew Macan, Director of Human Resources
• Jaichandra Shankar, Financial System's Manager, Controller's Office

Task Force on Language Schools, Bread Loaf School of English, and Bread Loaf Writers' Conference

• Robert Cohen, Associate Professor of English
• Michael Collier, Director of the Bread Loaf Writers' Conference
• Michael Geisler, Dean of Language Schools and Schools Abroad, Professor of German (co-chair)
• Gloria Gonzalez Zenteno, Associate Professor of Spanish
• Audrey LaRock, Spanish School Coordinator
• James Maddox, Director of the Bread Loaf School of English (co-chair)
• Kevin McAteer, Director of Principal Gifts
• Carmen Tesser, Portuguese School
• Alison Byerly, Vice President for Academic Affairs, Professor of English (liaison)
• Lynn Dunton, Senior Budget Analyst (advisory)
• Howard McCausland, Director of Network Design and Operations (advisory on technology)

Task Force on Planning Communications

• Ann Crumb, Associate Vice President for College Advancement
• Ronald Dragon, Dining Services
• Timothy Etchells, Editor, Electronic Communications
• Mary Hurlie, Senior Director, Administration and Organizational Effectiveness
• Elizabeth Karnes Keefe, Assistant Dean for Language Schools
• Margaret Paine, Director of College Communications (co-chair)
• Michael Schoenfeld, Vice President for College Advancement (co-chair and liaison)
• Rebecca Brodigan, Director of Institutional Research (advisory)
• John Denny (advisory from Middlebury College Alumni Association)
• Carrie Rampp, Area Director of Curricular and Co-Curricular (advisory from LIS)
• Jed Smith, member of the Board of Trustees (advisory)
• Alexander Stanton '07 (advisory from SGA)

Task Force on Staff Development and Professional Growth

• Matthew Biette, Director of Dining
• David Donahue, Associate Dean of Library and Information Services
• Barbara Hofer, Associate Professor of Psychology
• C. Drew Macan, Director of Human Resources (chair)
• Patricia McCaffrey, Assistant Banquet Chef, Dining Services
• Patrick Norton, Controller
• Dean Ouellette, Supervisor of Maintenance Electricians, Facilities Services
• Elizabeth Sacheli, Marketing Manager, Center for the Arts
• Harold Strassner, Coordinator of Contracted Services, Facilities Services
• April Tuck, Associate Director of Human Resources
• F. Robert Huth, Jr., Executive Vice President and Treasurer (advisory)
• Charlotte Tate, Assistant Director, Rohatyn Center for International Affairs (liaison)

Task Force on Staff Roles and College Mission

• Janis Audet, Assistant in Academic Administration
• Heather Cahill, Associate Director of Alumni and Parent Programs
• Barbara Doyle-Wilch, Dean of Library and Information Services (chair)
• Karen Guttentag, Associate Dean of Students
• Wayne Hall, Supervisor, Facilities Services
• Mary Hurlie, Senior Director, Administration & Organizational Effectiveness
• F. Robert Huth, Jr., Executive Vice President and Treasurer (member and liaison)
• R. Matthew Longman, Dean of Wonnacott Commons
• Margaret Nelson, Hepburn Professor of Sociology and Women's and Gender Studies
• Steven Reigle, General Manager, Retail Dining Operations - McCullough
• Linda Ross, Assistant Director of Custodial Services
• Ellen Usilton, Compensation Manager, Human Resources