We write now with a small view into our financial future. Before we do, we thought it worth reminding you of our current fiscal state. In an earlier note we described how we are projecting a $13.0 million deficit for this year ending June 30, 2020, having been hit hard by the stock market downturn and a number of other factors. These include our obligation to refund unused room and board for undergraduates as well as fees from Study Abroad students, expected shortfalls in philanthropy, and lost revenue from auxiliary sources like the ski areas and bookstore as they needed to close early.
Those financial realities remain with us today. So does our overall outlook for the foreseeable future: we are still traveling a most difficult road, having to make decisions in an incredibly dynamic environment.
As an institution we have a responsibility to be realistic in our approach to the problems we are facing, rigorous in how we analyze them, cautious in our deliberations, and decisive in how we move forward. And always, the health and well-being of the Middlebury community are our paramount concern. We have also heard from you that you appreciate straightforward, unvarnished communication about our situation.
Let us share now that unvarnished reality as we see it. There is little doubt that we will need to make hard choices in the weeks and months ahead, and that these will require sacrifices across the institution.
Our Highest Priority Remains Wages
We want to say again, up front, what was communicated in the earlier letter, that continuing to pay the wages of all Middlebury benefits-eligible employees through June 30 is our highest priority. Again, we have chosen that date because it is what our best budget projections allow us to say at this time.
President and Senior Leaders Salary Reductions
We also want to tell you that, beginning immediately, we will be reducing the salaries of the president and Senior Leadership Group. The president will be reducing her salary by 20 percent and the SLG will be reducing theirs by 10 to 15 percent. We will put this in place for the foreseeable future and evaluate the decision month by month.
The goal here, among other cost-saving measures we will outline below, is to put Middlebury in the strongest position to handle the unknowns and to help bring spending in line with our reduced revenue streams. This is about doing all that we can right now to reduce the harshest potential impacts of the financial pressures on Middlebury while keeping wage continuity as our highest priority.
Other Essential Cost Savings
We have also implemented the following measures and are grateful for our discussions with colleagues around the institution who have worked with the Budget Office to enable us to understand their impact. Some of these decisions have been discussed earlier with managers in Middlebury’s Leadership Alliance, with more than 500 employees who engaged in last week’s remote Town Hall Meeting, and with faculty via recent communications from the provost and dean of faculty.
- Hiring Freeze: This is in effect now and will apply across the board to all currently open faculty and staff positions, continuing into FY21 until we have more clarity on the budget.
- Position Vacancies: Any positions that come open in the coming months, and into FY21, will not be filled until we have more clarity on the budget. We will make exceptions for federal grant-related positions, while gift and endowment-supported positions will be considered on a case-by-case basis. The Ways and Means Committee will make limited exceptions to this policy when existing staff and structures cannot meet the critical needs of our students and academic programs. Any exceptions will first consider existing Middlebury employees who could move into the vacated position.
- Salary Increases: We do not anticipate being able to offer salary increases in the coming fiscal year.
- Budget Reductions: The only expenses that will remain in departmental budgets this fiscal year are those determined to be essential or contractually obligated, such as annual contracts. At a minimum, the following lines will be eliminated from budgets across the institution: travel, food, supplies, and equipment. The Budget Office has consulted with vice presidents to understand the impact of these cuts to their particular units and to ensure they have the tools they need to manage their operations.
The FY21 Forecast
Our current most optimistic assessment of our shortfall next year, after all savings have been realized, is approximately $30.0 million. It could be more. We continue to model what next year might bring. Higher education institutions across the country are making similar forecasts, basing FY21 financial projections on various scenarios of what a COVID-19 world might be like in upcoming months—how it might influence the recommendations of government and health officials and how those, in turn, might affect teaching and learning at Middlebury. We will report out to you on our progress in this area soon and will be keeping in close consultation with the Budget Advisory Committee, made up of faculty, staff, and students, as well as the College faculty’s Resources Committee. We will also send a questionnaire to all faculty and staff, as we did in the 2008 recession, asking for your views on how we might best meet this $30.0 million shortfall.
We would like to close with something we cannot say enough: how grateful we are for your understanding and perseverance through these times. We know you are carrying extra burdens—educating and caring for loved ones, performing essential responsibilities that bring some of you regularly back to campus, reimagining your courses on the fly, navigating classes and office meetings remotely through Zoom, being physically separated from your colleagues and often your familiar workplace surroundings.
A heartfelt “thank you.” Please keep communicating with your supervisors so we can help you through the stresses—and keep letting us and your colleagues know when things are going particularly well. We will all benefit from these stories.
We will soon be sharing a timeline of our decision-making about the fall, and what you can expect from Middlebury in these difficult and fluid times. Be assured that we are modeling a number of different scenarios, and those include safe ways to welcome students on our campuses next semester. In this situation we have no guarantees, but we do have Middlebury grit and hope on our side.
EVP for Finance and Administration