Tuesday, February 10, 2009

Provost Scherr and VP Keller detail the college's budget changes

Provost Barry Scherr and Executive Vice President for Finance and Administration Adam Keller blitzed out to campus, alums, and parents outlining where changes would be made to the budget. $72 million are being cut from the entire budget which calls for a $47 million cut to the undergraduate experience. Thankfully no faculty positions were cut, and several wasteful expenditures have been singled out such as print communication, discretionary expenses for travel, and under-utilized administrative positions.

The full e-mails after the jump.


The e-mail to the students:
>From: "Provost Barry Scherr and Executive Vice President Adam Keller"
>Date: Mon, 09 Feb 2009 11:12:23 EST
>Subject: Dartmouth's Budget Reconciliation Plan
>To: All Students:;

Dear Members of the Dartmouth Community,

This week we will begin implementing a strategic plan to decrease the Dartmouth-wide operating budget of $700 million by $72 million between now and 2011; included in this effort is a reduction of $47 million in the $450 million budget for the College (excluding the professional schools) over the next two years, with $35 million of that amount taking effect in the coming fiscal year. As you can imagine, the decisions we are announcing have not been easy to make. We realize that changes to programs and services will cause hardship for those staff members who will be losing their jobs or facing a reduction in hours through reorganizations of various areas. The careful evaluation of positions that we have conducted means that the effects will be felt in many offices and in some cases will have an impact on long-term employees. This is clearly the most difficult aspect of the work that we have had to do in an effort to bring our budget into balance.

In formulating these financial measures we have been guided by the same strategic priorities that have shaped previous institutional planning projects. Thus, we have aimed to preserve the excellence of the academic programs at Dartmouth, the strength of its teaching and research missions, and our full commitment to financial aid.

As President Wright mentions in his letter, the sharp decline in our endowment, on which we depend for about 35 percent of the College-only operating budget, has left us with the potential for extremely large deficits in the coming years if we were simply to continue doing business as usual.

In deciding how much of our endowment to use each year, we employ a formula meant to smooth the effect on our budget of year-to-year variations in endowment performance. However, neither our formula nor any other plan can manage the virtually unprecedented drop in endowments over the past few months. We must implement significant reductions to our budget. Next year, our spending formula will result in our using a significantly higher percentage of our remaining endowment than we did this past year. That is not sustainable in the long run. The steps we are announcing today are necessary to keep our endowment from falling further and to maintain the long-term health of the institution.

You will recall that in the fall we asked each of the divisions and departments at Dartmouth to model budget reductions of 5%, 10% and 15%. In a bottom-up process we asked for suggestions for savings from the entire community. We then took that information and, in consultation with the Budget Committee--which includes vice presidents, the Dean of Faculty and the Dean of the College--began to set specific targets. As we worked on the task of setting goals we consulted with the faculty's Committee on Priorities, with the Student Budget Advisory Committee, and with staff through community forums. Heads of departments and divisions came up with initial recommendations, which were then discussed with the Budget Committee, and during the process we made a number of adjustments in order to do the best we could in terms of adhering to our priorities while at the same time trying not to burden any areas unduly.

In order to identify $47 million that could be eliminated from our budget over the next two years, we have reduced compensation by $28 million, building project expenses by $10 million, non-compensation costs by $8 million, and we will add $1 million in new revenue. The majority of the compensation reduction results from the freeze in salaries for fiscal year 2010.

Dartmouth's professional schools each have their own budgets. Dartmouth Medical School continues to work on a new strategic plan and consequently will finalize its budget reductions later this spring. Tuck and Thayer will take the same measures as the College in terms of salaries and are adjusting discretionary expenses as needed to maintain balanced budget operations. Faculty recruiting in the professional schools will slow, with some searches deferred until we can ensure stable and consistent sources for funding new positions.

Throughout this process we have been mindful of the need to make reductions that are sustainable well into the future, given the seriousness of the economic downturn and the impossibility of predicting what the next few years might bring. The campus as a whole will find that while we are maintaining our core activities we are also trimming a number of programs and services to help achieve the necessary savings. At the same time, we are committed to recognizing and answering the very real needs of our diverse community, and continuing to ensure that Dartmouth is supportive of all who study and work here.

In light of these considerations, we will put in place the following measures:

SALARIES: In an effort to protect as many jobs as possible, we will implement a salary freeze for the coming fiscal year (July 1, 2009 - June 30, 2010). We will, however, provide the usual adjustments for faculty who receive promotion or tenure. Also, employees (except for those at the Medical School) who have been at Dartmouth at least since January 1 of this year and whose full-time equivalent salary is $50,000 or less will receive $1,000 in supplemental payments during the coming year. This amount will be pro-rated for part-time employees. The freeze does not apply to union members for whom existing collective bargaining agreements are in effect through June 30, 2010.

STAFF REDUCTIONS: The freeze on outside hiring in place since November, staff reductions in hours, transferring staff into positions vacated through retirements, and the elimination of unfilled staff positions have helped to reduce the number of staff layoffs. However, we expect that there will be 60 staff layoffs at the College as part of the plan that will eliminate 150 full-time equivalent staff positions. We have developed a package to assist individuals who are losing their jobs, which includes two weeks of pay for each consecutive year worked at Dartmouth, with a minimum of four weeks and a maximum of 52, plus a lump sum payment towards the full cost of maintaining health benefits for three months following the last day of work. Further information regarding additional components of the package may be obtained at the following website: http://www.dartmouth.edu/~hrs/empsupport/index.html

In addition, 28 employees will work reduced hours. For those individuals Dartmouth will, through the end of the calendar year, offset the additional health insurance costs associated with the reduction in hours.

ACADEMICS: We will maintain all tenure and tenure-track faculty positions, and we also will continue to provide our full array of off-campus programs. We will reduce the number of courses taught annually by 30 to 35 (less than two percent). Approximately one-third of the faculty searches planned for this year will be postponed, though the intention is to fill these positions over the next three years.

The library leadership has sought to maintain the integrity of the collections and to preserve core programs. Savings in this area will come primarily through elimination of specific databases and collection-related services, ending Dartmouth's participation in certain national organizations and programs, and reducing purchases in areas not related to academic programs.

TUITION AND STUDENT LIFE: Arts & Sciences and Thayer tuition will increase next year by 4.8 percent. Tuck tuition will increase 4.9 percent, and DMS tuition will rise by 6 percent. The College's financial aid enhancements, introduced in 2008, will remain. We will continue to have a need-blind financial aid program and to meet the full need of all students who matriculate at Dartmouth without requiring student loans; as a result, we expect our financial aid budget to increase by approximately $8 million in fiscal year 2010, to an estimated $72,000,000.

There will be some restructuring in student areas. In particular, funding for travel and various support services has been scaled back in some departments. While we will maintain GreenPrint for students, the subsidy for free printing will be cut in half.

ADMINISTRATIVE SAVINGS: All administrative areas are reducing travel, participation in conferences and consortia, funding for gatherings on and off-campus, as well as printing and publications. Many printed materials will be moved to the web, and we will rely more on electronic communication. Reduced staffing will result in more limited service hours and lower levels of administrative support in many areas of the campus, requiring students, faculty and staff to plan accordingly.

As we have stated in previous announcements, we have decided to delay a number of facilities projects, including a replacement building for Thayer Dining Hall, the Class of 1953 Commons, the renovation of the West Stands, a satellite parking facility on Route 120, and one of two renovation projects intended to provide housing for sororities. These will remain on hold until our financial situation improves. The Visual Arts Center and the C. Everett Koop Medical Science Center remain under review.

Plans are under way to study some six to eight cross-divisional activities to see whether we can gain savings by consolidation or reorganization. Most of these savings would not be implemented until the following fiscal year, beginning July 1, 2010.

NET SAVINGS: The various reductions we have outlined above will result in a net savings of $47 million for the College-only budget by fiscal 2011; thereby reaching the target of a balanced budget that was set in the fall.

We have read through the many suggestions for budget savings recommended by the Dartmouth community, and we appreciate both the quantity and the quality of the ideas that were submitted. Some of these have already been at least in part implemented; others are still being studied and some are likely to be introduced in the months ahead.

To describe our plans more fully and to answer questions, we are scheduling a number of information sessions for students, faculty, and staff at the divisional and departmental levels, as well as conference calls for alumni/ae and volunteers. We welcome your questions, and your further suggestions. For more information and to submit your thoughts please access our website: http://budget.dartmouth.edu

Finally, we want to thank all those who worked with us on budget planning over the past few months. We received good and often challenging advice not only from our colleagues on the Budget Committee, but also from the faculty's Committee on Priorities, from the Student Budget Advisory Committee and from staff at open forums. The heads of all the areas, along with their executive officers, have had the unenviable task of figuring out how to make significant reductions in their budgets while at the same time maintaining essential services. Without their cooperation and hard work, much of which continued uninterrupted through the holiday break, we could not have made the progress that we have achieved in coping with these extraordinarily difficult times.

While we are in a period when it is impossible to predict with confidence what the future might bring, the changes that we have made deal with the budgetary problem that was identified in the fall and do so in a way that protects our core values as an institution. The reductions in personnel that we are making are nonetheless painful, and we extend our appreciation and gratitude to those staff members who will be leaving Dartmouth. Rather than make across-the-board changes, we have attempted to reduce budgets carefully and strategically in order to minimize the effect on the educational experience of our students and on the teaching and research of our faculty. The quality of Dartmouth's faculty and students, the talents of its staff, and the variety and excellence of its curricular and co-curricular programs are what make the College a world-class educational institution. In protecting those, we are preserving the attributes that enable Dartmouth to cope with today's challenges and maintain its position at the forefront of American higher education today and in the future.

Sincerely,

Barry Scherr
Provost

Adam Keller
Executive Vice President, Finance and Administration




The e-mail to alums and parents:
From:
Date: Mon, Feb 9, 2009 at 12:51 PM
Subject: Dartmouth's Budget Reconciliation Plan
To: alums-and-parents-announce@locum.dartmouth.edu


SUMMARY OF ACTIONS: DARTMOUTH'S OPERATING BUDGET

Dartmouth is implementing a strategic plan to decrease its College-wide operating budget of $700 million by $72 million between now and 2011 (including the professional schools).

This plan calls for a $47 million reduction in the College-only budget of $450 million (excluding the professional schools). Budget reductions at the Thayer School of Engineering and Tuck School of Business are included in this summary. Dartmouth Medical School continues to work on a new strategic plan and consequently will finalize its budgetary adjustments at a later date.

All cuts are the result of a thoughtful process that benefited from significant input from students, faculty and staff. Our overarching goals have been to protect and enhance the excellence of the educational experience for our students and to ensure that they have the opportunity to attend Dartmouth regardless of financial need. As a result, there will be no reduction in tenure-track faculty positions, and we will continue to offer need-blind admissions and meet our students' full financial need without asking them to take on loans. Our aim is to learn to live with less and yet retain Dartmouth's core strengths along with our ability to innovate and lead as one of the world's most enduring institutions.

The sharp decline in our endowment, on which we depend for about 35% of the College-only operating budget, has left us faced with the potential for extremely large deficits in the coming years if we were simply to continue doing business as usual. In deciding how much of our endowment to use each year we employ a formula that is meant to smooth the impact of year-to- year variations in endowment performance on our budget. However, neither our formula nor any other plan can manage the virtually unprecedented drop in endowments over the past few months without implementing significant expense reductions. Next year our spending formula will result in our utilizing a higher percentage of our remaining endowment than we did this past year. That is not sustainable in the long run and would be irresponsible to future generations of students. The steps we are announcing are necessary maintain the long-term health of the institution.

An educational enterprise is labor intensive: More than 50% of our operating budget supports the workforce of Dartmouth - our faculty and staff. To meet our budget reduction target, cuts in program support and facilities alone are not sufficient. Nearly half of the budget cut will come from freezing compensation, reducing work hours, slowing the hiring process, and unfortunately, eliminating some staff jobs as well.

Administration

* All administrative areas are reducing their work force. 150 full-time positions are being eliminated. Although most of this will be achieved through retirements, reorganizations and attrition, 60 staff employees will be laid off. In addition, 28 employees will work reduced hours.

* Operational reductions have been made in areas including computing services, fundraising, human resources, travel services and academic department support.

* Discretionary expenses including travel, participation in conferences and consortia, gatherings on and off-campus, and printing and publications have been cut in all areas.

* Communications will increasingly move from print to electronic media.

* Service levels will be reduced in offices throughout campus, including payroll, selected dining sites, computing services and admissions, requiring students, faculty, and staff to plan their schedules more carefully.

Faculty and Staff Compensation

* Most salaries will be frozen for the coming fiscal year.

* Full-time employees earning less than $50,000 will receive a $1,000 supplement (except for those at the Medical School).

* Faculty who are promoted or receive tenure will receive the usual adjustments.

*Some faculty searches will be postponed with a goal of renewing them within three years.

*Plans to expand the faculty at Thayer School and Tuck will be slowed.

Academic Support and Student Programs

*Core programs in the library and the integrity of the collections will be preserved; savings will be made in several areas, including elimination of specific databases and collection-related services and ending Dartmouth's participation in certain national organizations.

*We remain committed to offering small classes taught directly by our faculty.

*Foreign Study Programs, Language Study Abroad Programs, and both undergraduate and graduate research opportunities will be sustained.

*Funding for travel and support services for some student groups will be scaled back.

Facilities

*Construction projects well underway will be continued, including:
- Class of 1978 Life Sciences Center,
- Red Rolfe Field at Biondi Park, and
- Renovations of New Hampshire Hall and Buchanan Hall.

*Renovation of one sorority facility will begin while another will be put on hold.

*Plans for the Visual Arts Center and C. Everett Koop Medical Science Center will continue to be reviewed.

*Other projects will be deferred, including:
- The Thayer Dining Hall replacement,
- The Class of 1953 Commons, and
- Renovation of the West Stands at Memorial Field.

Reducing expenditures for people, programs, and facilities is difficult. We have worked to deal with the budgetary problem in a way that protects our core values as an institution

Barry Scherr
Provost

Adam Keller
Executive Vice President, Finance and Administration

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