Trustees approve budget of $205M

Last Thursday, the Board of Trustees convened to approve an operating budget of $205 million for the 2009-10 academic year. This represents a 5.09 percent decrease from the $216 million budgeted for the 2008-09 fiscal year.

Of this spending, $78.5 million will come from the endowment, which is forecasted to stand at $1.3 billion on July 1, the beginning of the fiscal year. Last year, the trustees approved 2008-09 spending of $94 million from a $1.8 billion endowment. With the cataclysmic economy, actual endowment spending for the current year was trimmed to $91.5 million. The remainder of the College’s revenue comes from tuition fees and gifts.

These reductions stem from a combination of 15 percent average cuts in manager’s budgets, salary freezes, faculty and staff cutbacks through attrition, delays in major construction projects and a leaner building renewal budget.

“These changes, while painful, have protected the College’s highest priorities of maintaining our financial aid program, avoiding layoffs and continuing the high standard of our academic program,” wrote President Schapiro in an e-mail to the Williams community Monday. “So, it won’t be business as usual. But it will still be Williams at its best – great faculty and students interacting inside and outside of small classes, supported by dedicated staff, in first-rate facilities.”

Schapiro also emphasized the gravity of the College’s financial situation. Although only 38 percent of next year’s spending will be funded by the endowment, down from the typical 44 percent, the $78.5 million will still compose roughly 6 percent of the endowment, a deviation from the 5 percent rule of thumb that the College traditionally holds to. “That spending rate makes sense in the short-run­ to smooth out the disruption of the business cycle,” he wrote, “but we’ll need to get it back soon to around 5 percent to avoid depriving our future students, faculty and staff, whom the endowment is also meant to support.”

Administrators uniformly expressed optimism about the decision-making processes involved. “The budget priorities of the Board and the Administration are in sync: to protect the College’s core academic enterprise,” said Bill Simon, head of the Trustee’s budget and finance planning committee.

Provost Bill Lenhart noted the tradeoffs involved. “While virtually all areas saw decreases in managers’ budgets, which represents the non-salary budgets of departments and offices across campus, some areas saw larger decreases than others,” he said, citing Health Services and Campus Safety and Security as departments with smaller than average decreases.

In addition to the 15 percent overall cuts in managers’ budgets, which composed approximately 25 percent of the total budget last year, Lenhart noted that, “salaries, wages and benefits make up almost half of all of our expenditures. The salary and wage budgets will decrease by 2 percent from this year’s levels; benefits will decrease by a smaller amount,” he said. The rest of the budget comprises financial aid, which is slated to rise “by a bit less than 10 percent, reflecting our continued commitment to meeting the full demonstrated need of our students,” and capital renewal, which has been significantly reduced from last year’s 5 percent of the operating budget.

The budget for 2010-11 will see even more reductions, as the College seeks to lower endowment spending even further to $70 million. “We believe we can also hit that target without violating our key principles of financial aid and without layoffs,” Schapiro said in the message. His campus-wide e-mail noted that the College is modeling no growth in investments in 2009-10 and 2010-11, followed by returns of positive 8 percent in future years.

One major player in budget planning for coming years is the Ad-hoc Budget Advisory Group, which has been meeting regularly since the beginning of March. Comprising faculty, staff and students from various campus constituencies, this group seeks “to identify strategies for further reducing expenditures beyond the levels that we have targeted for the next two years, should such reductions prove necessary,” Lenhart noted. It aims to present recommendations to the Board by June. 

Administrators also continue to solicit feedback from the wider campus. Last November, the cost-saving ideas Web site drew hundreds of suggestions in the early days of addressing the economic crisis. This month, College Council spearheaded a Budget Blitz survey campaign to discern what students value most in resource allocation (see article on page 4).

According to Schapiro, the College has drafted a “soft version” of the 2010-11 budget. “Before I leave I’m putting to bed the $78.5 million and $70 million budgets, and will offer suggestions for the next year, too,” he said.

Schapiro also said that he does not expect students to notice a material difference under next year’s budget. “$70 million, and it’s still Williams as we know it,” he said, adding that the current incarnation of the 2010-11 budget includes all dining halls, although Dodd or Driscoll could close. “Everything is on the table. With a $50 million dollar budget, I’d probably be in a trailer.”

Large construction projects – Stetson-Sawyer and Weston Field – remain on pause, judging by economic indicators, according to Schapiro. Nevertheless, he noted that, “everything happens eventually,” and also that the College has already received donations from alumni earmarked for the construction costs of these projects.

The Stetson-Sawyer Building Project Committee is continuing to work with the architects towards finalizing construction documents. “We are refining details at this point,” said David Pilachowski, committee co-chair and College librarian, adding that the most recent plans were shared with CC last month, although the overall conception of the new Sawyer Library are unchanged. “Once the detailed documents have been completed in May, a pricing exercise will occur to see whether we are still on target with the project budget.”

Lenhart underscored that decisions about such major capital projects were a question of weighing the cost of borrowing – with “annual interest payments in the millions of dollars” – against the cost of construction. “For example, at the present time, inflation in the construction industry is very low, but when it starts to rise, construction delay will become increasingly costly,” he said.

Academic departments

Bill Wagner, dean of the faculty, was optimistic about the impact of the 15 percent scalebacks in departmental budgets. “The cuts are things that people will notice, but none adversely affect the intellectual work that departments are doing,” he said.

For example, the faculty chose to protect funding for summer research across all divisions, while cutting costs through slowing the pace of acquiring and replacing equipment; dissolving the Faculty Center for Media Technology, which pre-dated the Office for Information Technology; eliminating lecture committee funding formerly designated to bring a major lecturer to campus every year; halting stipends for developing new classes such as Exploring Diversity Initiative courses and moving toward online resources instead of print publications, as in the case of the 2009-10 Course Bulletin, which will not be distributed to students in hard copy this year.
 
Moreover, it was “hard to say” whether course sizes would be noticeably affected by the drop in visiting professorships and increase in target class size from 538 previously to 550 for the Class of 2013. “It will be a differential impact,” Wagner said. Schapiro stressed that small classes would be “protected at all costs.”

When asked about changes that students would notice, Wagner said, “There will probably be less food, fewer events, fewer events with food, and the food might not be as lavish.”
 
Similar sentiments prevailed among department heads. “Our main goal in planning our budget was to minimize effects on students and on our mission,” said Karen Kwitter, chair and professor of astronomy. “Though the cuts are real and substantial we hope that students will notice little beyond reduced snacks and meals.” She explained that the department would “not be eliminating specific items; rather we will be spending less across the board and being more frugal where we can,” citing postage, travel and restaurant meals with visiting speakers as examples.

The English department had a similar approach to the budgeting process. “We simply made each budget line smaller. We have a very small, very simple budget. It wasn’t hard to do,” said Peter Murphy, chair and professor of English. “No one will notice. We will be doing slightly less of the things we typically do, and that is all.”

Cathy Johnson, chair and professor of political science, also emphasized that the department was trying to minimize impact on students. “We intend to reduce expenditures that are controlled by the chair, such as lunch when we have department meetings or the annual social event for faculty, families and our emeritus faculty,” she said. “We will protect the major aspect of our jobs, specifically what we need for research and teaching.  It won’t change what we do or how we do it.” Johnson does not anticipate difficulty in meeting next year’s 15 percent cuts. “In subsequent years, I don’t know – what we do depends on how large the reductions need to be.”

The athletics department is also seeking to pare down its operating costs. “For next year we have looked for ways to save on travel, food, lodging, and the like,” said Harry Sheehy, director of Athletics. “We continue to look for ways to use our resources most effectively and preserve our broad based program for varsity, JV, club and intramural participants.”

According to Wagner, the ’62 Center for Theatre and Dance will also be dealing a smaller budget, specifically bringing in less expensive performances for the Center Series. He said that performing arts departments were looking into publicity budgets as well.

Amidst shrinking expenses, faculty are seeking to preserve other elements of the College’s signature academic programs. The tutorial program, for one, promises to continue its current range of offerings. Steve Fix, professor of English and coordinator of the tutorial program, said he “expects to have roughly the same number of tutorials next year as this year.” (Seventy tutorials were offered in 2008-09). Fix noted that the tutorial program does not have a budget of its own, but rather relies on departments and programs to generate tutorial courses.

Wagner does not foresee any impact from the truncation of stipends for developing new tutorials. “Tutorials are now embedded in the curriculum, and there are professors who want to develop them,” he said. “I think the program will continue to thrive without the other incentives.”

Other items under discussion include hiring for 2010-11, which has yet to be determined by the Committee on Appointments and Promotions (CAP). “They’re going to have to be more conservative and restrictive in authorizing searches,” Wagner said, noting that departments will continue to be restrictive with respect to visiting faculty, and hence need to be careful in staggering sabbaticals. “We’re in a situation where the CAP will have to weigh heavily continuing positions vs. creating new fields. The choices will be harder to make.”

Wagner reiterated that Williams in New York will be suspended next year as a committee re-evaluates its current form.

Dining and Facilities

Like academic departments, the departments under the purview of Steve Klass, vice president for Operations, sought to cut costs efficiently without noticeably changing quality. “We first focused on cost reductions that we thought would be the most transparent to our customers and that would have the lowest impact on campus quality of life,” Klass said. “And, wherever possible, we targeted changes that would be relatively easy to dial back or reverse so that, as resources become more available in the future, we can ramp services and programs back up as appropriate.”

For Dining Services, the biggest part of cuts will come from food costs as well as several improved processes developed by a dining services team last fall. “The savings are coming from consistent monitoring of product purchases, changing some of the products we buy, more consistent portioning, more integrated menus across all dining halls and tougher price negotiation,” Klass said, adding that many of these changes have been successfully reduced expenses over the past few months.

As with academic departments, other areas that will feel the pinch within Dining Services include staff travel and training, as well as deferring the replacement of a few pieces of equipment.
 
Contrary to rumors about dining hall closures, Klass does not envision such changes in the near future. “Thanks to truly impressive planning on the part of the entire dining staff team, we’ve hit our very aggressive budget reduction targets for next year without having to take that kind of step,” he said. “The one program that will be discontinued after this year will be the continental breakfast that we’ve offered in Dodd House for the past couple of years.”

While Facilities has a similar outlook – minimizing impact on students – in apportioning resources, it has to negotiate a much larger aggregate of fixed costs. “Consequently, their savings are made up of a significant number of smaller cuts to a much larger number of budget items,” Klass said, such as reductions in travel, training, professional development, contingency funds, vehicle replacement and furniture purchases.
 
However, Klass acknowledged that it is hard to predict where and when Facilities budget cuts will be felt. “While we’ve made extremely responsible reductions across the board, it still means that we’re spending much less on items like service contracts, repair materials and fertilizers,” he said. “Response times to work orders definitely will be extended and we’ll have to prioritize the urgency of specific requests to a much greater degree than in the recent past.”

Despite these reductions, Klass underscored that the College’s history of making consistent investments in facilities, as well as the dedicated staff, allow a buffer to adjust to the new budgetary constraints. He also noted that the Facilities management team, which is overseeing capital budget renewal reductions, is working in close collaboration with the Zilkha Center for Environmental Initiatives and the Provost’s Office, to conduct cost/benefit analysis and study the sustainability effect of capital projects.

Dean’s Office

The Dean’s Office faced similar obstacles in making budget decisions for next year. “We needed to concentrate first on protecting essential services, like Health Services, which just doesn’t have room for a 15 percent cut in its budget, although [Director of Health Services] Ruth Harrison did make cuts that she felt she could,” Dean Merrill said. 

According to Merrill, most departments under the Dean of the College cut travel and professional development.  They are also reducing the number of printed publications that they publish. “In any case, managers made decisions in their departments about priorities and discussed those with me,” she said. “In order for the Dean’s Office to meet our overall target, I asked several managers to cut a little deeper than 15 percent in order to help compensate for those departments that simply would not be able to make the target.”

Merrill noted that endowment loss will cut into summer internships funded by the Office of Career Counseling, and will translate into a slight reduction of funding for student events out of her office.

Allocations for food and events are also diminished. Although the Dean’s Office will continue to fund faculty meals with students in dining halls next year, funding for faculty to entertain students, either through bringing food to class or inviting them to their homes, was cut, as was money for food at events sponsored by the Dean’s Office. “As much as we like to draw students to events or meetings with snacks and the like, it was an area we could cut without feeling that we were cutting into the core of our work,” Merrill said.

Like other administrators, Merrill spoke both of the difficulty and productivity of the budget reevaluations. “This wasn’t always an easy process to go through at times and required a lot of discussion,” she said. “But we also achieved greater clarity on some budgetary issues, like the complicated accounting involved in our First Days/EphVentures program, which is shorter by a day. And I think it helped us all to focus on our essential work, and that was very valuable.”

Additional reporting by Kaitlin Butler, Laura Corona, Amanda Korman, Hanna Saltzman and Sasha Zheng, Record staff.