The College’s Board of Trustees approved a $217 million budget for the fiscal year of 2011-12 at its annual meeting in April. The planned budget will use approximately $80 million of the College’s financial assets, including funds from its endowment, to support all operations. This budget includes all regular operations in addition to physical plant maintenance, debt interest payments and various costs associated with the early retirement program that was started last year. Also included in the budget is an allocation for raises for faculty and staff, although the precise percent changes have yet to be determined.
The $217 million operating budget is slightly larger than that of last year, which totaled $205 million. However, last year also saw the College reduce spending in a number of ways over the course of the year in order to move down from the original budgeted figure of $216 million.
The 2011-12 budget growth is partially attributed to increases in general compensation spending, to provide raises for College employees and to accommodate increased budgets for specific departments, such as the library, in order to address rising resource costs.
Nevertheless, some areas of the College will continue to see budget cuts, according to Provost Bill Lenhart. “We have made every effort to avoid cuts to departmental budgets, but in order to achieve overall targets, a few areas will see modest reductions,” he said.
“The budget process spans a several- month period and includes numerous conversations among the president’s staff, between individual members of the president’s staff and administrative and academic department heads, the Committee on Priorities and Resources and others,” Lenhart said.
The various conversations between these groups inform decisions about competing College priorities and needs that are essential for constructing the budget. These ideas are then presented to the Board of Trustees in April, at which point the board makes a final decision.
Several goals and projects are reflected in the 2011-12 budget, including improvement of student health and safety, re-launching the Stetson-Sawyer Library Project, preparing the new Center for Media Initiatives and increasing employee compensation. Additionally, the quality of students’ educational experience is being addressed with budget increases.
Last year, the $205 million budget used approximately five percent of the College’s endowment. Unlike many other colleges and universities, “we don’t have a formula for endowment spending, but as a general rule we like to spend close to but not more than five percent of the endowment at the beginning of the fiscal year in support of operations for that year to come,” President Falk said.
“The percentage is a result of the budgeting process and numerous other factors,” said Greg Avis ’80, chair of the Board of Trustees. The target for the 2011-12 year is approximately five percent, which is “within the historical range,” Avis added.
The endowment took a downturn during the economic crisis of 2008, dropping by 22 percent in one year, but it has steadily risen over the following years. Even after the economic crisis, the College has continued to “pay the endowment out” to avoid spending more than what the endowment would earn over time, according to Falk.
Falk acknowledged that the increase in the endowment will be “something that takes place over time. We are recovering, but it is important to remember that during that period where the endowment was hurting, we continued to make payout on it,” he said. “We’re not back to where it was at, but it’s certainly higher than where it was last year.”
Falk also addressed the allocation made in the 2011-12 budget for faculty raises. “We are very aware that the last few years are not ones in which the College has been able to raise compensation like the years before. This is a very important priority for us,” he said.
Operational and department cuts were also a necessary part of creating the approved budget, Falk explained. “With the downturn of endowments, which supports more than a third of our operations, there was no way to make our budget without making significant cuts,” he said. “I think everybody is under a significant amount of stress, and we’re going to try to meet the critical needs of what is most necessary here. It remains a very tight budget here.”
However, the College has made smart decisions regarding the budget that have enabled it to sustain a stable position. “What we know from our peers is that we made more significant cuts earlier on than many of our peer institutions, and therefore we are in a good stable position now, but we are not going to go back financially to the position that we were in three or four years ago … But we’ve stabilized our operations for a sustainable level,” Falk said.
Falk also extended his gratitude to the number of people on campus that have been affected by the numerous budget cuts over the past few years. “I am deeply appreciative of how people all over the College, including staff, faculty and students, have adjusted to what has been a very difficult last few years,” he said. “The resources to excellence have been maintained, but we don’t have the discretionary resources that we had only a few years ago. It’s a new reality for us and for everyone in American higher education.
“It also hasn’t been easy, and I think people have adjusted with incredible energy and understanding,” Falk continued. “We’re in a period right now in which we’re going to have to make choices that reflect our very highest priorities. We need to figure out what is essential in a collective process that involves faculty and students.”