March 31, 2009
Dear Faculty and Staff,
I write at this time to provide an update on the impact the economic downturn has had on Hobart and William Smith and the steps the Colleges have taken to address the attendant issues. My intent is to provide information so that faculty and staff can have timely data on the Colleges’ financial situation.
As I outlined in my letter to campus last November, declines in the economy and stock market as well as volatility in the credit markets have had negative impacts on all of higher education. Although Hobart and William Smith are operating from a position of relative strength owing to prudent Board stewardship resulting in several years of balanced budgets, the Colleges have not been immune to fluctuations in the global economy.
Over the course of the past fiscal year, we have instituted a number of measures to help bring expenses in line with revenue. These include reviewing open positions to see if we can delay filling them, restricting administrative travel, and acting frugally to reduce expenses. We have stepped up efforts and initiatives in admissions, institutional advancement and retention to positively influence revenue. In addition, we have delayed two construction projects until fundraising goals are realized.
In all of this work, the level of dedication on the part of everyone at the Colleges has been extraordinary. During consultations with CoFac and the Administrative Advisory Committee as well as in one-on-one conversations with many of you, I have been impressed with the level of determination and commitment, and appreciative of the good ideas for cost-cutting measures. For your tenacity and hard work, I thank you.
Despite these best efforts, we still face what we estimate is a $700K deficit in this year’s budget. I have therefore asked all members of senior staff to review their budgets and to halt all discretionary spending unless critical to the operation of the institution. I know I can count on all of you to assist in this effort so that we can make serious strides in closing this gap.
Our plan for the upcoming year assumes that the economic downturn will result in a long-term shift in the economic landscape, one that will impose significant fiscal constraints into the foreseeable future. To sustain the momentum we’ve achieved over the course of the last decade, we will need to make continued sacrifices. Fortunately, we have always been a community that can do extraordinary things with modest resources.
We are currently working to complete recommendations for the 2009-2010 budget so that the Board can make its final decisions at its April meeting. To understand the implications of the economic downturn for the next year and the out-years, we have been modeling a series of budget scenarios that take into account possible changes in the major drivers of our budget. Specifically these drivers include tuition, financial aid, annual giving, the endowment, salaries and the operating budget.
It is clear to me that the extent of the economic downturn will continue to affect our endowment and our need for increased financial aid. In our work on the budget, we have been particularly sensitive to the impact our current decisions will have in two to three years.
Recognizing the financial strain that families face at this time, next year’s budget assumes a 3.5% tuition increase, the lowest tuition increase at the Colleges in 44 years. We have also allocated an additional $2.6M for financial aid in next year’s budget.
Our Office of Financial Aid continues to work with families on aid strategies to ensure the completion of an HWS education. If you learn of a student facing financial challenges, please contact Director of Financial Aid Beth Nepa at extension 3315.
Finally, the budget under consideration at the April Board meeting will likely have a freeze on operating expenses next year. Compensation and benefits, which comprise 50% of the budget, will also undergo deliberation at the April Board meeting. As I’ve stated at the Board Readout and the Faculty Meeting, the possible salary increase under consideration ranges from 0% to 1.7%. The only exception is the previously negotiated salary increase for Union employees.
I am grateful to the entire senior staff who have joined me in volunteering to freeze our salaries for the upcoming year as well as to increase our contributions to The Fund for Hobart and William Smith.
I will be able to provide details on the Board’s decisions at the Board Readout; details on time and location to be announced.
Budget Forums and Web Site
In order to provide staff and faculty with current information, I have scheduled two open forums to provide background on the budget:
April, 7, 2009
April 16, 2009
Coxe Hall, Room 7
We have also created a Web site dedicated to issues of the budget and economy: http://www.hws.edu/about/budget/. It includes:
Again, I thank all of you for your dedication and hard work. As always, I trust that you will contact me if you have any questions or concerns about this or any other topic.
Mark D. Gearan