September 23, 2009
Dear Members of the Hobart and William Smith Colleges Community:
I write today to update the community on our financial outlook based on new data and to outline our steps for moving forward.
As I observed in past messages to the HWS community, we face an economic landscape shadowed by recession and fiscal uncertainty, one that has affected student counts, financial aid, the endowment and philanthropy. Due to the expert fiscal management of our Board of Trustees, we entered this period from a position of strength with a balanced and conservative budget that incorporates a number of built-in contingencies. Last year, in response to the fiscal climate, the Colleges took immediate and decisive steps to curb spending across all divisions and departments. Recognizing the strain to students and families, we instituted the lowest tuition increase at the Colleges in 44 years. To cover an anticipated surge in appeals, we allocated an additional $2.6M to financial aid. And, in an effort to provide flexibility in our operating budget, we proposed to freeze salaries for the 2009-2010 academic year, with the understanding that the Board would review the situation at its October meeting.
I thank all of you for these continued efforts and sacrifices. I have been impressed by the many ways we've come together as a community to support one another and our students in this challenging time.
We are also bolstered by the news that the country as a whole is displaying a modest degree of financial improvement. However, as we anticipated, the ability of colleges and universities to harness that momentum and access resources is lagging behind any improvements in the overall economy. As I outlined to you in March, we forecasted that the recession would have a multi-year impact and that the out-years would require greater determination and resolve if we were to reconcile our aspirations with financial realities. In expectation, we modeled a number of scenarios to take into account possible changes in the major drivers of our budget.
One of those major drivers is financial aid. This year, we saw a 14 percent increase in financial aid packages to all students, which included an unprecedented increase of aid to sophomores, juniors and seniors. We were able to cushion the impact through, among other actions, an increase in the number of transfer students and students in housing. Although some of our calculations are still incomplete, it is clear that we now face an estimated $1.25 million shortfall that must be addressed.
This shortfall occurred as a result of increases in financial aid that were necessary to accommodate the changing financial situations of our students and their families. Our goal has always been to provide access to deserving students, so as we address the shortfall, let us take comfort in the knowledge that our current situation is the result of a commitment to our students and to our values.
While I am proud of our efforts to assist students and their families with the costs of an HWS education, these added demands will require continued restraint in other areas of spending. Our $1.25M deficit will call on all of us to look closely at every aspect of our operations to improve efficiencies and to make choices about the allocation of resources. We are working now to develop a new budget model that incorporates this deficit so that we can more accurately chart our financial course. To assist in this process, I am convening a task force of trustees, faculty, staff and students who will spend the remainder of the academic year laying the groundwork for the long term.
In addition, as we initiated last year in response to the economic turmoil, I have also scheduled a budget forum to take place on Tuesday, September 29 at 4:00 p.m. in the Vandervort Room in the Scandling Campus Center to provide a more complete picture of our financial situation and to answer any questions you may have.
Despite the situation we now face, it’s important to recognize that by every measurement, the Colleges are much stronger than even 10 years ago. We consider the Colleges' vitality through a number of important lenses - the academic and research accomplishments of our faculty and students, the aptitude of our incoming classes, the level of student engagement as indicated through national surveys, the quality of learning opportunities, national rankings of our abroad and service programs, and the outcomes of our graduates. In all of these ways, the Colleges are tracking ahead of expectations. This is truly a learning environment on a steady incline of achievement.
Our ability to navigate these challenging times will be enhanced by a determined focus, aggressive expenditure restraint, a collective level-headedness, compassion and civility in our dealings with one another, and a sustained commitment to our students. Let us move forward with deliberation and a shared pride in all that we have accomplished.
With every best wish, I am
Mark D. Gearan