Strategic Budget Reduction and Investment Update - April 1, 2010

Dear Colleagues:

As you know, Dartmouth has been engaged for months in a campus-wide Strategic Budget Reduction and Investment effort. We are writing today to advise you on our progress and to outline what to expect in the weeks and months ahead.

We want to begin this message with a sincere thank you to the community. We are grateful not only for the wonderful work you do each day to make Dartmouth thrive, but for the extra tasks you have taken on and the outpouring of suggestions you have been giving to help with this intense effort.

Update on Progress

We greatly appreciate the suggestions from across the Dartmouth community. To date, we have received and reviewed more than 1,300 suggestions, comments and questions and have assigned more than 70 percent to the budget project teams and Divisions/Schools (check out http://budget.dartmouth.edu/suggestions/ for a review of the status of all suggestions).

In brief, we are pleased to report that we have identified ways to close the gap of $50 million in FY11 (July 1, 2010-June 30, 2011), and to achieve 80 percent of the total target of $100 million we need to achieve by the end of FY12 (July 1, 2011-June 30, 2012). Additional expense reductions and new revenues will be required. However, many solid ideas and approaches for covering the remaining gap are already under evaluation or in development.

The following list provides examples of important measures that are already producing the savings that are necessary to close the gap:

• Revised processes for competitive bidding, and re-bidding, on construction projects;
• New contracts and preferred vendors for supplies and other purchases;
• Reinstating a loan expectation, starting with students entering the Class of 2015, for students with family incomes over $75,000, while continuing our commitment to need-blind admissions;
• Reducing printing, travel, and other non-compensation spending;
• Freezing new hires with limited exceptions;
• Retirements, eliminating vacant positions and other work-force reductions; and,
• Substantial reductions by divisions and the professional schools.

Identifying the changes needed to close the gap, however, is only the start. We understand that implementing such changes often is the more difficult step of the process. The need to reduce our expenses remains urgent. Realizing many of these savings will require making important changes in the way we all do some of our administrative work, over a relatively short period of time. Our success will depend on your assistance and full participation in the coming weeks and months. We will need your support to help us modify our processes in the most sensible and efficient ways.

Additional Savings Initiatives

There are three aspects of the plan to close the gap that we would like to describe in more detail here. These are (1) Reductions in Force (RIF)/Reduction in Hours (RIH), (2) Benefits Changes, and (3) Administrative Restructuring Team (ART) Projects.

• Reductions in Force (RIF)/Reduction in Hours (RIH): As President Jim Yong Kim noted after the February Board Meeting, additional positions will be eliminated in the coming months as we continue to restructure administrative operations. We will continue to do all we can to minimize layoffs. We expect the number, over the rest of this calendar year, will be comparable to the 38 layoffs made in February. Six positions will be eliminated in April; six additional positions will have reductions in hours. About 30 more positions that are now filled may be eliminated later in the year, as divisions and professional schools meet their budget targets, and as we begin to implement the cross-Dartmouth restructuring projects. We will also continue to provide a strong severance package for those whose positions are eliminated and to give them priority for new positions at Dartmouth.
  There are about 3,200 non-teaching employees at Dartmouth. In a typical year, we see about 33 staff retirements; 250 staff resignations; about a dozen layoffs and another dozen whose assignments end, as well as nearly 300 new hires. The Dartmouth workforce is always changing, providing new opportunities for employment as we innovate and develop new programs to meet evolving needs.
• Changes in Benefits: The College Benefits Council (CBC), made up of faculty and staff, has developed recommendations to change the Dartmouth College benefits plan. Our goal is to reduce costs while maintaining our competitiveness. We will share the recommendations with the entire Dartmouth community next week and announce an “open comment period” in April to solicit your opinions of the proposals. Having listened to some of the Council’s deliberations, we are impressed with the depth of the analysis and members’ sensitivity to minimizing the impact on their fellow colleagues, especially those with lower incomes. The work of the CBC illustrates how relatively small reductions shared by all can produce substantial savings for Dartmouth as a whole. In this particular case, the savings may be significant enough to enable us to avoid a furlough or salary reductions.
• Administrative Restructuring Team (ART) Projects: These cross-Dartmouth projects examining how we handle information technology, procurement, finance, facilities, and communications are well under way. (See the project list, posted at http://budget.dartmouth.edu/process/art.html) Team members represent all parts of Dartmouth, including all divisions and professional schools. There are currently more than 75 individuals involved. Each team shares common themes and approaches:
  • Focus on supporting the teaching, learning and research experience;
  • Leverage collective buying power;
  • Maintain quality and service levels in critical areas;
  • Ensure decisions are aligned with strategic priorities;
  • Standardize policies and procedures to reduce inefficiencies and redundancies;
  • Redefine jobs as necessary; and,
  • Provide training for the development of specialized skills to enhance opportunities for career advancement.

The savings goal for the ART projects is $25 million in FY12, which would reduce a significant portion of our overall $100 million gap. Concepts are being developed, and reviews by leaders are being scheduled, to help create implementation plans for these restructuring projects. We are focusing on making changes that ensure we can continue to do things well but also significantly reduce costs. To accomplish this, the way we conduct some of our core financial and administrative services necessarily will change, with the first of these changes to be announced over the next few months. Most of the other organizational changes and new service models will need to be in place by the end of this calendar year to achieve our savings.

In closing, we want to acknowledge both how far we as a community have come in such a short time toward resolving our budget gap – and also that there is much yet to do. In particular, we thank the Budget Committee, ART project teams, and the budget work teams in each division and school that have been working with such great care to identify savings, minimize hardships to individuals, and advance Dartmouth’s mission.

We also want to end this message as we began it, by thanking all of you for the many very helpful ideas and suggestions you have contributed to this process. The work you do every day and the care you bring to it is what makes Dartmouth an outstanding learning and living community.

Best regards,

Carol Folt, Acting Provost & Steven Kadish, Senior Vice President