February 9, 2009
Dear Members of the Dartmouth Community,
This week we will begin implementing a strategic plan to decrease the Dartmouth-wide operating budget of $700 million by $72 million between now and 2011; included in this effort is a reduction of $47 million in the $450 million budget for the College (excluding the professional schools) over the next two years, with $35 million of that amount taking effect in the coming fiscal year.
As you can imagine, the decisions we are announcing have not been easy to make. We realize that changes to programs and services will cause hardship for those staff members who will be losing their jobs or facing a reduction in hours through reorganizations of various areas. The careful evaluation of positions that we have conducted means that the effects will be felt in many offices and in some cases will have an impact on long-term employees. This is clearly the most difficult aspect of the work that we have had to do in an effort to bring our budget into balance.
In formulating these financial measures we have been guided by the same strategic priorities that have shaped previous institutional planning projects. Thus, we have aimed to preserve the excellence of the academic programs at Dartmouth, the strength of its teaching and research missions, and our full commitment to financial aid.
As President Wright mentions in his letter, the sharp decline in our endowment, on which we depend for about 35 percent of the College-only operating budget, has left us with the potential for extremely large deficits in the coming years if we were simply to continue doing business as usual.
In deciding how much of our endowment to use each year, we employ a formula meant to smooth the effect on our budget of year-to-year variations in endowment performance. However, neither our formula nor any other plan can manage the virtually unprecedented drop in endowments over the past few months. We must implement significant reductions to our budget. Next year, our spending formula will result in our using a significantly higher percentage of our remaining endowment than we did this past year. That is not sustainable in the long run. The steps we are announcing today are necessary to keep our endowment from falling further and to maintain the long-term health of the institution.
You will recall that in the fall we asked each of the divisions and departments at Dartmouth to model budget reductions of 5%, 10% and 15%. In a bottom-up process we asked for suggestions for savings from the entire community. We then took that information and, in consultation with the Budget Committee—which includes vice presidents, the Dean of Faculty and the Dean of the College—began to set specific targets. As we worked on the task of setting goals we consulted with the faculty’s Committee on Priorities, with the Student Budget Advisory Committee, and with staff through community forums. Heads of departments and divisions came up with initial recommendations, which were then discussed with the Budget Committee, and during the process we made a number of adjustments in order to do the best we could in terms of adhering to our priorities while at the same time trying not to burden any areas unduly.
In order to identify $47 million that could be eliminated from our budget over the next two years, we have reduced compensation by $28 million, building project expenses by $10 million, non-compensation costs by $8 million, and we will add $1 million in new revenue. The majority of the compensation reduction results from the freeze in salaries for fiscal year 2010.
Dartmouth’s professional schools each have their own budgets. Dartmouth Medical School continues to work on a new strategic plan and consequently will finalize its budget reductions later this spring. Tuck and Thayer will take the same measures as the College in terms of salaries and are adjusting discretionary expenses as needed to maintain balanced budget operations. Faculty recruiting in the professional schools will slow, with some searches deferred until we can ensure stable and consistent sources for funding new positions.
Throughout this process we have been mindful of the need to make reductions that are sustainable well into the future, given the seriousness of the economic downturn and the impossibility of predicting what the next few years might bring. The campus as a whole will find that while we are maintaining our core activities we are also trimming a number of programs and services to help achieve the necessary savings. At the same time, we are committed to recognizing and answering the very real needs of our diverse community, and continuing to ensure that Dartmouth is supportive of all who study and work here.
In light of these considerations, we will put in place the following measures:
We have read through the many suggestions for budget savings recommended by the Dartmouth community, and we appreciate both the quantity and the quality of the ideas that were submitted. Some of these have already been at least in part implemented; others are still being studied and some are likely to be introduced in the months ahead.
To describe our plans more fully and to answer questions, we are scheduling a number of information sessions for students, faculty, and staff at the divisional and departmental levels, as well as conference calls for alumni/ae and volunteers. We welcome your questions, and your further suggestions. For more information and to submit your thoughts please access our website: http://budget.dartmouth.edu
Finally, we want to thank all those who worked with us on budget planning over the past few months. We received good and often challenging advice not only from our colleagues on the Budget Committee, but also from the faculty’s Committee on Priorities, from the Student Budget Advisory Committee and from staff at open forums. The heads of all the areas, along with their executive officers, have had the unenviable task of figuring out how to make significant reductions in their budgets while at the same time maintaining essential services. Without their cooperation and hard work, much of which continued uninterrupted through the holiday break, we could not have made the progress that we have achieved in coping with these extraordinarily difficult times.
While we are in a period when it is impossible to predict with confidence what the future might bring, the changes that we have made deal with the budgetary problem that was identified in the fall and do so in a way that protects our core values as an institution. The reductions in personnel that we are making are nonetheless painful, and we extend our appreciation and gratitude to those staff members who will be leaving Dartmouth. Rather than make across-the-board changes, we have attempted to reduce budgets carefully and strategically in order to minimize the effect on the educational experience of our students and on the teaching and research of our faculty. The quality of Dartmouth’s faculty and students, the talents of its staff, and the variety and excellence of its curricular and co-curricular programs are what make the College a world-class educational institution. In protecting those, we are preserving the attributes that enable Dartmouth to cope with today’s challenges and maintain its position at the forefront of American higher education today and in the future.
Sincerely,
Barry Scherr
Provost
Adam Keller
Executive Vice President, Finance and Administration
