Dartmouth is beginning the process of developing its fiscal year 2011 budget. This page contains frequently asked questions about the budget and the budget process. For frequently asked questions about the fiscal 2010 budget reconciliation process announced on Feb. 9, 2009, click here.
Q: Is it true a higher number of lower-paid workers’ jobs were eliminated as a result of the budget reductions that the College announced in February 2009?
A: No. In February 2009, the College announced 60 layoffs as part of its budget reconciliation plan. In that round of reductions people at every level were affected, but more salaried workers were laid off than were hourly workers. Managerial and professional positions were eliminated in areas such as procurement, computing, human resources, development, and real estate. Dartmouth provided a financial package that included cash and financial support toward healthcare benefits to all employees whose positions were eliminated.
Twenty-four of the 60 employees whose positions were eliminated in February 2009 were subsequently rehired into other open positions through a process in which hiring preference was given to internal applicants.
In May, 2009, Dartmouth Medical School announced 12 layoffs, as well as a reduction in hours for another 40 employees. Four of the 12 DMS employees whose positions were eliminated were subsequently rehired into other positions at Dartmouth.
For other frequently asked questions about the fiscal 2010 budget reconciliation process announced on Feb. 9, 2009, click here.
Q: What does a “structural budget gap” mean for Dartmouth?
A: “Structural budget gap” means that our operating expenses exceed our revenues.
Dartmouth faces this situation because the annual gap between operating revenues and expenses of $34 million in fiscal year 2009 is projected to widen to more than $50 million in fiscal 2011, and to even more by fiscal 2012 and beyond, if action is not taken to bring expenses in line with revenues.
Q: How does the College plan to address the projected budget gap?
A: We are pursuing a three-pronged strategy to address the budget gap:
Our goal will not be just to cut costs, but to improve the way that we operate the College in pursuit of its mission. This process will require making tough choices today so that we are in a position to invest strategically in Dartmouth’s future.
Q: What are the next steps for addressing the 2011 budget deficit and developing a strategic plan?
A: The Administration will submit a detailed fiscal 2011 budget plan and a five-year investment plan to the Trustees, in stages, for approval next spring.
The process will be led by President Jim Yong Kim, Carol Folt, Dean of the Faculty of Arts & Sciences and acting Provost, and Steven Kadish, Senior Vice President. It will involve the entire campus community, including reviews of departments and divisions.
Meetings are already scheduled with the Committee on Priorities of the Faculty of Arts & Sciences, the institution-wide Budget Steering Committee and the Student Budget Advisory Committee.
The Administration will continue to provide information on the process and ways for the Dartmouth Community to participate.
Q: How will the measures affect students, faculty and staff?
A: President Kim’s goal is to make strategic choices and to improve the way that we operate the College in pursuit of its mission. He is committed to protecting and enhancing the “Dartmouth Experience” and preserving the College’s commitment to leadership in higher education.
President Kim believes the College must continue to offer superb teaching and scholarship by world-class faculty, while achieving leadership positions in new and emerging fields that will advance our mission and make the most of Dartmouth’s unique strengths.
Q: What measures have already been taken this year and how many redundancies have occurred?
A: You can find more information about the measures Dartmouth has already taken in the Summary of Actions taken by the College in February 2009, and the Financial Update sent to the Community in June 2009.
Q: Will there be more layoffs in Fiscal 2010? If so, how many?
A: In order to address Dartmouth’s immediate and pressing financial challenges, the Administration will look to reduce our expenses thoughtfully and improve the efficiency and effectiveness of our administrative operations.
While no decisions have been finalized, this process will unavoidably result in a smaller workforce at Dartmouth.
The Administration will pursue every possible alternative and treat affected employees with respect and dignity.
Q: What is the current market value of the endowment? What are the prospects for recovery? How does the endowment work?
A: The value of Dartmouth’s endowment fell $835 million to $2.8 billion through June 30. This represented a decline on return on investment of 19.6 percent. (The total decline in value was 23 percent, because of the declining investment return as well as spending towards operations, somewhat offset by new gifts.
While the stock market has recovered in recent months, College and University endowments generally have not rebounded as quickly because of their more diverse asset allocations. (Dartmouth, for example, has only 26 percent of assets invested in public markets.)
We do not expect Dartmouth’s endowment to return to its fiscal 2008 level of $3.66 billion for some time.
For an explanation of how Dartmouth's endowment works, read more.
Q: Are there plans to reduce the endowment distribution rate?
A: We can no longer sustain our current level of endowment spending given the economic environment. The distribution rate was 6.3 percent in fiscal 2009.
The Trustees have asked the Administration to plan for a more sustainable endowment distribution rate that is closer to the College’s historic distribution rate of 5 to 5.5 percent. The reduction will take effect in fiscal 2011.
Q: Why was the endowment distribution rate higher in the past?
A: Decisions made over the past five years to increase our level of endowment spending enabled the College to achieve many critical priorities. We enhanced financial aid to attract the best students, hired more faculty in key areas, and started construction of a range of critical new facilities.
The change in the worldwide economic outlook has caused the College – like many other institutions – to change our assumptions about future returns on investment.
Q: Will construction of the Class of 1978 Life Sciences Building and other projects continue as planned?
A: We are just starting the planning process to address the budget gaps we now project for the coming years.
However, as part of this process we will evaluate where strategic investments – including investments in facilities – need to be made to ensure the College continues to advance its mission and maintain an educational experience that is the best in the world.
Q: Is the College considering issuing additional debt to close the budget gap?
A: The College’s most recent bond issue, in June 2009, helped provide greater liquidity. You can find more information about the bond issue in the Financial Update sent to the community in June.
At this time, we have no plans to return to the bond market.
Q: President Jim Yong Kim has said “everything is on the table” – but in the past, some areas were not considered for reductions. What are Dartmouth’s budget priorities?
A: “Our priorities are clear,” said President Kim in a message to the Dartmouth community on Oct. 9, 2009. “To enable the best students to attend Dartmouth, regardless of their financial means; to continue to attract superb faculty who are both great scholars and great teachers; and to build on our reputation as an exceptional place that offers a personalized educational experience for leaders who will shape the future.”
That said, the College is re-examining all activities to determine what is core to its mission, in view of the serious financial challenges faced by Dartmouth as well as nearly every institution of higher education.
Q: We made a good faith effort to reorganize one year ago, and we are now extremely lean. What more can we do?
A: We recognize that it will not be possible to continue Dartmouth’s current level of services and activities with fewer employees. This will be a difficult process, but we need to continually examine what services are core to our mission, as we reconcile our expenses with our revenues.
Q: How do I submit a suggestion? Can I do so anonymously?
A: Suggestions to help us with the budget reconciliation process are always welcome, and can be made in several ways:
Submissions through the Budget Communications web site can be anonymous. We encourage everyone to participate in this process to bring out the best ideas for effective and efficient operations in support of Dartmouth’s mission and reflecting Dartmouth’s values.
Q: What happened to suggestions made during the FY 2010 budget reconciliation process?
A: More than 200 suggestions were received during last year’s budget reconciliation process; you can view them at “Ideas from the Dartmouth Community.” The College took action on many ideas, and started four “X-projects” to review cross-institutional ideas: on facilities; on print-to-digital conversion; on travel services at the College; and on email technology.
