With the global economic crisis worsening by the week, Bowdoin and its peer schools have worked on plans to secure their financial futures. Bowdoin has created a financial planning model and recently approved cost-cutting measures to balance the budget, while peer schools have made other plans to suit their needs.
In his memo to the College community in late January, President Barry Mills acknowledged that Bowdoin, like "all other colleges and universities," has tough decisions to make. However, he added, "We are better positioned relatively than most colleges and universities to respond to these changing times."
"If you look at the private [colleges], because we are not heavily burdened by debt, because our endowment per student...is still pretty strong, because our student faculty ratio is 9:1 and not 7:1, and because we've managed our expenses fairly prudently over the last number of years, we sit in a position relatively favorably to many other places," he said in an interview on Thursday with the Orient.
In comparison with other college endowments, Bowdoin's has fared relatively well, losing approximately 20 percent since June 30, 2008 when the endowment was $831.5 million. Williams, Amherst, Colby, Bates, Middlebury, Trinity, Wesleyan, and Colgate are all estimating endowment reductions in the range of 20 to 30 percent.
Bowdoin's financial plan includes a two-year salary freeze for faculty and staff earning more than $40,000, an increase in student enrollment by 50 students over five years, and holding operating costs flat.
Though there are similarities in cost-cutting goals and financial aid commitments, some peer schools have taken different routes. Middlebury plans to cut 10 percent of its staff and close a dining hall, and Dartmouth will lay off 60 staff members. Amherst is making 10 to 15 percent dining service budget cuts, Wesleyan will take an extra 120 students, and most schools are delaying maintenance and construction.
Managing enrollment, faculty compensation
Of Bowdoin's financial recommendations, Mills said the one that "troubles me the most" is that of increasing the student body by 50 students over five years, as he has advocated against doing so in past years. Though Mills said he hopes that the economy will improve to make this condition unnecessary, Bowdoin is not alone in its decision.
In a November 25 update, Wesleyan's president announced to increase its 2,800 undergraduate enrollment by 30 students annually over four years, generating $3.9 million in revenue. Amherst's president announced its plans in a February 3 letter to add 100 additional students over four years to its 1,700-student population.
As for faculty, Mills wrote in his memo that he was "very concerned about avoiding layoffs wherever possible," preferring to "keep people working at their jobs and retain programs in lieu of salary increases." The decision to freeze most staff and all faculty salaries is in line with other peer schools, although the decision not to freeze faculty hiring, and continue its allocated searches for faculty, stands out.
Williams President Morton Schapiro has also announced the college will not increase faculty or staff salaries this year. Further, it will postpone the filling of open staff and faculty positions, by deferring six of 14 tenure-track positions and stopping its search for 11 visiting faculty positions.
Colgate President Rebecca Chop announced a temporary freeze of all non-faculty position hiring and scrutiny of any faculty openings. President Tony Marx of Amherst plans to freeze salaries and reduce the number of visiting faculty, but to maintain the search for faculty to fill some spots.
With more aggressive action, Middlebury President Ronald Liebowitz has announced his college's goal to reduce staff by at least 10 percent through attrition by 2011, resulting in at least 100 cuts, while also promoting a voluntary early retirement program.
Bates also plans to further reduce faculty and staff, but has already cut 19 positions through attrition since the 2003 fiscal year. With an endowment about one-third the size of Bowdoin's in June 2008, a 10:1 student-faculty ratio, and "fewer resources for faculty support," Bates President Elaine Tuttle Hansen wrote that the school cannot cut much more without affecting students, in a February 4 announcement.
Despite the financial crisis, Bates recognized its needs to plan ongoing renovation work for the 2010 fiscal year. While other colleges might suspend "non-essential construction work," Hansen wrote that most of Bates' projects are "essential and, in most cases, overdue." The college may construct dining, residential, science, and athletic facilities now "while costs are lower," seeking funding through long-term objectives like fundraising, increased enrollment, or lower energy consumption.
Funding financial aid, facilities
Mills outlined a key objective in his memo was to "continue to provide sufficient resources, including our new no-loan policy, to students who require financial aid." All peer schools surveyed planned to maintain most financial aid commitments in their budgets.
In a December 16, 2008 letter, Colby President William D. Adams announced he plans to "fully fund" their no-loan financial aid program for 2009-10, but cannot predict the program's sustainability for future budgets. Middlebury's president announced on January 29 that it would cut 10 percent of its financial aid reserved for international students. The Amherst Student newspaper reports that the Association of Amherst Students plans to donate $100,000 to the college, a portion of which will go to financial aid as a symbolic gesture of the student's concern.
Having recently completed major building projects on campus, funded through the Bowdoin Campaign, Mills wrote that we need to "maintain these buildings and our infrastructure," as it "would be irresponsible" to neglect routine, planned maintenance. Any new major capital projects, however, will be put on hold.
Taking similar action, Williams announced it will postpone construction of a new library and field renovations, Wesleyan will reduce capital projects, and both will cut planned spending on building renewal and maintenance. Amherst's president wrote that major capital projects will be reviewed in their planning stages and possibly delayed, though additional tax-exempt debt may fund pressing projects.
Colby's president announced plans to postpone "major new capital projects and some strategic initiatives indefinitely," to focus on "the fundamental missions of the college: teaching and learning."
Balancing the budget, cutting costs
Bowdoin plans to draw the same 12-quarter lagging average from its endowment, about 5 percent, while other schools, such as Williams and Amherst, plan on drawing at a greater rate in the short-run. Though Bowdoin has yet to announce its tuition fees for next year. Senior Vice President for Finance and Administration Katy Longley told the Orient in October that tuition will rise between 4 and 5 percent. Similarly, some peers, including Wesleyan and Dartmouth, are estimating an increase of around 5 percent.
As for College fundraising, Bill Torrey wrote in an e-mail to the Orient that, with some rough comparisons with NESCAC schools, "it's fair to say that nearly everyone is down in Annual Giving in amounts ranging from -3 to -26 percent from a year ago at this time."
Therefore, without much-increased revenues from more significant endowment draws or tuition hikes, schools are looking to reduce their operating costs. Bowdoin plans on holding its operating expenses flat, which are currently around $125 million, but other schools are making more aggressive budget cuts.
Williams plans to cut its operating budget next year by $10 million to $207 million, partially by asking budget managers to cut 12 to 15 percent out of non-personnel spending next year, and an additional 6 percent the following year. Amherst plans to cut its budget next year by 10 percent, and Colby will trim $700,000 from its expenses.
In more extreme cases of budget cutting, some schools have sought to eliminate programs or certain student luxuries.
Amherst is targeting its dining services budget, cutting 5 percent this semester and 10 to 15 percent next year. The Amherst Student newspaper reported that the dining hall has reduced the frequency of certain items (no longer offering cereal and juice at dinner, for example), cut portion sizes, and eliminated some foods entirely. They've removed the disposable to-go cups, leading some students to steal the coffee mugs.
Middlebury announced it will cut its MiddView orientation program, including its outdoor excursions similar to Bowdoin's Pre-O trips, and will close one dining hall in January 2010. Similarly, Williams is planning to eliminate its Williams in New York Program.
"There are a number of ways to approach these problems," Mills said. "My goal with the committee was to find solutions that represent this concept of shared sacrifice, but at the same time don't go to the heart of what we're about."