The College could face a $3 to $5 million shortfall for the 1997 Fiscal Year due to the rising costs of need-blind admissions and the ending of the College's capital campaign in 1996, College officials said.
Although the implementation of the 1997 budget is still a year and a half away, if initial projections are correct, Provost Lee Bollinger said cuts may be necessary.
"As we look at '97 and '98, we have some big gaps to close," College Vice President and Treasurer Lyn Hutton said. "The picture for '97 and '98 doesn't look real rosy right now."
Bollinger said the deficit represents 2 percent to 5 percent of the more than $160 million budget for Fiscal Year 1997, which begins on July 1, 1996 and ends June 30, 1997.
According to Hutton, current budget projections predict expenses of $162 to $166 million.
She said this forecast could change as the College receives new information on price increases for utilities and library collection expenses.
Hutton said one of the reasons for the anticipated deficit was the increasing cost of need-blind admissions.
She said financial aid costs were growing faster rate than the revenue intake allotted to need-blind admissions.
The College currently spends about $25 million annually, or 17 percent, of its budget on need-blind admissions, according to Hutton.
Hutton said another major reason for the expected shortfall is the ending of the Will to Excel capital campaign in the spring of 1996. "We can't count on the tremendous revenue from the campaign because there won't be a campaign anymore," Hutton said.
The "College-only budget," the one which will experience the deficit, does not include expenses and revenues for the Amos Tuck School of Business Administration, the Thayer School of Engineering, the Dartmouth Medical School or other departments not funded directly out of the College budget, like Dartmouth Dining Services.
Bollinger said the amount of the shortfall might be overestimated, because the College was extremely conservative in predicting revenues for the 1997 Fiscal Year.
He said it is not uncommon for colleges and universities to be conservative in these tight budgetary times. "Our numbers are conservative, but that's the way they should be for budget planning purposes," he said.
Hutton said that while some other institutions do not mind having budget deficits, Dartmouth is committed to maintaining a balanced budget.
"In the last couple of years we've been pretty successful at balancing the budget," she said.
She noted that the College has even returned a small surplus of about $100,000 each year for the past two years.
The College begins formulating the budget in earnest for a fiscal year during the preceding summer. A first-cut look is presented to the College's Board of Trustees in November and then the specific details and line items are worked out, Hutton said.
In February, the Trustees give final approval to the budget and also approve any other increases, such as a tuition raise or a raise in the price of room and board.
The College formulates each year's budget with a three-year outlook.
For example, the 1996 Fiscal Year budget, which takes effect this July 1, was approved last month. The College is now looking at the budgets for Fiscal Years 1997, 1998 and 1999.
Bollinger said that if cuts are made, he will make sure they are done judiciously.
"I am personally committed in so far as if there must be cuts or reductions, that they occur according to an established and agreed to set of priorities," he said.
Hutton said the College follows five main budget principles -- maintaining need-blind admissions, compensating faculty competitively and refraining from reducing core academic programs, cutting tenure-track positions and delaying facilities maintenance.
The College's Priorities Advisory Council examines the viability of the principles each year and makes sure the operating budget accurately reflects the principles.
"Since I've been here, no council or committee has challenged those principles, and the Board of Trustees certainly hasn't sent a directive that these principles should be changed," Hutton said.
But Bollinger said College priorities do get reevaluated.
"The priorities at this point reflect the values of the College, but it's not something you agree to and never review again.You should be asking, 'What do we value and why, and how can we use our resources to protect those values?' "
Bollinger said while need-blind admissions makes up a large part of the budget expenses, the College is still committed to it. But he said that it will not be exempt from future review just like any of the other principles.
"Need-blind admissions is a value and you must think about where to put it relative to your other values," Bollinger said. "It's not required that you have to modify need-blind admissions, but the debate should continue."
Bollinger emphasized that the 1997 Fiscal Year does not begin for another 16 months, and the amount of the expected deficit is anything but final.
"Both revenues and expenses can change quite a bit over the next few months as we work our way through this," he said.
