College to reduce budget by $3.5M
Due to this year's economic downturn and the resulting zero-percent increase in endowment return, Dartmouth will be making campus-wide budget cuts of 1.5 to 2 percent that will affect every area of the College.
The budget cuts, as approved by the Board of Trustees at last weekend's meeting, represent an overall spending decrease of about $3.5 million. $1.05 million of that comes from the Arts and Sciences, $800,000 from the departments under the Provost and $600,000 from the Vice President and Treasurer's Office.
The remainder comes from a variety of areas including the Dean of the College's Office, the President's Office and Development and Alumni Relations.
Vice President and Treasurer Edwin Johnson, Provost Barry Scherr and Kate Soule, the director of Budget and Fiscal Affairs in the Dean of Faculty Office, each emphasized that cuts will not come from faculty salaries or current projects.
The Hopkins Center faces a reduction of $40,000, but Director Lewis Crickard said that this will not result in the cancellation of any programs, at least for next year.
"Without cutting programs, we can survive a first year. If this continues, it starts to get serious," Crickard said. As the Hop lacks a substantial reserve fund, he said everyone in his department will be doing some "belt-tightening" in the areas of equipment, travel expenses and supplies.
Johnson said his office would be operating under similar constraints next year due to budget cuts as well as unforeseen expenses such as increased employee healthcare costs.
Last year the College saw a 38-percent increase in number of employee claims to Blue Cross/Blue Shield, which resulted in higher premiums for the College, Johnson said.
About the difficult budget decisions he has had to make this year Johnson said, "I have to put more money into insurance, and I would rather not." He also mentioned that he has not been able to allocate as much money as he would like for building and grounds maintenance.
According to Scherr, cutting non-compensational expenses will become a campus-wide trend in the coming years. At the same time, Scherr mentioned, "Salary raises will be more modest than they have been in the past."
Dean of Thayer School of Engineering Lewis Duncan said that this will be a reality for faculty in the engineering school as well.
In order to cut the Arts and Sciences budget in the without affecting any academic departments, the office of the Dean of Faculty has had to employ some creative solutions.
"We decided to limit the increase in start-up budget," Soule said. Cuts in the start-up budget, which currently supplies new professors with $1.4 million in initial research money, will amount to $450,000 -- the largest single reduction in the Arts and Sciences budget.
To alleviate some of the budget crunch, the College is also increasing the projection for revenue it will receive from professors' grant money. Part of every grant dollar goes to the College as a "facilities and administrative" fee, so the more grant money professors receive, the more revenue the College earns.
"We think we're going to get more grants next year than we got this year," Soule said. To explain why the College increased its grant revenue forecast by $200,000, she said, "In the past 10 years, we've made a special effort to hire people who are good researchers, and they've been exceeding our expectations."
The Provost addressed the same issue when he said, "We've seen revenue growth in externally funded research. The amount of federal funding is growing. It's a way of ensuring the long-term economic security of the nation."
"We've been very conservative, and now we're being fairly conservative," Soule said of the College's recent budget decisions. In particular, Soule was optimistic that computer science, psychology and brain sciences, biological sciences, physics and astronomy would continue to be "successful grant-getting departments."
In the past the Arts and Sciences have provided funds for the renovation of old classrooms, a burden it has recently been relieved of due to a new centrally funded initiative that will take over the work of creating "smart classrooms," Soule explained. This new initiative will save Arts and Sciences $100,000.
While salaries will not be reduced next year, Dartmouth hiring practices may be less aggressive then in the recent past.
"We're leaving several faculty lines vacant for a year, both old positions in which someone has left and newly created positions that haven't been filled yet," Duncan said. While Thayer has a separate endowment from the Arts and Sciences, it suffers from a similar "modest growth" in endowment return.
Nevertheless, Thayer will not experience the 2-percent budget cut because it has fewer expenses and more flexibility in terms of absorbing endowment fluctuations, according to Duncan.
"This is less a case of budget-cutting than with making difficult decisions," Duncan commented. Some of these decisions may concern the hiring of new faculty members, though Duncan remained optimistic about the engineering school's ability to hire qualified professors.
"If an outstanding candidate becomes available, we'd like to have the opportunity to move quickly," he continued, noting that there were five faculty positions that could potentially be filled by the end of the year.
"Where it affects us most is how we spend any new resources, such as buying faculty equipment and spending discretionary monies." At the same time Duncan emphasized, "we're not having to freeze spending."
Despite the budget cuts, the College has implemented some costly new programs, such as a $1,000 healthcare benefit and a 10-percent stipend increase for all graduate students. According to Soule, the current graduate-student stipend of $16,440 was making Dartmouth less competitive.
Departments such as studio arts, anthropology and linguistics will also receive additional funding from the College.
"We are providing subsidies for studio-art students ... we're creating an out-of-pocket cap of $200 per student and subsidizing the rest." Soule said, explaining that photography students will benefit the most from this new program.
In addition, next year the anthropology and linguistic departments will receive funding to implement a new Foreign Study Program in New Zealand. According to Soule, the plans to increase spending in particular areas were made before budget cuts were announced, but administrators have been able to compensate without changing their plans.
Duncan spoke to the proposed spending increases, as well as the Trustee's decision to grant funds for dorm construction and Hop renovation, when he commented, "One of the advantages of coming to an elite wealthy school is that Dartmouth has fiscal shock absorbers."
State and private universities across the country are experiencing similar, and in many cases much worse, difficulties than those Dartmouth faces.
The current situation is "remarkably better at Dartmouth" than at Duncan's former employer -- the University of Tulsa -- which had about a $500 million endowment, compared to Dartmouth's $2.5 billion endowment.
While the University of Tulsa struggles as a private institution, the University of California system has been forced to increase out-of-state tuition for the first time since 1991 and the University of Tennessee system may eliminate funds for remedial education and athletics programs.
Prestigious private universities other than Dartmouth are also having to make difficult decisions due to the economic downturn.
"There is a freeze in hiring at Cornell, and Stanford is looking at the possibility of cuts larger than Dartmouth's, although that hasn't been announced yet," Scherr said.
Scherr and other administrators said that things could be much worse. Compared to budget crunches a decade ago, the current situation is relatively mild.
"Dartmouth's bad years were at the end of the '80s and early '90s ... things were worse than they are now. I would say it's gone from good to not-so-good," the provost said.
On a less optimistic note, Scherr added, "It's hard to imagine that budget cuts will be reversed any time soon."
Scherr affirmed that budget cuts will not negatively impact academics or student life. He noted, "As administrators, if we do our job well, fluctuations in the budget will be invisible to students."