The dismal state of the economy has moved the College's budgetary committee to discuss cost-cutting strategies with employees. Talks with faculty and staff began Thursday when Provost Barry Scherr and Adam Keller, executive vice president for finance and administration, hosted a meeting to inform College employees about the impact of the current financial crisis on Dartmouth. Between 180 and 200 faculty and staff members attended the forum.
No definitive decisions were made at the meeting about how to deal with the problems presented by the economic downturn, Keller said. The College hopes to send the message to faculty and staff that "we will be facing tough economic times, and we will look at all potential expenses to help us manage through these times," he added.
While the national economic downturn will affect the College's future operating budget, Keller maintains that Dartmouth is still "strong financially." The College's investments are in multiple asset classes, managed by a team of five professionals and monitored by an investment committee of the Board of Trustees to ensure that the investments are being maximized, he said.
"The market downturn is going to have a real impact on us -- we are very dependent on endowment for revenue. It is 36 percent of our revenue, more than a third," Keller said. "When the markets turn south and our investments don't increase at the rate we anticipated they would, we are going to have less revenue, and that is accentuated because we've been very aggressive about spending our endowment."
The College is spending its endowment at a high rate, Keller said, in order to invest in Dartmouth's current students, facilities, faculty and financial aid. He said he believes there will be sufficient funds to cover future students.
The College's current priorities are the "classroom experience" -- including small class sizes and the recruitment and retention of faculty -- financial aid and building projects, according to Keller. If the College cuts costs, these priorities will be the last to suffer, he said, although they will still be evaluated.
"We've added another priority, which is trying to look after staff and faculty who are working here on campus and protecting them as much as we can," Keller said. "We are looking to do that by trying to avoid any layoffs, so there are no plans right now for layoffs."
In an attempt to avoid layoffs, Dartmouth will closely evaluate the need to fill a vacancy if a staff member leaves the College, Keller said. He emphasized that this policy will not apply to faculty openings.
"We will also look at the kinds of administrative processes and services that we do and try to figure out ways we can do them more efficiently," Keller said. "We'll try to find out ways that we might be willing to lower service levels and try to think about things we've been doing for a long time that maybe we can stop doing."
The deans and vice presidents will be responsible for making the decisions about downsizing in their respective departments, Keller said.
"We are asking employees to get really actively involved in looking at how we can make things less costly and looking to the deans and to the vice presidents for leadership," he said.
The College will use cost-cutting ideas generated by the budget committee, the faculty committee on priorities and the student budget advisory committee, as well as open forums with employees, Keller added. Current discussions concern the budget for the 2009-2010 fiscal year, which begins on July 1.
"It is mostly for the next fiscal year," Keller said. "We have plenty of time, but we have to get working on this early enough so it doesn't become a crisis."
Although tuition hikes may seem like a viable way to generate revenue, Keller said the College will not introduce them at the expense of the financial aid program. The College's commitment to financial aid is "absolutely as strong as you can imagine," he added. Over the past 10 years, tuition has increased by approximately 50 percent, whereas financial aid has increased by 100 percent, according to Keller.
"Even in the worst of times, our commitment to financial aid remains strong ... so when we talk about tuition, we are very cautious of being able to provide the program that meets the full demonstrated needs of students," he said.
Each year, the College models potential financial outcomes for the upcoming year and for the next five years to better understand its immediate and extended needs, according to Keller. The process involves continually refining estimates and focusing on revenues and expenses to ensure a balanced operating budget, he added.
"What we are doing now is modeling different things," he said. "What if the endowment return is negative five percent this year, or what if it's negative 15 percent? We're trying to narrow the parameters of what could actually be, and we keep doing that throughout the year and try to be as prepared as we can for wherever we are."
