Returns on Dartmouth's endowment had dropped by 18 percent, or $700 million, as of Dec. 31, College officials disclosed on Thursday. The loss will require the College to implement staff layoffs, according to vice president of finance and administration Adam Keller.
The reported loss, which represents investment returns for the first and second fiscal quarters, is triple the $220-million decrease that the College announced for the first fiscal quarter.
"We could see that [the drop] was coming," Keller said. "We had anticipated that the budget would be down 20 percent for the year and that most of that would happen in the first half of the year, so we aren't too far off our predictions. It's not so much a matter of concern as it is a matter of looking into the future."
Dartmouth plans to begin laying off staff members as early as next month because of the rapid decline of the endowment, Keller said, explaining that the College still hopes to cut the budget by $40-million this year
"We expect to have a financial plan to present to the [Board of Trustees] at the February meeting," Keller said. "We hope that the trustees will accept the budget and the plan."
Keller's office has already begun reviewing what reductions should be made, he said. The intended layoffs, though, are still subject to confirmation by the Board.
"We've asked deans and vice presidents to look at service levels and functions, understanding that the consequences of that might be reductions," Keller said. "The individuals are important to us. It is important to think of layoffs at Dartmouth as a reduction of positions, rather than individuals."
Earl Sweet, president of the Service Employees International Union Local 560, which represents about 600 employees at the College, said in an interview on Thursday that administrators have not yet contacted him about the layoffs.
He said he hopes enough union members accepted the College's recent retirement incentives to limit the number of unionized employees that need to be laid off.
Sweet urged administrators to value seniority in deciding which union employees will keep their jobs.
More than 70 staff members opted for the enhanced retirement plan, Keller said. Under the incentive plan, employees over age 55 with 10 years of continuous service were offered six months of pay following the last day of employment if they agreed to retire.
Eligible employees had to notify the College of their plans to retire within the next eight months by Jan. 16.
Because individual departments make their own staffing decisions and may choose to fill the vacancies that result from retirement, Keller said he was unsure of the incentive plan's impact.
"There are some cases where a reorganization in a department would result in employees working less hours," he said.
College employees, who rely on Dartmouth's health care plan, may see an increase in the amount they pay for their insurance.
If employees work fewer hours, the College pays for a smaller portion of their health insurance. Keller said he hopes the College will be able to help those affected by this increase in medical payments.
Keller reiterated that all future construction, including the planned replacement for Thayer Dining Hall, will continue to be put on hold.
"There is no timetable for the building projects, and they will not move ahead until we have a sound financial plan that minimizes impact on the budget," Keller said.
The College's peer institutions have taken similar measures in response to endowment losses.
Brown University, Boston University, Cornell University, Harvard University and University of Pennsylvania have all implemented either hiring pauses or hiring freezes. Stanford University unveiled a plan on Jan. 13 to reduce spending, which included laying off 49 employees.
Miami University, meanwhile, will likely lay off or buy out 100 employees. Rensselaer Polytechnic Institute laid off 98 staff members in December and Syracuse University has laid off 48 employees and eliminated 71 vacant positions, according to U.S. News and World Report.
"All private schools are grappling with what we are right now," Keller said. "Many have announced slowdowns in hiring and stopping building projects."
Despite the current economic recession, Keller said he is optimistic about the future of the endowment and expects it will not change as drastically during the third and fourth quarters of the fiscal year.
"We are somewhat optimistic that with [President Barack Obama], optimism in the financial sector, [the Troubled Assets Relief Program] and the subsequent financial stimulus package, we will have a flat budget return," he said.
