Dartmouth's effort to trim $72 million from the institutional budget through 2011 -- a reduction of roughly 10 percent to the College's overall budget of about $700 million -- is part of a trend within higher education to combat falling revenues and minimize the effects of the economic recession.
Dartmouth, which announced on Monday that it will lay off 60 employees, or roughly 2 percent of its staff, is the first Ivy League institution to announce a specific number of layoffs. Brown University President Ruth Simmons announced in a statement last month that the university would reduce the size of its administration and curtail an increase in the size of its faculty, but gave no estimate of the possible number of cuts.
Colleges and universities across the country are likely to eventually face similar budgetary issues.
Dartmouth's budget cuts are consistent with those projected by other Ivy League institutions. Harvard University has predicted a 15-percent reduction in expenses, according to a statement by Michael Smith, Harvard's dean of the Faculty of Arts and Science.
Cornell University also faces a budget gap, necessitating a 10-percent reduction in spending. Cornell President David Skorton announced in a letter to the university community that, among other measures, the university will extend its hold on construction and increase tuition by 4 percent. The Dartmouth Board of Trustees approved a 4.8 percent tuition increase last weekend.
Although few institutions have formally announced layoffs, officials at several colleges and universities have hinted for several weeks that they will likely become necessary.
Several state university systems are implementing significant employee cuts.
Arizona State University has already eliminated 550 positions and could ultimately reduce its staff of 12,000 by another 450 employees, the Arizona Republic reported.
Louisiana's universities, which may face funding cuts as high as 30 percent, are preparing to lay off 2,000 employees, the Daily Reveille, Louisiana State University's newspaper, reported.
North Carolina state universities have considered reducing employee rosters by 1,700, including the dismissal of 660 faculty members, according to the Associated Press.
Dartmouth's planned layoffs will not affect tenure or tenure track faculty, vice president for finance and administration Adam Keller said.
Making up the budget shortfall has required leaner operating budgets for many divisions, but the new budget has largely preserved the faculty and academic programs, Provost Barry Scherr said in an interview.
"We really hold the academic experience and academic programs at the forefront of what we're all about and what we're trying to do," Scherr said. "That's really what we want to protect most of all."
Dartmouth has also avoided any reduction in financial aid, a decision mirrored by most other colleges and universities.
Middlebury College officials, however, recently announced that they would be making adjustments to the school's financial aid program. This includes a reduction in aid for international students and changes to the amount of tuition that must be paid by families of students on financial aid.
Dartmouth's fiscal changes have been largely in response to recent declines in the College's endowment returns.
An institution's dependence on its endowment is a significant variable in budget calculations, College President James Wright said in an interview.
Dartmouth relies on the endowment for 35 percent of its revenue, leaving the College vulnerable to fluctuations in the value of its investments, Wright said.
The importance of endowments in generating operating revenue appears to have affected the financial dialogue at several institutions coping with the economic downturn.
Stanford University draws 30 percent of its revenue from investment income, and the university is currently working to make up for a $63 million shortfall in its $817 million budget, according to a recent report by the Stanford Provost's Office.
In contrast, Columbia University relies its endowment for only 13 percent of its operating funds, according to a statement by Columbia President Lee Bollinger. Columbia has not yet been forced to make changes on a similar scale to Dartmouth.
The endowment itself may not be the root of the problem, according to Bill Jarvis, managing director of the research group Commonfund, which has studied endowment practices.Commonfund's most recent study of institutional endowments from July to November 2008 showed that returns for endowments of all sizes have fallen.
"I don't know that I would point a finger at a Dartmouth, or at a big university endowment, and say it's a bad thing that they're so reliant on their endowment," Jarvis said. "In this environment, no one was prepared for the dry up of liquidity. Everybody's done terribly."
Institutions that rely more on tuition than endowments for funding will ultimately also face budgetary issues, Jarvis said. As families are affected by the wider economic issues, tuition-driven schools will have to contend with more financial aid requests and a corresponding decrease in tuition.
"What happened this last fall was completely abnormal, and so the task is to take what we can to learn from it," Jarvis said. "Most of the time [the endowment] model works. The task is really to get the markets fixed again."
Dartmouth administrators maintain, however, that the proposed budget can work within the framework imposed by weakened revenue sources.
"I wish I could tell you what's going to happen in the market," Keller said. "I don't think this is an effort that necessarily stops today. It's really something which we could be using to sustain for the long term."
