Dartmouth will implement a series of budget cuts over the next two fiscal years that could total $100 million, the Board of Trustees announced on Saturday. The announcement follows a 23-percent drop in the College's endowment and comes less than one year after the College implemented a $72-million budget reduction last winter for the 2009 and 2010 fiscal years combined.
In the 2009 fiscal year, the College had a $34 million gap between operating revenues and expenses.
"We think that the endowment will grow around 5 percent next year, and if it grows around 5 percent next year, we are looking at a $50-million deficit," College President Jim Yong Kim said in an interview with The Dartmouth on Saturday. "There is still uncertainty here, but from everything we can tell and we have some excellent financial minds on our Board our best guess is starting for fiscal year 2011 we are going to have to take about $50 million from what we had projected before as our budget."
The Board directed the administration to cut $50 million in the 2011 fiscal year and another $50 million in 2012, according to a statement released by the College on Saturday.
Kim told The Dartmouth that he and the College's trustees did not feel comfortable determining budget targets for any year later than 2012 because of economic uncertainty.
"We must take bold and immediate action to address a structural gap in our budget that will otherwise continue to grow," Kim said in a statement. "Eliminating the deficit will require some difficult choices, but I am confident that with the entire community working together, we can address this challenge while protecting and strengthening the Dartmouth experience for our students."
Kim said in the interview that "no stone will be left unturned" in determining how the budget reduction will be made.
The financial aid program, which was unaffected by the College's previous budget reduction, will be examined as the College seeks to outline the forthcoming budget cuts, he said.
Kim emphasized that the College's commitment to need-blind admissions will remain unaffected.
"I can't imagine being part of a college that is only open to people who can pay," Kim said. "So we will absolutely maintain our commitment to need-blind admission."
Board of Trustees Chairman Ed Haldeman '70 told The Dartmouth on Saturday evening that the Board did not provide any further stipulation about how the program might be altered, if at all.
There may be ways in which the College's financial aid program can be "tweaked" to make it work "more effectively," Kim said
"We are going to make sure people who are currently Dartmouth students don't find themselves unable to afford a Dartmouth education," he said.
The College will institute a second round of layoffs as part of the budget cuts, Kim said in the statement.
"This process of bringing revenues and expenses in line will be painful and difficult, and we regret that it is necessary," he said.
The Board did not go into detail about the budget cuts or clarify if faculty would be exempt from the layoffs, Haldeman said. In the last round of budget cuts, no tenure or tenure-track positions were eliminated.
"We still have no idea how many [layoffs] there will be," Kim said in the interview.
The administration hopes to begin developing a plan for the budget cuts over the next few months in anticipation of the next Board meeting in February, Kim said.
"We hope that a final fiscal 2011 budget will be ready sometime in April," Kim said. "But between now and February, we have a lot of work to do, and a lot of discussion we have to have with all of our different constituencies on campus, and then we may have a preliminary idea of what the budget may look like in February."
The College has suspended its search for a new chief investment officer, Kim said, opting instead to have the College's investment office report to a new investment committee temporarily. The investment committee was previously a sub-committee of the Board's finance committee, according to the statement.
Trustee Stephen Mandel Jr. '78 will chair the investment committee, with former Trustee Peter Fahey '68 acting as vice chair.
"The investment office will continue to report directly to the investment committee," Haldeman said in the interview. "We really think that our staff in the investment office is highly skilled and that this structure is in the best interest of the College at this time."
The Board also called on Kim to lower the endowment distribution rate the percentage of the endowment that goes towards the College's operating budget each fiscal year.
The Board hopes to reduce the endowment distribution closer to between 5 and 5.5 percent, down from a 6.3-percent rate in the 2009 fiscal year, according to Kim.
Kim emphasized that he and other College officials will work to ensure that the quality of the student experience at Dartmouth is maintained.
"The Dartmouth experience can't change," Kim said. "The student experience has to still be as rich and powerful as it has ever been. We have got to preserve the student experience, our great faculty. We have got to be sure that this is not something that does any kind of lasting damage to the Dartmouth experience."
Kim said that the Board asked him to look at every aspect of the College in determining where cuts will be made, but added that those cuts must be made without doing damage to the "most important" aspects of the Dartmouth experience.
"Everyone has a slightly different understanding of what is essential about the Dartmouth experience, so that is the conversation we have to start having right now," Kim said. "The bottom line is that everything has to be on the table we have to look at everything We have to be sure that any time we can be more efficient and more effective at lower costs, we have to do it."
The administration will not be instituting a uniform, College-wide cut, Kim said.
"We have to really look at what we're doing, and there is no doubt that there are some things that we're doing now that we're either going to do much less of or not at all," Kim said. "But, at the same time, in areas where we need to grow or where there are strategic opportunities for us to really make a big difference or dramatically improve the Dartmouth experience, we're going to continue to invest."
Despite the size of the budget cuts, Kim said he is optimistic about Dartmouth's ability to "weather this storm quickly and get right back to growth."
"I am entirely confident that if we get through these next two years by being very focused and very strategic, we are going to get right back on the path to building the most extraordinary Dartmouth College that anybody can possibly imagine," he said.
During his presentation to the Board, Kim explained his aspirations for the College as it approaches its 250th anniversary in 2019, including expanding interdisciplinary programs and making the College the "most sustainable campus on the planet."
Kim also said he would like to build on Dartmouth's leadership in undergraduate education and the strength of its faculty, as well as create new programs that better integrate the professional schools with the undergraduate program.
