Wheaton's preliminary budget options
Posted on January 30, 2009
To the campus community,
The month of January is traditionally when the college develops its budget projections. The Board of Trustees reviews and approves the preliminary budget option in February when it sets the comprehensive fee for the following year. As you might imagine, given the economic downturn, budget planning this year is particularly difficult because Wheaton is not immune to the current global recession.
Earlier today, the Budget Advisory Committee reviewed preliminary budget options for FY'10, and I want to share the major outlines of those projections with the entire community. My hope is that this information informs our discussions during the open office hours I will hold next week.
I am eager to hear your thoughts on the challenges we face, your perspective on the implications of the cost reduction strategies under consideration, and your ideas about how to move forward. Wheaton's success in weathering this economic turbulence will depend upon the strength of our community and our ability to work together.
Indeed, it is important to celebrate the strengths that will sustain our community. One measure of our continuing strength is reflected in the more than 3,200 students who have applied to Wheaton for the Class of 2013. Although our applications numbers have declined this year when compared to last (as they have at nearly every private selective liberal arts college this year), Wheaton continues to hold strong appeal among high school students. This appeal arises directly from the personal nature of the education that the college offers, and it testifies to the talents of faculty, staff and students.
The importance of preserving Wheaton's academic quality cannot be overestimated. Even as the college will look to reduce costs, we must invest strategically in initiatives that will maintain and enhance our strengths. The science center project remains an important objective. We will complete construction documents for the building by the end of March. At present, the finance office is preparing the documentation necessary to secure the required debt financing for this project, although we continue to wait for its availability at reasonable rates. The college received initial approval for our science center plans from the Health & Educational Facilities Authority (HEFA) last month. We are acting on other opportunities to improve campus life, such as enhancements to Balfour-Hood Café and to many residence hall common spaces this semester.
Short and long-term challenges
Still, Wheaton faces significant short-term and long-term challenges. The next eighteen months will be difficult because we must reduce the college's operating costs substantially. Wheaton's operates on a relatively lean budget and depends upon tuition revenue, so reducing costs will require great creativity, flexibility and patience from the entire community.
No one can predict how long this recession will last. But it is clear that Wheaton must achieve substantial cost savings over several successive fiscal years For example, the loss in Wheaton's endowment value during the first six months of this fiscal year, which I reported to you last week, will impact endowment revenue for as much as five years.
During February, we must focus on the immediate challenges of the coming fiscal year: reducing operating expenditures, allocating more funds for financial aid to preserve students' access to Wheaton and taking every step to safeguard faculty and staff positions. This will not be an easy task.
Financial aid and comprehensive fee
Our preliminary FY'10 budget options include a further increase in the financial aid spending rate, which would result in allocating $1 million more for student support next year. This would provide critical support amid the economic difficulties besetting so many college students and their families.
The preliminary budget options, which the Board of Trustees will consider, include three different alternatives for setting the comprehensive fee for the 2009-2010 academic year-ranging from a 2.3 percent tuition increase to no increase. Ultimately, the trustees will decide which course to take in setting the comprehensive fee. However, all three options assume a freeze on faculty and staff salaries, and a hiring freeze.
Cost containment measures
I am well aware that a salary and hiring freeze may present difficulties for many employees and departments, but I am committed to avoiding employee layoffs wherever possible. I cannot make any guarantees at this point, but I would much prefer to maintain current staff and faculty to ensure the strength of our community and the quality of our programs.
Operating budget reductions
A freeze on salary increases and hiring is necessary, but not sufficient, to balance our FY'10 budget. The college may need to reduce operations expenditures by as much as five percent, for the fiscal year starting on July 1. While the exact amount of these spending reductions remains to be determined, substantial budget cuts will be necessary. This is a sobering reality.
However, as we weigh options for budget reductions, I am committed to the three priorities that I outlined in the fall: sustaining academic quality, increasing resources for financial aid to maintain students' access to a Wheaton education and strengthening the community and our ability to collaborate effectively.
Community consultation and process
I am asking the community to discuss this situation in greater detail over the next few months. The Budget Advisory Committee will continue to meet weekly to analyze budget options and represent the broad interests of the campus.
I will hold several open office hour sessions in the Presidents' House on Tuesday, Feb. 3 from 10 to 11 a.m., Wednesday, Feb. 4 from 4 to 5 p.m. and Monday, Feb. 16 from 8:30-10:00 a.m. for further discussion of these issues. I also plan to hold an open office hour specifically for students on Thursday, Feb. 5 from 3:30 to 5 p.m., as well as meet with the Student Government Association. As always, please feel free to send me email, if you have comments or suggestions.
Following the February 21 Board meeting, I will convene a community meeting in Weber Theatre on Wednesday, March 4th, 9:30 - 11:00 a.m. to review the budget option approved by the Board, discuss the proposals under consideration and gather input for the decisions that lie ahead. I will share more details closer to the date of the meeting.
I close with a note of thanks to the entire campus community for each person's contributions to our collective strength.