Scherr on the Budget

>Date: Tue, 28 Jan 2003 14:36:13 -0500 (EST)

>From: Barry.P.Scherr@Dartmouth.EDU

>To: on-campus-undergrads-announce@locum.dartmouth.edu

>Subject: Budget

>Sender: massmail-sender@locum.dartmouth.edu

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January 28, 2003

Letter to the Dartmouth Community from Provost Barry Scherr

As promised in the fall term, I am writing to provide you with additional information regarding the 2004 budget and our need to reduce expenses. Since mid-October, the Budget Committee and senior officers have reviewed proposals for budget reductions from department heads in nearly every area of the College. We have consulted with or heard from many students, faculty, and staff, and I would like to thank them for their thoughtful suggestions. The current budget plans reflect these discussions. Over the next month or so, Adam Keller, the Acting Vice President and Treasurer, and I will continue to meet with these groups to discuss the FY �04 budget and to receive further comments. We will finalize the budget for Trustee approval in late spring.

While the budget savings will be achieved in various ways across campus, chairs and directors looked for savings that would have the least impact on teaching and learning, both in and out of the classroom, and on other priority needs in their areas. We have protected the financial aid budget, tenure-track faculty positions, and competitive faculty and staff compensation. All areas reduced non-compensation office expenses such as supplies, travel and entertainment, and professional development. Reorganization of operations will occur in some areas including the libraries, where the services of the satellite libraries will change, and research computing, which is still under discussion. I have summarized these budget strategies in the document copied below. (These materials, as well as further information on the budget, are available on the Dartmouth website: www.dartmouth.edu/~news.)

I indicated in an earlier communication that to balance the budget, we might need to lay off as many as 30 employees. I am very pleased that we have not had to do this so far. Instead, we have eliminated approximately 50 positions through attrition and reorganization. We still need to reduce expenses in several areas to fully realize our budget goal, and we will need to eliminate additional positions. Nonetheless, because of the success we have had so far and our interest in avoiding layoffs, the President has urged us to continue with the current process. We will look aggressively for further attrition and will encourage thoughtful and focused reorganization plans. We remain committed to try to find other positions for employees who may be affected by these changes. I am very grateful to all of the people who have helped and continue to help in this process.

It is still too early to predict with certainty how the budget will look for FY �05 and beyond. But the three consecutive years of disappointing endowment performance will have an impact on the budget for some time to come. Therefore, it will be important for all areas to continue to think about savings that can be obtained through additional cost-saving measures. Resources for new initiatives other than those that are part of the strategic plan will have to come through internal reallocation and efficiencies rather than through reliance on the central budget. We must organize our activities in as efficient a manner as possible while maintaining the very high quality of our educational program.

In closing, I want to thank all employees for their patience and support during this year. This has been a challenging time, but Dartmouth is strong fiscally, and we will move forward with our key priorities. Dartmouth will continue to attract the best students and faculty, provide need blind admissions, offer competitive compensation packages, and provide vibrant academic and co-curricular programs.

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Summary of Changes to the College-Only FY �04 Budget

The senior administration continues to develop the FY �04 budget and to discuss it with the appropriate officers and faculty and student committees before final approval by the Board of Trustees in June. Because of the downturn in the market over the last two years, we have had to adjust budgets. The College experienced a return of -5.7 percent on the endowment in 2002 following 0 percent in 2001. This compared to national returns for universities and colleges of -6 percent in 2002 and -3.6 percent in 2001.

Of the four main revenue streams � student tuition and fees, endowment income, gifts for operations, and sponsored research � we anticipate increases in tuition and fees (although the Trustees have not yet set the tuition increment for next year) and sponsored research. Sponsored research funds are fully restricted to the research project for which they were granted. For budgeting purposes we project income from endowment will decline slightly and gifts for current operations will remain flat in the coming year.

In the 2003-04 budget, Dartmouth will see expenses grow in several areas: faculty and staff salaries, fringe benefits, financial aid, taxes, and utilities costs. Because we expect these expenses to outpace the growth in revenue we have reorganized operations in some areas and reduced expenditures in all of the College’s activities. In August, President Wright announced reduction targets for each area of the College amounting to $5.7 million out of a budget of approximately $300 million. In addition, the Arts and Sciences, the Provost, and the President reallocated just over $2 million in restricted funds to protect key priorities.

Arts and Sciences (target: $1.09 million from operating budget and $525,000 from restricted funds)

The Dean of the Faculty will not eliminate any tenure-track faculty positions and, indeed, has authorized five new positions as a result of prior fundraising. No academic programs will be cut, but academic departments will reduce their non-compensation budgets by 5 percent. The Dean of Faculty, in consultation with department chairs, will reduce the total number of courses by approximately 20, or less than 2 percent of the 1,500 courses offered. (The Dean will add a few courses to meet the Interdisciplinary requirement.) In addition, the Dean of Faculty Office used its own and departmental restricted funds to reduce net expenses.

Provost Division (target: $1.6 million from operating budget and $350,000 from restricted funds)

Library: The library system will undergo a reorganization of its satellite operations. Sanborn will remain open as a reading room and the tradition of afternoon tea will continue. Sherman Art Library will also remain open, but the reserve books will be transferred to the Baker-Berry reserve room. The Cook Mathematics Library will close and its collection will be absorbed into Baker-Berry as the Department of Mathematics prepares to move to Kemeny Hall. The Rare Books collection within Rauner Special Collections Library will be reorganized. The President and Provost have provided $250,000 from their budgets to ensure that there will be no reductions to the collections budget.

Computing Services: Under the guidance of the director, Computing Services will undertake an internal review to take fuller advantage of technological advances and to be ever more responsive to changing academic and administrative needs. Interim Associate Provost for Research Roger Sloboda will chair a committee to review Research Computing, which may expand into a cost center where heavy users will purchase services through grant and professional development support. Although we expect that Curricular and Academic Computing Services will see little cha
nge, Administrative Computing is likely to reduce some services and to slow the implementation of new administrative systems. Upgrades in the network system and increased security needs could result in some reorganization within Technical Services.

Admissions and Financial Aid, Hood Museum, Hopkins Center, Tucker Foundation, the Provost�s Office, and other offices within the Provost Area: There will be no reductions to financial aid or the admissions program budget. The Hop and the Hood have protected those programs and services offered to faculty and students. Tucker will reduce its subsidy of programs. To meet their target reductions, offices will reduce their net administrative costs including travel and entertainment and professional development funds and will leave some open positions unfilled.

Dean of the College (target $885,000 from operating budget)

The Dean of the College will leave some positions unfilled and will reduce administrative expenses and student programming budgets including those in the Offices of Student Life and Residential Life. The Office of Residential Life will adjust maintenance schedules on facilities. Dining Services is evaluating cost-saving measures in its satellite operations and expects to increase sales in all areas. Athletics and Recreation will rely on new gift support for the swimming and diving program. Outdoor Programs will rely more heavily on gifts, endowment, and external revenues to support recreational opportunities. Morton Horse Farm and the Hanover Country Club will increase non-student fees by a modest amount.

President�s Area (target: $188,000 from operating budget and $1.3 million from restricted funds) and All Other Administrative Divisions (target $1.9 million from operating budgets)

Administrative areas, including Alumni Relations, Development, Public Affairs, and the Vice Presidency for Finance, will reduce net operating expenses by eliminating some unfilled positions, reorganizing office functions, renegotiating outside contracts, and reducing non-compensation budgets such as travel and entertainment. The College will delay some renovations to facilities while being careful not to create future problems with deferred maintenance. Facilities Operations will institute energy saving measures. The President transferred $1.3 million of restricted funds to the Dean of the Faculty and the Dean of the College to protect key priorities.

Reduction of Positions

Dartmouth is heavily dependent upon people and compensation makes up a significant portion of our budget, but we hope to avoid having to lay off any employees. Many areas met their target allocations through the elimination of vacant positions and restructuring. Several employees agreed to take positions elsewhere in the institution. We have currently recovered approximately 50 positions through this process. We will continue to review all new and replacement hires and to assess other reorganization plans as we seek to recover still more positions to bring the budget into balance.