Senior Vice President Steven Kadish, President Kim, and Dean of the Faculty of Arts & Sciences Carol Folt at a news conference announcing the Board of Trustees initial plan to close Dartmouth’s budget gap. (photo by Joseph Mehling ’69)
Dartmouth College today announced that the Board of Trustees has approved an initial plan to close a projected, recurring annual budget gap of $100 million in fiscal 2012 and beyond.
In November 2009, the Board asked the Administration to prepare a Budget Plan to address the growing deficit. As a result of the global economic downturn, endowments for Dartmouth and other schools have declined. The investment return on Dartmouth’s endowment fell 19.6 percent in the fiscal year ending June 30, 2009, and consequently, projected revenues are down sharply. Although the College expects to have a balanced budget this current fiscal year, projections are for deficits of $54 million in fiscal 2011 and $96 million in fiscal 2012, if no action is taken. The Administration presented its Plan to address the budget shortfall to the Board at its meeting over the weekend, and the Board approved it.
Through thoughtful and strategic actions, the Administration identified ways to achieve approximately 95 percent of its targeted savings before any layoffs. The Administration limited layoffs to 38 non-teaching positions and expects a comparable number of additional layoffs will be required in April when the most intensive phase of the budget-reduction process is complete.
President Kim said, “The plan that the Board has approved will allow us to advance our strategic priorities for Dartmouth and pursue our vision -- to build on our unique approach to educating leaders who will shape the future -- while keeping the College on sound financial footing. It protects the Dartmouth experience for our students and allows us to continue to invest in our academic priorities and remain competitive in attracting and retaining world-class faculty. We are moving aggressively because the sooner we take responsible action to address the looming budget gap, the sooner we can return to focusing all of our attention on advancing our mission. At the same time, we have worked hard to treat all employees of the College fairly and minimize any adverse impact on the community.” (read President Kim’s letter to the campus community, distributed today)
Board Chair Ed Haldeman ’70 said, “The Board greatly appreciates the tremendous input received from all corners of the Dartmouth community. Hundreds of people have worked tirelessly together with the Administration to identify ways to close the financial shortfall. This community involvement has proven incredibly valuable in helping to determine the best way to address what are obviously difficult choices. President Kim has provided bold leadership and sensitivity throughout this difficult process, and we believe we are now well positioned to move ahead to realize his dynamic vision for the College.”
Budget Plan
Work on the budget will continue through April, but the savings and revenue targets that have been developed for fiscal 2011 and 2012 fall into the following categories:
- Administrative reorganization and restructuring - $ 25 million
- Benefits and compensation - $ 13
- Professional school savings - $ 14
- Program reductions - $ 14
- Financial aid - $ 5
- Other savings and revenues - $ 29
- Total - $100 million
Dartmouth has taken a number of measures to avoid layoffs, including offering voluntary retirement, reducing hours, eliminating unfilled positions and freezing salaries. To date, more than 105 non-teaching employees have accepted the College’s retirement incentive, and unfilled positions have been reduced by 43. These actions come on top of 158 positions that were eliminated last year.
While these steps have made a significant impact, they did not fully eliminate the need for layoffs. Thirty-eight layoffs in non-teaching positions will take place starting Tuesday, with a comparable number anticipated in April. Approximately 60 percent involve professional and managerial employees. Combined, these layoffs will represent approximately 2 percent of Dartmouth’s non-teaching workforce of 3,400. The layoffs are at all levels and include union and non-union jobs. Another 33 non-teaching employees will be asked to work reduced hours as a result of operational changes.
Affected employees, who will receive notifications beginning on Tuesday, will receive enhanced layoff packages. These include four weeks of working notice, a lump-sum payment equivalent to between four and 52 weeks of pay depending on length of service, as well as a health-care subsidy. Employees experiencing layoffs will maintain internal status when applying for jobs that become available. (More information about the package)
Undergraduate Tuition and Financial Aid
The Board has approved an increase in undergraduate tuition, room and board and fees of 4.6 percent, to $52,275. This is the smallest increase in the past five years and will be partially offset by a 10 percent increase in the financial aid budget. The College has reaffirmed its commitment to enable the most talented students to attend Dartmouth through need-blind admissions and will continue to provide free tuition (with no loan expectations) for students with family incomes of $75,000 a year or less. (Tuition alone is up 4 percent, to $39,978; the new mandatory fee for health services is $75 per term, with financial aid for the health fee available as needed.)
For financial-aid recipients from families with incomes above $75,000, the Board has decided to re-institute a loan requirement of approximately $2,500-$5,500 per academic year beginning with the Class of 2015, whose members will enter in fall 2011. This is necessary in the context of efforts to address the budget gap while minimizing layoffs.
Current students on financial aid and applicants to the Class of 2014 will not be affected by the change in the no-loan policy. (Click here for additional information, including Dartmouth’s professional-school tuition increases)
Administrative Reorganization and Restructuring
More than two dozen cross-institutional projects have been launched to produce a more effective Administration at the College, initiating best practices in facilities management, construction, procurement, information technology, research administration and finance. Additional steps will be taken to create a more efficient and greener Dartmouth by enhancing waste management and recycling programs, improving energy efficiency and adjusting maintenance service levels. Other recommendations for restructuring are under development.
Benefits and Compensation
The Council on Benefits is now looking at a number of different ways to achieve budget-reduction targets by redesigning Dartmouth’s benefits package, and further details will be announced in April.
President Kim will join Acting Provost and Dean of the Faculty of Arts & Sciences Carol Folt and Senior Vice President Steven Kadish in donating 10 percent of their salaries to be split between the Dartmouth College Fund and a hardship fund. The hardship fund will assist those with financial difficulties not met through our other programs such as layoff packages or our staff loan program.
For more information about Dartmouth’s financials, please go to http://www.dartmouth.edu/404.
