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Responding to the Financial Environment

MEETING SUMMARIES

Throughout the 2008-09 spring semester, the Committee on Mission and Priorities (CMP) and the Advisory Committee on Resource Allocation (ACRA) met jointly to advise President Christ on the development of a strategic plan to meet the college's budget challenges. To keep the Smith community informed and engaged in the process, summaries of those meetings are posted here.

Committee on Mission and Priorities (CMP) and Advisory Committee on Resource Allocation (ACRA)

May 7, 2009

Joint Meeting, Committee on Mission and Priorities and the Advisory Committee on Resource Allocation

The final meeting of the year covered three main areas: admission and financial aid for 2010-11; plans for the comprehensive campaign, the first phase of which will begin July 1; and the major planning initiatives for next year that will be undertaken by CMP, ACRA and other groups. With regard to admission issues, Dean of Enrollment Audrey Smith noted that we are likely to exceed the target discount rate for the class entering this fall because students are presenting with high financial need; this trend is expected to accelerate next year, as financial need determinations are made based on 2009 tax returns. Financial aid will be a centerpiece of the upcoming fundraising campaign, which has a working goal of $500 million and is focused on securing the core of the Smith experience. Vice President for Advancement Trish Jackson described the campaign timeline (6-8 years), volunteer structure, budget, events and strategies, pointing out that it is the most ambitious campaign in Smith’s history. Committee members discussed the ways in which the campaign will support the Smith Design for Learning. Noting that CMP and ACRA will return to meeting individually next year, President Christ outlined the work that they and others will take up: implementation of the Smith Design for Learning; implementation of the recommendations of the Art & Science study; a comprehensive review of employee benefits; and recommendations for revenue-generating academic programs.

April 29, 2009

Joint Meeting, Committee on Mission and Priorities and the Advisory Committee on Resource Allocation

Ruth Constantine, vice president for finance and administration, brought forward a budget request for the operation of Ford Hall, noting the seriousness of increasing the college’s budget at a time when we are planning for reductions. The request encompassed professional and custodial positions, equipment and supplies, equipment maintenance, and fees. Before endorsing the request, committee members discussed issues of audio-visual equipment purchase and replacement, noting the need for a comprehensive budgeting process for such in relation to both registrar-scheduled classrooms and other areas. The remainder of the meeting focused on the proposed budget reduction plan that was presented to the community on April 13 and which will be presented to the Board of Trustees on May 2. Ruth Constantine noted that reductions will be implemented as needed but that, at minimum, it seems clear that $20 million will have to come out of the budget within two years. As stated in the proposed plan, some 55-60 positions are likely to be affected by a reduction in hours, elimination, or not filling a vacancy. President Christ said that the board would vote on a severance plan at its May meeting and would begin discussions of the potential need for one-time bridging funds to help with implementation of the plan.

April 9, 2009

Joint Meeting, Committee on Mission and Priorities and the Advisory Committee on Resource Allocation

The meeting opened with remarks by Director of Libraries Chris Loring regarding the potential for reducing the Libraries budget. The proposed reductions are focused in three areas: acquisitions, consolidation of back-office operations with Five College libraries, and relocating the Josten Library collection (music, theater, dance) to Neilson. Regarding sharing collections among the Five Colleges, Loring explained that a major focus will be on further reducing duplication of acquisitions among institutions and attempting to achieve more shared purchasing of electronic resources such as online journals. He noted that journal publishers have different pricing and access models, with some only willing to sell to individual institutions, not consortia. In focusing on Josten as the collection to relocate, Loring said that he and his staff examined a number of factors about each branch library, including service levels, instructional interactions, research appointments, and numbers of honors theses. Moving the Josten collection to Neilson would require a one-time investment in compact shelving.

Herb Nickles, executive director of information technology services, outlined potential budget reductions in his area, focused on operational efficiencies, reductions in service, increasing the computer replacement cycle from four years to five, reducing faculty grants for technology in teaching, and reducing equipment budgets. Committee members expressed concerns about cuts that could affect our ability to cooperate with other institutions, whether locally or around the world; to use technology to “do more with less”; to optimize online resources for student recruitment; and to expand wireless capacity on campus.

Members of the Committee on Faculty Compensation and Development (CFCD) joined the final segment of the meeting for a discussion of proposed benefits reductions. Mahnaz Mahdavi, speaking on behalf of the committee, reported that faculty favor salary freezes over benefits reductions, seeing the former as a measure that could be made up over time, and would prefer more time to study possible changes to benefits. Discussion ensued about whether staff, who earn less than faculty on average, could sustain a multiple-year wage freeze. CFCD members expressed concern about the difficulty of discussing these issues without clarity on an institutional philosophy of the role of benefits in employee compensation.

March 12, 2009

Joint Meeting, Committee on Mission and Priorities and the Advisory Committee on Resource Allocation

President Christ opened the meeting by reviewing the board of trustees' March 7 discussions of the college's financial planning, which took place in the context of an economic environment that has worsened significantly since the fall. In light of what many believe will be a deep and prolonged recession, the board has requested an acceleration of the planning process that will lay out $30 million in permanent budget reductions over two years. They will review this plan at their May meeting. Acknowledging that the committees' planning work will be extremely challenging, President Christ recalled to the group the extraordinary growth Smith has seen over the last dozen years, including new facilities such as the campus center and the Brown Fine Arts Center as well as the Picker Engineering Program and Praxis, a growth trajectory that is now recognized as based, at least in part, on overvalued assets.

On the main agenda item of the meeting -- achieving savings by increasing the student–faculty ratio -- President Christ told the group that it needed to make a recommendation in the next several weeks on whether to move from a 9:1 to a 10:1 student–to–faculty ratio, a strategy that would require eliminating, through resignation or retirement, approximately 25–30 positions from the faculty budget. She noted that the group did not need to identify the specific positions affected but to determine the target ratio. She further affirmed that decisions did not need to be reached this year about faculty workload or sabbatical policies. Discussion ensued on whether we should institute a soft freeze on filling faculty vacancies; whether faculty retirements could be accelerated through an incentive program, despite the fact that a similar program in 2003–04 was less effective than expected; the need for departments to take an active role in staffing and curriculum decisions; whether the committee should review a further ratio change of 11:1 in recognition of the fact that reducing the faculty further could allow for a reduction in student enrollment in the future, when the economy improves.

Director of Budgets and Grants David DeSwert informed the group that $1.5 million of the $4.3 million 2009–10 budget shortfall could be addressed by eliminating the one–time $1 million contribution to the enrollment stabilization fund and reducing the one–time budgeted continency from $1 million to $500,000.

The meeting ended with a brief discussion of January Term, driven by the fact that UMass will start its 2012–13 spring semester one week earlier. Aligning our calendar with theirs, thus ending the spring semester one week early, would affect Interterm but generate significant savings in energy, dining and student services. The group will review actual savings figures for such a change, as well as data on enrollment in credit–bearing and non-credit Interterm courses, at its next meeting.

March 3, 2009

Joint Meeting, Committee on Mission and Priorities and the Advisory Committee on Resource Allocation

President Christ opened the meeting by reminding the group that her January 28 memo to the community was intended to provide a framework of potential strategies for budget reduction. The work of CMP/ACRA is to refine the savings estimates put forward in that memo and then to prioritize the measures the college should take and determine the steps needed to enact them. She confirmed that the group will meet all day on April 10 for a financial planning retreat, at which they will be joined by a number of trustees. Maureen Mahoney, dean of the college, presented a range of ideas discussed in recent years by the Committee on Study Abroad and the Committee on Academic Priorities that would lower costs in study abroad while maintaining the centrality of international study to the Smith experience. The group discussed options such as direct enrollment in overseas programs, especially in English-speaking countries; alternatives to Smith’s home-school fee policy; limiting the number of students studying abroad; one-semester options; non-language programs; and different staffing models and other efficiencies for some of our JYA programs. The committee continued the discussion of potential changes to employee benefits begun at its February 19 meeting. John Davis, associate provost and dean for academic development, noted that Larry Hunt, executive director of human resources, would be meeting with the Committee on Faculty Compensation and Development on March 10 to seek their feedback on the options under discussion. Committee members discussed whether reducing tuition benefits would have a disproportionate impact on families with young children; whether reducing a benefit that affects relatively few individuals is necessarily preferable to reducing one that affects many; the impact of present-day reductions on individuals’ long-term compensation; differences in staff utilization of specific benefits versus faculty utilization; and whether benefit reductions are permanent or temporary changes.

February 19, 2009

Joint Meeting, Committee on Mission and Priorities and Advisory Committee on Resource Allocation

Committee members reviewed the admission and financial aid budget request for 2009-10. Controlling the tuition discount rate -- one of the savings strategies outlined in President Christ’s January 28 memo to the community -- will be assisted by Admission’s aim to enroll 643 traditional students and 35 Ada Comstock Scholars. First-year applications are at an all-time high, international applications are up by one-third, while Ada Comstock applications have declined 23 percent. Describing the Ada program as an important program for Smith but not financially sustainable at its current size given the financial need of Ada students and falling applications, President Christ said she will appoint a study group to review its policies and enrollment patterns. Committee members discussed the growth in Smith’s international applications and affirmed the importance of linking expansion in Smith’s international student body to curricular changes and offerings. Committee members reviewed the proposed 2009-10 budget, which will be discussed by the board of trustees in March and approved in May. In addition to the tuition discount rate, strategies that will be presented to the board to bring the 2009-10 budget into balance include eliminating the inflationary allowance to departments; eliminating funding for new initiatives; forgoing faculty and staff salary increases -- a strategy that committee members voted to recommend; and setting the endowment spending level at 6.5 percent for one year before bringing it down to its normal cap of 6 percent over the following two years. Committee members reviewed a wide range of possible changes in employee benefits to achieve budget savings. Possibilities under consideration include changes in the college’s health plan that would hold its costs steady; elimination of the Emeriti retiree health plan; a 1 percent reduction in retirement contributions; capping the college tuition benefit; and eliminating tuition subsidies for the Campus School. President Christ noted that the college would develop grandfathering plans for any changes in tuition benefits. The meeting closed with a discussion of the facilities projects proposed for the 2009-10 capital budget, which will be reviewed by the board in March. The projects being put forward are deemed urgent and many address issues of energy savings.

February 6, 2009

Joint Meeting, Committee on Mission and Priorities and the Advisory Committee on Resource Allocation

President Christ opened the meeting by outlining the main agenda items for the seven joint meetings of the semester. The topics largely reflect the areas of potential savings outlined in her January 28 memo to the Smith community. By May, she explained, CMP/ACRA will need to have made the budget decisions necessary for fiscal year 2010. In addition, they will need to have developed the broad outlines of a three-year financial plan based on current projections. Those broad outlines, envisioned as a series of actions to be implemented as needed, will continue to be refined and detailed in the ensuing years. Members discussed the importance of keeping both short-term and long-term planning horizons in mind, so as not to be “penny wise and pound foolish.” David DeSwert, director of budget and grants, discussed financial plan updates that reflect recent economic conditions. Ruth Constantine, vice president for finance and administration, advised the group to accept that the loss of endowment income will have a long-term effect, since no economist is predicting a rapid return to previous investment return levels. The group discussed the impact of a one-time .5 percent increase in spending from endowment on the 2009-10 budget, a decision that would require trustee approval. For the remainder of the meeting, the group considered salary recommendations from the Committee on Faculty Compensation and Development (CFCD) and Human Resources. The committees are inclined to recommend a salary freeze for faculty and staff for 2009-10.

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