An Update on the College's Budget
October 26, 2009
Dear Students, Faculty and Staff:
As we reach the midpoint of the semester, the work of our major planning committees -- CMP, ACRA, CAP -- is fully under way. I want to update you on the context for their work, as well as the feedback from the fall Board of Trustees meeting, as we take forward the financial and strategic planning we set in motion last year.
The economy is in a somewhat different place than when we closed out the last academic year but, as the board noted, there is little consensus on whether the recent upturn in the investment markets necessarily indicates the beginnings of a robust recovery. It is too soon to make any responsible predictions.
We have decided to implement approximately $21 million of the $30 million budget reductions identified last year. Of this $21 million, $16 million has already been put into effect. We have invested one-time funds to pay the remaining balance on the co-generation facility and other sustainability projects, allowing the energy savings to be realized immediately in the budget. Those actions, combined with the improving endowment value, bring the operating budget into balance.
With the board’s support, we now have the opportunity -- and the responsibility -- to carefully consider the levels of reductions not yet implemented. For example, we are projecting the restoration of faculty and staff salary increases in 2010-11. In addition, rather than the $3.7 million reduction in faculty and academic support positions that was planned last year, we are modeling a $2.6 million reduction. We are also looking at the possibility of budgeting those reductions over a longer timeframe of seven years.
While these are fortunate choices to have, there is much about which we need to remain cautious. We have seen an increase in students’ financial need this year, a trend that is likely to continue or even grow, as aid awards based on 2009 tax returns will reflect the employment and investment effects our economy has experienced in the last year. We anticipate only a modest tuition increase in these times. Despite very generous alumnae and friends, philanthropic support continues to present challenges to Smith and nearly all nonprofits.
All of these considerations -- positive or negative -- will inform the committees’ deliberations over the course of this year, as well as my discussions with the board as we develop the budget that will be presented for their approval in May. Despite a changeable economy, I am gratified by the widespread support, on the board, among our alumnae, and across the campus, for developing a defining initiative in global education. Such an initiative builds powerfully on Smith’s history and resources and aligns with our investments in science and engineering education. In our recent celebration of the opening of Ford Hall, I saw not only the realization of a powerful vision, one at least a decade in the making, but an ongoing manifestation of Smith’s commitment to preparing women to actively engage in their communities and around the world.
Carol T. Christ
Budget Reduction Plan
* When fully enacted, a space reduction of 150,000 square feet or 5 percent is estimated to generate savings in the range of $975,000-$1 million. For the purposes of near-term financial planning and modeling, we have used a more conservative figure of $650,000, since the pace at which we can release buildings will be somewhat dictated by the economy and real estate market.