Financial Planning Update
March 11, 2009
Dear Students, Faculty and Staff:
I write to update you on the March board of trustees meeting, much of which focused on the college’s financial planning. In light of the growing severity of the economic situation, the board has asked us to accelerate our planning process and present a concrete set of recommendations in May that will permanently lower our annual operating costs. They would like us to be able to implement the plan within two years rather than three.
Here are the financial planning decisions reached to date and the work we must complete before the close of the semester.
For 2009-10, we will, at minimum:
The tasks before the campus’s major planning committees, particularly ACRA/CMP, are to recommend a strategy to close a $3 million gap remaining in the 2009-10 budget and address a much larger shortfall we face in 2010-11. Our plan must close a potential gap of $30 million, and we must be prepared to address an additional $10 million gap should the economy continue to weaken. As outlined in my January 28 letter, budget areas under discussion include:
Study abroad: To reduce costs while maintaining the centrality of international study to the Smith experience, we are considering options such as direct enrollment in overseas programs, especially in English-speaking countries; alternatives to our home school fee policy; and different staffing models and other efficiencies for some of our JYA programs.
Employee benefits: Savings could be realized through changes to our health insurance plan for the 2010 calendar year that would hold its overall costs steady; elimination of the Emeriti retiree health insurance program; a reduction of 1 percent in retirement contributions; capping tuition benefits for employees’ children; and eliminating the campus school tuition subsidy. Any changes to tuition benefits would be accompanied by plans to implement those changes over time in order to ease the impact on families relying on them.
Consolidation/cooperation: In these extraordinary times, the Five College presidents are committed to developing much deeper integration and consolidation among our institutions and have issued a statement calling for a new strategic vision of Five Colleges, Inc. In the academic realm, we have identified some 15 departments where integration of curricular planning and upper division course work would enable us to continue to offer high quality programs despite low student enrollment on individual campuses. We are actively pursuing opportunities on the administrative side, and in libraries and information technology, where shared functions or positions have the potential to create significant economies.
Administrative and support budgets: At my request, senior managers have reviewed their budgets to propose significant reductions. These reductions, and the very real tradeoffs they represent, will be part of ACRA/CMP’s discussions.
Facilities: Smith has the most square footage per student of any of its peers, in both the academic and residential sectors. To inform ACRA/CMP’s deliberations about space reduction, Ruth Constantine is convening a group to formulate ideas about consolidating our space uses so that we can close, sell, or lease some of our facilities.
Student/faculty ratio: An increase in the student/faculty ratio will be a major parameter of our budget plan. Reducing the size of the faculty will be among our most difficult challenges and will require academic planning in concert with our deliberations about Five College integration and consolidation. Making final decisions about the specific mix of reductions of temporary and tenure track positions is not something we can complete this year but it is urgent work nonetheless.
On April 10, ACRA/CMP will participate in an all-day retreat, joined by Board Chair Cornelia Mendenhall Small ’66 and a number of other trustees, to integrate their thinking into a clearly defined set of options. Those will be presented to the community so that, by May, we will have a plan that demonstrates how we can reduce the budget by $30 million over a two-year period.
In the meantime, there are things I would ask of each of you. Foremost, stay informed and make your views known. The members of CMP/ACRA are very interested in the ideas sent to email@example.com, which are posted, without attribution, on the financial planning site. In addition, we are holding periodic budget forums for staff and students. For example, from 10-11 a.m. March 18, Staff Council will be hosting a forum for staff in Seelye 201. All forums will be announced on eDigest and on the financial planning site. These are your opportunities to ask questions of me, Ruth Constantine, Larry Hunt and others and to help us understand the concerns of the community.
One budget saving suggestion that I have already taken, with regret, is to suspend the annual employee picnic until resources allow us to hold it again. In addition, I am very sympathetic to the many suggestions to reduce paper and printing in favor of electronic communications via eDigest and the Gate, a strategy that is both fiscally wise and environmentally sustainable. Facilities Management is continuing to focus on renovations and upgrades that will generate significant energy savings and conserve resources.
Even as we focus on the specifics of significant cost reductions, it is vitally important for us to take a long view of the future of Smith, an institution that has responded with remarkable resilience, throughout its history, to difficult times. There is no question that we face long-term challenges -- a growth in expenses that exceeds growth in revenues, the affordability of a Smith education for students and their families, and a highly competitive admissions environment. But there is much to celebrate as well. While applications to a number of peer institutions have declined, Smith is reviewing the largest pool of applications in its history -- 4, 008 -- a group that includes significantly more international applicants than usual. We are moving forward, with the full support of our board, in planning to launch a fundraising campaign within the year. When admitted students visit the campus this spring, they will see an institution that has continued to invest in its faculty and staff, its academic resources, and its facilities -- including Ford Hall, whose opening we will celebrate next fall -- all in service of the extraordinary and transformative education that Smith provides.
Carol T. Christ