The worldwide economic crisis has touched Dartmouth. With the endowment's 6 percent drop in value last quarter (see below), President James Wright has announced a process to bring the College budget back into balance.
More than a third of the College's $420 million operating budget (excluding grants) is supported by an endowment distribution. "The College is blessed with an endowment that has been enhanced greatly over the years by positive investment returns and by remarkably generous alumni/ae and friends," the president wrote in a letter to the community Nov. 13. "We need to reduce expenses to preserve that strength."
Wright appointed Provost Barry Scherr and Executive Vice President Adam Keller to lead a consultative process to adjust projected expenses by up to 10 percent, or $40 million, over the next two fiscal years. The professional schools also will take necessary measures to ensure balanced budgets. "We understand this is a difficult period for Dartmouth and the community," they wrote in a second letter Nov. 13. "Hard decisions lie ahead."
The Board of Trustees, in a meeting in early November, agreed with the College's priorities: to protect financial aid; to protect academic strength; and to "do all we can to support Dartmouth's employees," Wright wrote. Though the College has started to cut back compensation expenses through attrition, "it is not likely to be sufficient to meet our objectives."
Scherr and Keller announced a series of measures, including an immediate freeze on external hiring of staff to provide opportunities to existing staff to transfer into open positions. They also will seek a reduction of 5 percent in discretionary spending through this fiscal year, ending June 30, 2009.
"We commend the College on its transparency," The Dartmouth wrote in an editorial the next day, "Tightening Our Belts." "While the staff hiring freeze is certainly unfortunate," the editorial board concluded, "the hiring of faculty should remain untouched for as long as possible." The Dartmouth also praised the College's commitment to protect financial aid, "an assurance that a number of peer institutions have not been able to make."
Construction will continue on projects already under way, Scherr and Keller announced, including the Class of 1978 Life Sciences Center, the Tuck Living and Learning Complex, and Biondi Park. Feasibility assessments were ordered for the Visual Arts Center and the renovation of West Stands at Memorial Field. Planning will be completed, but further funding must be identified for two projects: the Class of 1953 Commons and the C. Everett Koop Medical Science Complex. Two projects were deferred, since funding is clearly not in place: the replacement of Thayer Dining Hall and a new parking lot on Route 120.
Positive returns over five years, down 6 percent last quarter
The value of Dartmouth's endowment dropped in the last quarter. While the endowment grew by $1.5 billion in the past five years-a 12 percent annualized increase-it declined by $262 million to $3.39 billion in the three months ending Sept. 30. The decline was due to lower investment returns, as well as budgeted spending for operating expenses of the College. Returns declined 6 percent (-$224 million). Spending (-$65 million) was partially offset by new gifts and transfers (+$27 million).
Five years ending June 30, 2008:
Growth: +$1.5 billion
FY 2003: $2.1 billion
FY 2008: $3.66 billion
Three months ending Sept. 30, 2008:
Decline: -$262 million
June 2008: $3.66 billion
Sept. 2008: $3.39 billion
Return: -$224 million
Gifts and transfers: + $27 million
Spending: -$65 million
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Last Updated: 11/26/08