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November 13, 2008
Dear Members of the Dartmouth Community:
As President James Wright has informed you, Dartmouth, like most colleges and universities, is facing long-lasting effects from the worldwide financial crisis. It is prudent that we begin to deal with the budgetary impact of this situation, and this message outlines the process that we intend to follow in the coming weeks. There will be further communication with the Dartmouth community as we learn more during the process. We are committed to working with you through this challenging period to assure that Dartmouth will continue to be a strong and vibrant intellectual institution, as well as accessible to the most promising students of all backgrounds.
October was a particularly volatile month for the financial markets. While the Dartmouth endowment performed much better than the stock indices, its value continued to fall. As a result, we have revised projections about future income from our endowment, on which we rely for more than a third of our operating revenue.
President Wright has asked us to outline the approach we are taking to reduce expenses in the College. Our target is to reduce expenses up to ten percent, or $40 million over the next two fiscal years. Each of the professional schools will also be taking any necessary measures to ensure that their budgets are in balance.
We plan to take the following actions in order to achieve a balanced budget through cost reductions that can be sustained into the future:
Effective immediately, we will freeze external hiring of staff from outside the current pool of Dartmouth employees. This will provide opportunities for existing staff to transfer into open positions that need to be filled. Exceptions may be made by the provost, the executive vice president and the professional school deans under extraordinary circumstances.
For this current fiscal year (ending June 30, 2009), we seek to reduce spending by five percent through reductions in every aspect of discretionary spending.
We have asked the vice presidents and deans to recommend changes in each of their areas that will achieve substantive cost savings in FY 2010 and 2011. These changes may include the elimination or reorganization of programs, or reductions in service levels. We have asked divisions and departments to develop contingency plans to reduce their budgets in those years by five percent, ten percent and fifteen percent below what is currently projected. This broad range of options is important in order to allow us to make programmatic adjustments on a strategic basis, as opposed to less well-articulated reductions. In addition, multiple options offer us flexibility if the economic impact on Dartmouth changes dramatically.
The dean of the faculty and the deans of the professional schools, in conjunction with the provost, will evaluate current plans for filling faculty positions and adjust them to reflect new financial circumstances. This will be done in the context of available funding and the clearly articulated long-term goal of maintaining a competitive faculty with the resources to support academic and creative endeavors.
We will evaluate the implementation plans for all new programmatic initiatives and capital projects and adjust them to reflect the new financial circumstances.
-- We propose to complete projects where construction is sufficiently under way to make a slowdown impractical: the Class of 1978 Life Sciences Complex, the Tuck School Living and Learning Complex and the Michael J. 1979 and Cynthia Ginn 1980 Biondi Ballpark.
-- We will delay some projects for two to six weeks in order to conduct further analysis to assess the feasibility of moving forward: the Visual Arts Center, the renovation of the West Stands at Memorial Field and Buchanan Hall.
-- We will complete planning already under way for projects which would then require additional financial resources before proceeding to the next phase: Class of 1953 Commons and the C. Everett Koop Medical Science Complex.
-- We will defer projects where we recognize that sufficient funding is clearly not in place: the replacement of Thayer dining hall and the parking lot on Route 120.
As a result of the comprehensive review of programs, we anticipate that there will be programmatic reductions and changes in operations and service levels. As a result, we expect that there will be fewer staff employees at Dartmouth in the coming years. Before implementing any changes, we will consider the impact on people and services, and we are committed to supporting those affected through any transition period.
We will begin formulating ideas to reduce the budget as soon as possible through a consultative process involving faculty, staff and students. In particular, we will engage the Faculty Committee on Priorities and the Student Budget Advisory Committee to provide input to the College Budget Committee. We have put in place opportunities to offer suggestions through email, the Dartmouth website and physical boxes on campus (for details, go to http://www.dartmouth.edu/~finance). We hope that staff at all levels of the organization will work together in their divisions to provide input. We believe that many of the best ideas for improving efficiencies and practices will come from those engaged in our day-to-day work. Please do not hesitate to share your suggestions.
In previous years we have tried to have the final budget for the next fiscal year in place by early May. Despite the need for frequent consultations between the Budget Committee and the various departments, we will attempt to expedite that process and finalize plans over the next three months. During that time we are committed to communicating clearly about the financial environment and our progress and plans.
We understand that this is a difficult financial period for Dartmouth and for many of those in our community. Hard decisions lie ahead. We will need to use our resources wisely and creatively in order to keep us moving forward and preserve the very distinctive characteristics of Dartmouth that make it a special place to learn and work.
Thank you very much for your support and assistance in addressing these problems.
Sincerely,
Barry Scherr
Provost
Adam Keller
Executive Vice President,
Finance and Administration
