The Dartmouth College Budget

November 2004

Memo to the Dartmouth Community, from Barry Scherr, Provost and Adam Keller, Executive Vice President for Finance and Administration:

As part of our ongoing commitment to communicate regularly about the College's budget process, we write to bring you up to date on the latest budget information, and to share a summary of our recent progress. This past year, we worked with faculty, students and administrators from across the institution, and we would like to thank everyone who contributed to the successful outcome of the 2004 fiscal year budget.

Our financial strategy has been guided by the College's overarching goal-to offer the leading learning experience in the nation. We have continued to assign priority for funding to the core objectives President Wright has consistently championed, as summarized in his Five-Year Report. These priorities include our ongoing commitments to:

• Supporting need-blind admissions and financial aid as we seek to maintain both access for students of all socioeconomic circumstances and the overall diversity of the student body;
• Recruiting and retaining leading faculty committed to teaching and scholarship;
• Offering a rich student experience outside the classroom, the laboratory, and the studio;
• Moving forward to construct the academic, residential, and dining and social facilities we need to maintain and enhance Dartmouth's competitive strength.

As you know, the events of recent years have brought new challenges to budget development in all sectors of American higher education. At Dartmouth we met these challenges and ended the 2004 fiscal year with a slight surplus. Our strengthened financial position resulted from the exceptional performance of the Dartmouth College Fund, strong investment returns, and prudent financial management across the institution. (We have also included a summary of the 2004 budget.)

Over the past year, through the use of gifts and new funding sources, we moved ahead on a number of important initiatives. We have launched the Dartmouth Center for the Advancement of Learning, the Writing Center, and a new academic advising program, and completed the renovation and expansion of the Sudikoff Center for Computational Science. In addition to these new initiatives, within the Arts and Sciences we increased the faculty compensation pool by $1 million to make faculty salaries more competitive.

In the professional schools, the Thayer School of Engineering has begun construction on the MacLean Engineering Sciences Center, the Tuck School of Business is planning for an additional residence and classroom building, and the Dartmouth Medical School is looking into future facilities projects both on the Hanover campus and at the Dartmouth-Hitchcock Medical Center.

In a few days, we will launch the Campaign for the Dartmouth Experience, approaching that endeavor from a position of financial strength. Dartmouth provides one of the very best student experiences available anywhere. Our goals in the campaign will be to ensure that Dartmouth retains its leadership among institutions of higher education, and to make possible new programs and facilities that will add substantially to the quality of a Dartmouth education. 

While Dartmouth's financial picture is stronger than it was two years ago-or even last year-we nonetheless will remain focused on our top priorities, and we will look for further reallocation of resources as necessary. Even the most precise budget planning cannot predict what will happen with every revenue stream and expense item. Revenue streams-including investment returns, fund-raising, and external grant support-are subject to external factors that we do not control. Expenses for several non-discretionary expense items-such as the cost of oil, insurance premiums, and health care-are increasing much more rapidly than inflation, and we face ever more complicated regulations around federal compliance. Deteriorating exchange rates have an impact on our off- campus programs and all of our purchases of international goods and services.

While the economic picture now looks more optimistic, we still feel the impact of the previous few years.  The College's investment performance was very successful last year, but the three-year average is still below the target we set for endowment growth.

We also recognize the challenges that lie ahead in addressing institutional compliance and strengthening the infrastructure on campus. Several attempted computer intrusions have heightened awareness that Dartmouth must make a significant investment in information technology security to assure the ability to continue operations, communications, research and education without unanticipated interruptions.

We will continue to manage expense growth, focus efforts on the most efficient ways to support the mission of the College, and capitalize on the upcoming fund-raising campaign to strengthen the College in a strategic manner. As we enter the campaign, we are optimistic about the new programs and facilities that will strengthen the Dartmouth experience and the richness of the academic environment for faculty and students.

In closing, we would once again like to thank all of you who have contributed to our sound financial picture. We know that it required a great deal of hard work and a clear commitment to the priorities of the College. We will continue to seek your guidance in the coming months as we develop the FY 2006 budget and address the financial challenges ahead.