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Dartmouth’s Board of Trustees discusses strategic priorities and long-term budget projections

Dartmouth College Office of Public Affairs • Press Release
Posted 11/07/09 • Media Contact: Public Affairs (603) 646-3661

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President Kim Outlines Aspirations for College and Approach for Investing in Dartmouth’s Future

President Jim Yong Kim discussed strategic priorities and long-term budget projections with the Board of Trustees of Dartmouth College at the Board’s fall term meeting in Hanover on Nov. 6-7.

In reviewing the College’s financial position with the Board, President Kim said that Dartmouth, like many of its peers, faced significant financial challenges. He made clear that in addressing those challenges, his guiding principles will be to preserve and enhance the “Dartmouth experience” as well as the College’s commitment to leadership in higher education.

“In the coming months, we will present a strategy that puts into sharp focus our educational uniqueness and commitment to excellence, our fostering of leadership, and our ability to develop and deliver solutions to pressing global problems,” President Kim told the Trustees.

President Kim looked ahead to 2019, the 250th anniversary of the College’s founding, and his aspirations for the College at that time. “We will make strategic choices to enhance the College’s operating efficiency, while continuing to offer superb teaching and scholarship by world-class faculty. And we will stake out leadership positions in new and emerging fields that will advance our mission and build on Dartmouth’s position as a world-class institution,” President Kim said.

Financial Results for Fiscal Year 2009

The Board received the audited financial results for the fiscal year ended June 30 which showed operating revenues of $701 million and operating expenses of $735 million. The gap of $34 million was caused primarily by financial losses on investments. Spending from the endowment was the largest source of revenue at $227 million. Gross tuition revenue was $232 million, offset by $99 million in financial aid, for net tuition revenue of $133 million. Total net assets fell by $916 million. (The 2009 Audited Financial Statements can be found at: Independent Auditors Report, 673kb PDF.)

As previously announced, the value of Dartmouth’s endowment dropped $835 million, to $2.8 billion, through June 30. The 23 percent endowment decline was primarily due to a 19.6 percent drop in investment performance, with the balance due to additional spending, somewhat offset by new gifts.

Board Requests Budget Plan

The Board asked the Administration to prepare a Budget Plan for fiscal years 2011 through 2014 in order to address the growing structural deficit. The Board set targets for a $50 million expense reduction in fiscal 2011, and an additional $50 million expense reduction in fiscal 2012, in order to address deficits and allow for investment in new programs and initiatives to further Dartmouth’s mission.

President Kim acknowledged that the reductions will result in a smaller workforce. “This process of bringing revenues and expenses in line will be painful and difficult, and we regret that it is necessary,” President Kim said.

Financial projections show the gap of $34 million in fiscal 2009 widening in the years ahead. “We must take bold and immediate action to address a structural gap in our budget that will otherwise continue to grow. Eliminating the deficit will require some difficult choices, but I am confident that with the entire community working together we can address this challenge while protecting and strengthening the Dartmouth experience for our students,” President Kim said.

Board Chair Ed Haldeman ’70, said decisions made over the past five years to increase the level of endowment spending had enabled Dartmouth to achieve many critical priorities. “We enhanced financial aid to attract the best students, hired more faculty in key areas, and started construction of a range of critical new facilities. We will continue to invest strategically in Dartmouth’s future while recognizing that, as is the case across institutions similar to ours, the current economic environment has an impact on the revenues generated by our endowment,” Board Chair Haldeman said.

President Kim said: “We must look to reduce our expenses thoughtfully and improve the efficiency and effectiveness of our administrative operations. In developing our plans, we will seek input from across the College community and consider every possible alternative. We also will aim to increase philanthropic giving to Dartmouth, and we will pursue initiatives that build on Dartmouth’s strengths while providing new sources of revenue.”

Given the challenging economic and financial outlook, the Trustees asked the Administration to plan on an endowment distribution rate that is more sustainable in the current environment and closer to the historic distribution rate of 5 to 5.5 percent, and down from 6.3 percent in fiscal 2009. The lower endowment distribution rate will take effect in fiscal 2011.

“The Board and the Administration agree that it is essential to reduce Dartmouth’s current distribution rate. We must work together to identify how we will address the gap and achieve a more balanced and sustainable financial plan. Part of that will be making tough choices today so that we are in a position to realize Dartmouth’s aspirations in the future,” Board Chair Haldeman said. “I am confident the community will draw on its love for Dartmouth and commitment to our continued excellence to ensure that we meet our goals in ways that are true to our abiding mission. Let there be no doubt that we are committed to preserving the unique Dartmouth experience.”

Planning for Dartmouth’s Future

At the same time that the College will look to reduce expenditures, the Board asked the Administration to develop plans for new strategic investments that will ensure the College continues to advance its mission and maintain an educational experience that is the best in the world.

The Board requested a detailed fiscal 2011 budget plan as well as a five-year investment plan. The plans will be submitted to the Trustees, in stages, for approval next spring.

The budget process will involve the entire campus community, including reviews of departments and divisions. Meetings are already scheduled with the Committee on Priorities of the Faculty of Arts & Sciences; the institution-wide Budget Steering Committee; and the Student Budget Advisory Committee.

Other Actions and Activities

Barry Scherr
Dartmouth Provost Emeritus Barry P. Scherr (right) accepts congratulations and thanks from Ed Haldeman, Chairman of the Dartmouth Board of Trustees (center), Dartmouth President Jim Yong Kim (left) and the rest of the board Friday during a special segment of the Trustees' fall meeting in Hanover. The Board honored Scherr, who stepped down as Provost last month after eight years in that position. A member of the Dartmouth faculty since 1974, Scherr will remain the Mandel Family Professor of Russian. "I want to thank you on behalf of the whole Board," said Haldeman. "We are very much indebted to you for the leadership you brought, for the wonderful people who have come to work with you and for the programs and facilities you have helped to build." (Photo by Zach Ingbretsen '11)

The Trustees honored Barry Scherr, who stepped down last month after eight years as Provost. He will remain the Mandel Family Professor of Russian. “I want to thank you on behalf of the whole Board,” Board Chair Haldeman said. “We are very much indebted to you for the leadership you brought, for the wonderful people who have come to work with you and for the programs and facilities you have helped to build.”

The Board also took a number of actions, reviewed reports, and met with the faculty during their November meeting:

  • Dartmouth Medical School Department Renamed “Department of Physiology and Neurobiology”
    The Trustees approved changing the name of the Department of Physiology to the Department of Physiology and Neurobiology, effective November 1, 2009. The new name more accurately reflects the fact that the majority of tenure-track faculty have primary research interests related to neurobiology.

Board Committee Assignments

The Board finalized appointments to its committees and heard reports from them. There are seven full committees of the Board and two sub-committees. The committees and subcommittees and their chairs are:

  • Academic Affairs, Dr. Al Mulley '70, Chair
    - Subcommittee: Health Sciences, Sherri Oberg '82, Chair
  • Alumni Relations, John Donahoe '82, Chair
  • Finance, Steven Roth '62, Chair
    - Subcommittee: Audit, Diana Taylor '77, Chair
  • Governance/Nominating, Christine Bucklin '84, Chair
  • Investment, Stephen Mandel '78, Chair
  • Master Plan and Facilities, Jose Fernandez '77, Chair
  • Student Affairs, Peter Robinson '79, Chair

An Executive Committee also meets as needed and works with the chairs of the Trustees' committees to manage the Board's agenda and work flow. A Campaign Executive Committee of both Trustees and other alumni and parent leaders guides the work of the Campaign for the Dartmouth Experience.

Reception with Faculty Leaders

Trustees met with the leaders of the academic departments and programs of the Faculty of Arts and Sciences and with the associate deans who head the four divisions into which those nearly 40 departments and programs are organized (Arts and Humanities, the Sciences, the Social Sciences, and International and Interdisciplinary Programs). The reception offered an opportunity for an informal discussion between faculty leaders and members of the Board of Trustees, including Board Chair Haldeman and President Kim.

Board Approves Municipalization Plan

The Board voted to approve the municipalization of the Hanover Water Works.

For more information, go to: Proposed Municipalization of the Hanover Water Works Company (Town of Hanover website)

Dartmouth has television (satellite uplink) and radio (ISDN) studios available for domestic and international live and taped interviews. For more information, call 603-646-3661 or see our Radio, Television capability webpage.

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