Planning & Steps Taken
The 2009/10 operating budget
The college has adopted a budget of $153.4 million for the 2009/10 academic year. This figure represents a slight reduction from the approved budget for 2008/09 ($153.9 million), and a reduction of about $6.8 million from what was projected for the 2009/10 expense budget prior to the economic downturn. This initial response to the loss in endowment market value caused by the financial and economic crisis was achieved through a variety of measures:
- a salary freeze in 2009/10 for administrators earning more than $50,000 and for tenured faculty;
- a hiring freeze for many faculty, administrative, and staff positions and a small number of lay-offs and non-renewals of expiring contracts, resulting in a reduction in non-faculty positions of 25 FTE and in faculty of 16 FTE in 2009/10;
- a reduction in overtime for hourly employees;
- a reduction in departmental operating budgets for 2009/10 averaging 10%;
- a sharp decrease in spending on facility renewal and discretionary projects to improve facilities;
- the provision of incentives for voluntary retirements for faculty, administrators, and staff.
Additionally, the college has investigated and enacted changes in several other areas in order to achieve additional savings, including but not limited to the elimination of all non-essential travel, reductions in student employment where it will not compromise financial aid, efforts to reduce energy consumption, and changes in operations or programs on campus to adapt to the slightly lower staffing levels.
These steps, taken in combination, have positioned the college to meet the 2009/10 operating budget of $153.4 million approved by the Board of Trustees.
To support this operating budget, the Trustees approved spending of $50.6 million from the college’s endowment. Expressed as a percentage of the estimated beginning market value of the endowment in 2009, this translates into a spending rate of approximately 7.6%. Normally, the college expects to spend between 4.5% and 5.5% of the market value, based on the average amount of anticipated investment return and the importance of retaining part of that return to offset long-term inflation. This is why the Trustees and the administration say that the rate of endowment use in 2009/10 is clearly unsustainable.
Planning for the future
In order to achieve financial equilibrium, the college must reduce its annual draw on the endowment to the sustainable rate of 4.5-5.5% of its value. This will be a 5-year process that will require the college to reduce its operating expenses by roughly $37 million from the level of expenditure we anticipated in our original financial planning for these five years, while at the same time allocating additional support for the maintenance of the physical plant.
Additionally, we anticipate several years of increased need for financial aid due to the national recession, and we recognize that tuition increases must be moderate both in order to keep attracting strong students from different economic backgrounds to the college and in order not to out-price ourselves with respect to our peers.
Because nearly 65% of the college’s operating expenses come from employee compensation costs, the lion’s share of the budget reductions must affect compensation. The Trustees have endorsed the principle, long held by the campus community, that Vassar’s salaries, wages, and employee benefits must be competitive to attract and retain a talented workforce. Thus, growth in compensation for continuing employees will undoubtedly be restrained in this period, but only in keeping with similar restraints at other colleges and universities.
In addition, we are reviewing the size of the work force in every area of the college. Planning to date has identified reductions of 10-15% across most areas of the college. We are hopeful that some of the remaining shrinkage in our employee base will be achieved through attrition, retirement incentives, and restructurings that will allow us to phase out vacated positions. However, some involuntary reductions are expected.
While the maintenance of the core academic mission of the college is our absolute priority throughout this process, reductions will not be focused on any one area of the college and will affect faculty, administrative, and staff positions alike.
The dean of the faculty has been charged with reducing the faculty salary budget by 10-15% by the 2012/13 academic year. In late 2008, the dean of faculty convened an ad hoc group, the Advisory Group on the Allocation of Faculty Resources (AGAFR), to advise him on ways of achieving this goal. The group consists of the president, dean of faculty, dean of planning and academic affairs, the members of the Faculty Policy and Conference Committee (FPCC), which is charged with representing the faculty on all matters pertaining to educational policy at the college, the academic executive of the Vassar Students Association (VSA), and the associate deans of the faculty and of planning and academic affairs (in non-voting roles).
Meeting weekly in the spring of 2009, AGAFR has helped to develop both a retirement incentive and a revamped phased-retirement plan for eligible faculty. It has additionally advised the deans and the president on how to prioritize other measures that may need to be taken once the success of these retirement incentives is better established. Measures under discussion include the elimination of leave replacements whenever feasible, reallocation or elimination of some tenure lines upon retirement, a slowing of planned salary increases, a reduction in the number of contingent faculty, and, in order to sustain the curriculum in the face of likely reduction in the numbers of faculty, a reduction in the amount of released-time granted for service to the college.
Throughout this process, which will continue in the fall of 2009, the faculty members of FPCC have held numerous meetings with the faculty to keep them informed of the discussions in AGAFR as well as to solicit faculty input. The majority of the faculty on AGAFR are also members of the Priorities and Planning Committee, which meets several times a semester to advise the president on campus priorities and strategic planning for the college.
Administrative and staff positions
Approximately 25 FTEs of administrative and staff positions were eliminated in developing the 2009/10 budget plan. Another 10-15% reduction in this workforce is the goal over the next three years. Each dean and vice president has been asked to evaluate programs and services, to determine how best to deliver essential work of the college with reduced staffing. The reduction in employment is being realized through attrition whenever possible, but it is unlikely that the necessary reductions can be achieved entirely in this way.
Each senior officer has been charged with examining his or her area for possible restructurings that will lead to greater efficiency in the use of the college’s workforce. Beginning in the spring of 2009, senior officers have been working closely with department heads in their areas to identify services that can be modified or eliminated, to look carefully at areas of redundancy, and to see where greater streamlining is possible.