Message to the Whitman Community on the Recession and Whitman’s 2009-2010 Budget
Dear Members of the Whitman Community,
Whitman's Board of Trustees met recently to consider the College's budget for 2009-2010. I write to inform you about their decisions and about the challenges and opportunities that lie in the months ahead. Like most other U.S. colleges and universities, Whitman faces a significant reduction of income due to the downturn in the economy. A major source of Whitman's income is our endowment which has dropped significantly in value with the steep decline in the financial markets. While I remain very optimistic about Whitman's future, much work is needed to preserve the quality of education we offer now and in the coming years.
Since my letters to parents, staff and faculty in October and my message to parents and alumni in the December Whitman Magazine (with Board Chair Jim Robart), the College has thoroughly assessed how our endowment and the resources available to support our work have diminished. Based upon this assessment, we have developed a plan for reducing our spending and re-organizing some of our operations in order to continue advancing Whitman. Clearly, the national recession will affect how we operate in the short term, how we deliver Whitman's unique educational experiences, and how we will continue to support our students, faculty, and staff.
Whitman's operating revenues derive from three major sources: tuition and fees, endowment payout (taken at 5 percent of the total endowment value averaged over the previous twelve fiscal quarters), and gifts. Endowment payout constitutes roughly 30 percent of our annual operating budget (approximately $16.5 million in 2008-2009).
With the significant decline in the markets this fall, the endowment lost roughly 30 percent of its value (through December 2008). Because the markets remain volatile, estimates of endowment values are approximate and will likely change in the coming months.
Unless Whitman acts preemptively to mitigate the effects of the markets' decline, we will feel the full force of our endowment losses during the period 2011-2012 through 2013-14 (given the twelve quarter payout lag). We estimate that endowment payout support for the operating budget will drop from nearly $16.5 million this year (2008-2009) to approximately $12.5 million in 2013-2014 unless market performance improves. To complicate matters, recent declines in interest rates have reduced earnings from our short-term investments and cash accounts for the current year. Thus, we have been forced to reduce spending this year and must make major reductions in spending in future years.
We are not alone in this experience. Virtually every college and
university in the country has experienced similar losses over the past six months
despite having very diversified investments and talented investment advisers. In response to these losses, most schools
must reduce expenditures, staffing levels and support programs.
Over the past 5 months, we have sought to reduce spending while remaining steadfastly committed to the following principles:
- Fulfilling the College's core academic mission by ensuring that its programs remain vital and strong, and
- Supporting and retaining our excellent faculty and staff to the fullest extent possible.
While adhering to these principles, we have also sought to maintain the financial aid we offer students.
Despite the need to reduce our expenses significantly, we intend to continue offering students (and their families) considerable financial aid to support their Whitman education. For 2009-2010, we have increased scholarship support in our budget in order to make more aid available to those families with substantial income and monetary losses resulting from the decline in financial markets.
In an effort to dampen the effects of the downturn on other aspects of operating budgets in the years ahead, the College initiated immediate steps in October to reduce expenditures for the current fiscal year (2008-2009) and also began developing a conservative budget for 2009-2010 along with contingency plans for additional budget reductions in the event they are needed.
The budget just approved by the Board of Trustees calls for a reduction in spending of nearly $2 million next year. We will balance Whitman's budget by:
- Suspending salary increases for faculty and staff,
- Reducing salaries of budget officers,
- Deferring 8 of 13 tenure-track faculty searches,
- Reducing staff levels by 5 FTE (through a combination of attrition, reorganization and reductions),
- Extending the replacement cycle for some equipment,
- Reducing administrative and operating costs in all departments and programs,
- Postponing some noncritical maintenance projects on facilities and grounds, and
- Reorganizing some programs.
The College's budget officers have notified - in person - those individuals under their supervision who are directly affected by the reorganizations and reductions. They have also taken steps to move forward with programmatic and operating changes.
Obviously, if the markets erode further and the economy continues to decline, additional reductions will prove necessary. We are continuing to plan for this possibility and, over the coming months, will review and evaluate the College's overall level of enrollment and elements of our strategic plan.
We will also continue the renovations of the Sherwood Center gym and Olin Hall now underway. The Olin Hall renovation will be completed by the end of the academic year whereas the Sherwood renovation will be completed by the beginning of fall semester. These and other projects are funded with gifts and funds borrowed over a year ago. Halting construction at this time would be imprudent financially and programmatically.
Finally, the Board of Trustees set next year's tuition at $36,620, reflecting a necessary increase that is lower (5%) than any increase in recent years. This will enable Whitman to finance increased costs in areas beyond our control such as health benefits for faculty and staff, utility costs, and long term service contracts.
In order to afford students, faculty, staff and local alumni access to additional information about the College's response to the recession and market declines or to recommend additional cost saving measures we can take, I will be available for three on-campus fora at the following times (all will be convened in Maxey Auditorium):
- Friday, February 20th at 8:30 a.m.
- Tuesday, February 24th at 4:00 p.m.
- Wednesday, February 25th at 7:30 p.m.
I will also make a presentation to the ASWC student senate at its meeting scheduled for Sunday, February 22nd.
The College has also established an email address to which anyone may submit ideas for reducing Whitman's operating costs:
All ideas are welcome. Suggestions will be summarized and reported in the Pioneer, in the staff newsletter, the Fountain, and posted online.
Please send us your ideas and join me at the all-campus fora. The future is unclear and while we hope that our journey on this path becomes less difficult, it may prove even more difficult than that which we have encountered thus far. As we move ahead, I want all of us to be fully informed and working collaboratively for the collective good.
Notwithstanding the many challenges we face, Whitman is thriving. We are financially sound; we continue to recruit exceptional students, faculty, and staff; we continue to create and sustain intellectually challenging programs of academic study; and we continue to advance our commitment to providing a vibrant, diverse and supportive campus environment. We are in a much stronger position than many other institutions.
Thanks to committed alumni and donors who give generously to the College, I am pleased to announce three important projects directly supported by their gifts. The first is our solar energy demonstration project. Funded in part by a grant from Pacific Power and from gifts given by numerous others, the project will install photovoltaic panels on the roof of Jewett Hall thus providing a dedicated source of solar energy for Whitman. This project continues our commitment to environmental sustainability and to reducing the College's carbon footprint.
Second, the College will continue to provide project support from the Fund for Innovation in Teaching and Learning established last year, giving faculty and staff opportunities to create and launch new types of academic programs and experiences for students. As a result of recent gifts that endow the Fund, our Provost and Dean of Faculty, Lori Bettison-Varga, will release a new request for proposals in the next few weeks.
Finally, I am particularly pleased to announce Whitman's plans to create a new multicultural center located at 26 Boyer Avenue, a property currently owned by the College. Supported by a very generous gift from an alumna, the house will undergo a major renovation and upgrade and will be completed and available during fall semester (2009). Once completed, the new center will promote greater interaction between groups within the Whitman community while offering all students a dedicated location to convene multicultural and other diversity programs and to meet and gather socially.
We intend to move forward on these projects in the coming year (and will continue to seek gifts to support them). They epitomize Whitman's commitment to advancing our academic and co-curricular programs - even in difficult times - in order to enhance students' learning and to fulfill the mission of the College. I look forward to sharing more with you about these initiatives (and others) in the weeks ahead.
In this uncertain and changing period, we must remember that Whitman is and will remain an institution uniquely defined by its people, their relationships and their ideas. No changes in the society will alter the fundamental character of the College. No changes will diminish the College's commitment to learning that is forged from rigorous study, a supportive intellectual environment, and close personal ties between faculty, students and staff. Ultimately, Whitman's distinctive character and our collective commitment will define its mission and direct its future.
George S. Bridges