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Update on Carleton's Budgetary Planning

February 24, 2009
By President Rob Oden

Dear Members of the Carleton Community,

Throughout the financial turmoil and economic recession of the past months, we have worked to understand the impact of these unprecedented developments and to develop plans and initiatives which ensure the College’s short term survival and which contribute to its long term success.  As we seek to keep everyone on campus informed of our continuing budgetary deliberations, of the financial challenges Carleton faces, and of the steps we have taken to meet these challenges, we are particularly indebted to the Budget Committee and to College Council, whose members have demonstrated continued wisdom and flexibility in advising us on how best to meet our financial challenges.  We are most grateful to all staff, students, and faculty who serve on the Budget Committee and on College Council. 

With the conclusion of the Winter Meeting of our Board of Trustees, the time is right once again to convey a message about steps we have taken and on actions ahead to everyone on the Carleton campus and now to the broader Carleton community.  Throughout, our aim has been this:  How do we ensure the College’s long-term financial stability while also maintaining and enhancing Carleton’s academic excellence?  And in answering this question, we have adhered to the College’s sound process in shaping each year’s budget, rather than allowing the present financial crises to divert us from this important and year-long process. 

The operating budget for the coming academic year, which College Council recommended to our Trustees and which the Trustees approved, is an integral part of a longer term plan to balance the College’s operating budgets over the next 3 to 5 years.  Though the coming year’s budget will ensure the continuation of Carleton’s academic excellence, there are some significant budgetary reductions in this budget, including a reduction of 5% below the current year’s budgeted levels for all department operating budgets, and we already have put into place significant reductions in the current year’s budget, for example a sizeable decrease in deferred maintenance support.  We also have offered to staff a Voluntary FTE Reduction Plan, which gives all staff the opportunity of reducing temporarily their hours and which includes modest bonuses for all who elect to enroll in this plan.  To date, 6 staff members are taking advantage of the plan.  The chronology for our ambitious and distinctive Arts Union has been changed, though we remain committed to determining how to make use of the facility in a way that moves us toward the full Arts Union and is true to the concept underlying the Arts Union. 

Since much the largest single expense for Carleton is staff and faculty compensation, we have greatly reduced earlier projections for compensation growth.  In the coming year both faculty and staff will receive very modest compensation increases of approximately $400 for each full-time person, which will cover for most employees the increased expense for health care coverage.  Faculty receiving rank promotions and staff whose responsibilities are substantially changed may see additional adjustments.  Increases for staff represented by the union will be as negotiated in their contract, which is yet to be finalized.  The comprehensive fee for next year was scaled back from its originally proposed level, acknowledging that this economy will have a significant effect on students’ families as it does for all of us.  Need-based financial aid, long among the College’s most noble attributes, will not be reduced, but rather will be increased by 6.6%, from $26.5 million this year to a total of $28.2 million for the coming year, an increase which includes an addition to our Carleton Access Scholarship Plan which greatly reduces or eliminates loans for our neediest students.  While our application numbers to date are down slightly (3% to 4%), we expect the quality and diversity of the class to be equal to or better than past years.  In addition, we have assembled from suggestions made by faculty and staff a list of nearly one hundred recommendations for reducing our long-term expenses.  The Board of Trustees has formed a Task Force on Revenue and Costs to aid us in this exercise.  These exercises continue to engage faculty and staff across the campus in creatively planning ways to strengthen the College while seeking to lower our ongoing operating costs.

The greatest single reason for needed budgetary reductions is the fall in the value of Carleton’s endowment.  Our endowment’s recent decline makes budgetary challenges in years further in the future the more daunting.  The value of Carleton’s endowment fell about 20% in calendar year 2008 to a reduced value of $524 million as of December 31, 2008.  That the decline in our endowment’s value was not considerably higher we owe to the wisdom and expertise of our Investment Office and of the Trustee Investment Committee.  Our endowment’s decline has continued during the quite brutal financial markets of recent weeks, making the greater the challenges we must meet for the coming year and beyond.  Carleton’s endowment, which is our most significant asset but for our human assets, we owe to the signal generosity of past and current alumni, parents, and friends. 

Breaking Barriers, Creating Connections:  The Campaign for Carleton is now in its fifth year.  Because of the commitments made by our alumni, parents, and friends, $220 million in gifts and pledges have been raised for the College’s key priorities.  So, too, we owe our ability to meet many of our financial challenges to the continued giving of so many to the Alumni Annual Fund.  In the months ahead, we will need to rely upon alumni, parents, and friends even more to continue their generous support of the Alumni Annual Fund and the Parents Fund.  These are truly Carleton’s lifeblood, and most especially today. 

If current financial turmoil presents major challenges to the College, this same environment offers us some real opportunities.  Most significant among these is a rare opportunity to continue to attract to Carleton teachers and scholars committed to the liberal arts and to teaching our extraordinarily engaged and intensely curious students.  At the encouragement of the Trustees, we thus made the decision to ensure Carleton’s academic excellence by continuing all of our tenure-track faculty searches, searches which garnered applicant pools the largest and the most talented in our collective experience.  What most matters at Carleton is engaged and committed and diverse faculty, staff, and students, and we are working to preserve and to enhance this most significant of our assets.  We also preserved our commitment to completing by fall 2009 two new residence halls, a critical component of ensuring a strong residential campus community.

Looking ahead, it is clear that we will need to continue to be diligent and creative in our approaches to planning and managing our resources and responsibilities.  It is likely that we will seek yet more aggressive ways of reducing costs through consolidation, reorganization, and increased efficiencies, and that continued campus advice will be central to such developments.

We have created this special collection of web pages on our budgetary planning.  These pages include the following information:

  • all of our email messages to the campus about budget planning;
  • a web-based form to solicit budget reduction ideas;
  • information about our voluntary staff FTE reduction plan and;
  • information on the Trustee Task Force on Revenue and Costs.

We soon will post a set of frequently asked questions about the budget process and answers to these questions.  These web pages you can access at the following address:  http://go.carleton.edu/economy

The website will be updated periodically, and we welcome further questions and recommendations from all of you who visit this site.  

If the Carleton community is distinctive for unparalleled levels of engagement and intellectual curiosity, our community is also distinctively creative and resilient.  Relying upon just these traits, we will work, always, to ensure that Carleton offers as fine an academic experience as can be shaped anywhere.  With your continued help, support, and understanding, we will get through the difficult days ahead and we will emerge on the far side a stronger College.  Thank you. 

-Rob Oden