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Timely Budget Update

April 17, 2009
By President Rob Oden

Dear Carleton Faculty and Staff,

Those of us on Carleton’s Administrative Council have pledged to keep you fully informed of our continuing financial challenges and planning, and this week we have engaged in conversations across the campus to provide the most up-to-date budget projections along with actions we are considering, actions we must consider.

The College’s budget continues to evolve, and our February prediction that we would need to present a revised budget to our Board of Trustees in May continues to be accurate.  The budget reviewed and approved by the Trustees in February was based on estimates of investment returns and gift income from December data.  Since that time, our estimates of endowment decline have increased from 20% to 30% and gifts to the annual operating budget are estimated to be down by 20% rather than 10%.  Current budget projections show a small deficit for the current year and a larger deficit for next year, growing even larger for Fiscal Years 2011 and 2012, nearing $7 million in FY ’12.

Carleton remains in a relatively good position to deal with this economic crisis.  Your engagement and ideas have already led to a number of actions we have taken to reduce operating costs.  Conditions today, however, dictate that we must now begin to consider significantly more painful choices to reduce expenses, while preserving the College’s academic excellence and our continuing commitment to financial aid.   When the situation does improve, and it will, we want to be in a position to invest in Carleton’s continued academic excellence.

We have established a goal of balancing the FY 2010 budget and of reducing the ongoing costs to the College by $5 million per year beginning in FY 2012.  This requires that some significant reductions occur immediately and that we continue to find additional savings to reach our larger goal.

Actions under consideration include a reduction in faculty and staff compensation.  We continue to make every attempt to treat faculty and staff equally as we seek ways of reducing compensation costs and our guiding principle throughout has been that sacrifices be shared.  The budget approved in February included a nominal salary increase for FY 2010.  Because economic and financial conditions have continued to deteriorate, we now will recommend to our Trustees no salary increases for FY 2010, except in the rare circumstances of faculty promotions.  Further, we plan no salary increase for a second year – FY 2011.  We may need to also ask all faculty and staff to accept a five day furlough for FY 2010.  If economic conditions improve significantly, we hope to resume salary increases in FY 2012.

Reductions to benefits are also likely.  It is probable that we will recommend a reduction in the contribution to retirement plans for all faculty and staff and some reduction in future benefits for the dependents tuition plan.

As part of meeting the current budget needs, we will increase our on campus budgeted enrollment by 20 students for the class entering in 2009 and by 5 for students for the classes entering in 2010 and 2011.

As a last resort, after all other possibilities have been exhausted, we are of necessity considering reductions in the FTE workforce of the College.  For staff, wherever possible it is our intent to accomplish this through voluntary means.  We now have the equivalent of about nine positions that are open, and these will not be filled.  We had to begin the layoff process in the closing of River City Books.  We do not yet have a final target, but have conducted an initial review of the entire College, searching for areas where opportunities for reduction and consolidation of work may exist.  It is likely that we will make some decisions in the next few weeks and that we will seek to reduce over the next six months approximately 20-30 FTE.  Such a reduction would affect up to 50 people.  Again, every effort will be made to grant choice and flexibility, but in the end, as was the case with River City Books, there may be some areas where this is not possible.

For faculty, we are considering the introduction of a short-term addition to the 5-course teaching load in 2011 and 2012 which would affect half of the senior faculty each of those years.  This adjustment will save substantial money that would otherwise be allocated for leave replacement faculty.  Faculty Development Accounts are also being considered for cuts.

The measures described above here have been or will be thoughtfully discussed by representative groups (including the Budget Committee, College Council, the Benefits Committee, the Faculty Compensation Committee, Staff at Carleton, and the Staff Forum).  We also want to assure you that managers in every area of the College will be involved in planning whatever changes are contemplated in their areas.

After the Board of Trustees meetings next month, we will again let you know where the budgets for the coming year and beyond stand.  In the meantime, please consult this Budget Planning website for up-to-date budget information, and please continue to send us your creative and productive ideas.

Better news, much better news, I wish I were today conveying.  Thank you for all you do for Carleton.

Rob Oden