As the economy deteriorates, institutions across the nation have been digging deep and implementing new policies to make ends meet. Colleges and universities, including Wesleyan, have seen their endowments plummet and their budget deficits balloon. As the crisis drags on, it is becoming clear that no school is exempt from its effects.
Since June 2007, Middlebury College has seen its endowment reduced by $252 million, or 20 percent. According to Patrick Norton, Chief Financial Officer for Middlebury College, the endowment will probably lose a quarter of its original value by midyear. Furthermore, the college is now projecting a $20 million deficit, which it hopes to make up over the next two years.
In the latest campus-wide financial update, Middlebury President Ronald D. Liebowitz and his administration outlined measures to help close the deficit, which included a hiring freeze, salary freezes and cuts, departmental budget cuts, and a reduction of staff. Employees earning under $50,000 will see their salaries raised two percent while those earning above that figure will not see an increase. In addition, Vice Presidents and those on the President’s Staff will have their salaries cut by five percent and two-and-a-half percent, respectively. The salary freezes at Middlebury and at institutions across the nation are cushioned by the near zero increase in inflation over the past year, however.
Middlebury is also aiming to eliminate 100 staff positions, or 10 percent of total staff, by 2011. Like Wesleyan, the school is looking to reduce staff size through a voluntary separation program, where eligible employees can choose to retire early with generous benefits.
Williams’ endowment has suffered even more severe losses, declining 30 percent for this fiscal year, according to a campus-wide letter from President Morton Owen Schapiro. Despite the losses, Schapiro said his administration remains committed to avoiding layoffs and maintaining Williams’ financial aid program. In order to meet the planned $10 million reduction to the overall operating budget next year, however, cost-saving measures, such as denying tenure to qualified professors, have been taken.
Other NESCAC schools are also facing similar financial strains. Trinity’s endowment has dropped by 30 percent in the most recent fiscal year, and the college is looking at a deficit of $2 million for the current fiscal year. Colby College is predicting a $1 million deficit in next year’s budget, and has seen a $400,000 reduction in gifts.
Even big institutions, which initially seemed to absorb the crisis relatively well, are being hit hard. Harvard’s $36.9 billion endowment fell 22 percent in the four months ending in September, a figure that may rise to 30 percent by the end of the fiscal year. Harvard, which draws 35 percent of its operating funds from the endowment, is coping with the crisis by freezing salaries and attempting to cut 1600 employees.
As part of a $25 million two-year budget reduction, Dartmouth has laid off employees in numerous departments, including their dean of first-year students. The college will also eliminate up to 35 course offerings and restructure its dining services. Yale, which is looking to close a $100 million deficit for next year, plans to lay off 300 workers.
However, most colleges and universities across the nation have yet to cut financial aid. According to a Feb. 27 article from The New York Times, “To Keep Students, Colleges Cut Anything But Aid,” a December survey by the National Association of Independent Colleges of 372 institutions found that only 8 percent said that they would cut financial aid. Fifty percent of these institutions had implemented a hiring freeze, 22 percent had frozen employee salaries, and 49 percent had delayed construction or renovation.
Even as institutions are scrambling to deal with the present troubles, school officials are all too aware that the financial crisis may have them strapped down for the long haul.
“There is no clear sign that the bottom of this global financial crisis has been reached,” Liebowitz wrote. “And so our efforts to reduce spending will have to continue next year and perhaps beyond, depending on when the financial markets and economy recover.”