Give it to Us Straight

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October 13, 2009

Ever since President Roth arrived at Wesleyan, he has consistently promised to make protecting, even increasing, financial aid a priority. This administration has also trumpeted its notable transparency. We are puzzled, then, by the administration’s recent decision to end need-blind admission for transfer students, perhaps even more so by the secrecy that accompanied this major move: the only way students have received this news has been through a WSA e-mail.

Perhaps the problem lies in the unrealistic promises that the administration made in an unstable and unpredictable economic climate: in March, for example, President Roth wrote on his blog that plans were in place to increase the financial aid budget for the next year by more than 8%; at this point, the number is closer to 6%. However, one of the school’s core values, that of ensuring that cost is not an issue for prospective students, is now being compromised in a way that we did not anticipate; we knew there would be cuts and downsizing, but not in so crucial an area. Perhaps we should have recognized that cuts in nearly every area were inevitable, but students deserve to be included in the conversation when such drastic changes are undertaken.

Last year, when the University faced staggering deficits, the administration was surprisingly open about the responses it was considering. That makes this year’s secrecy all the more striking. When our reporter tried to write a story about our endowment, our budget, and our administration’s money-saving measures, she was given a three-week-long runaround through various administrative departments before getting any hard numbers.

What’s the point? Is the administration trying to suppress questions, already circulating in some quarters, as to whether the University can still call itself need-blind? If so, it won’t work; sooner or later Wesleyan’s status is going to become clear. At this point, we won’t be kept in the dark for long. We know more cuts are coming. Give it to us straight—what are they?

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7 responses to “Give it to Us Straight”

October 20, 2009

David Lott, ’65

The recent resignation of Tom Kannam should tell you quite a bit. Take a look at last year’s University financial report, which came out in late October. The new one should be out shortly. Find someone who can help you understand the accounting and write some articles on the trends. It would be pretty interesting.

Do you know that Wesleyan has more than $200 million of debt? That it engaged in interest rate swaps for tens of millions of dollars on which it has lost money and has risk of more loss? That Wesleyan has a potential liability of over $170 million for future capital calls on limited partnerships it has invested in? That Wesleyan is more dependent on tuition for funding operations than nearly all of its “peers?” That Wesleyan has been spending endowment on operational costs at an unsustainable rate?

All of these facts were apparent in last year’s financial report. What will this year’s report bring?

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October 20, 2009

David Lott, ’65

And by the way, one of the elements of Wesleyan’s less than stellar financial condition is the continued rise of tuition and fees at a rate about double the rate of inflation. This has been going on for decades, at Wesleyan and other schools. How long can this imbalance be sustained? (It has gone on longer than most imagined it could, and still the lambs arrive glad to pay $50,000+ per year.) Can tuition increases that outstrip incomes and other costs continue for the next 20 years? What kinds of risks does a continuation of a tuition increase policy have for Wesleyan? Can the school continue to afford it’s present scholarship policy? If Wesleyan were required to hold tuition increases to or below the rate of inflation, what would be the consequences to programs and finances?

Wesleyan has can not engage in deficit spending like the Federal Government can. And Wesleyan’s sources of income are less reliable than they have been (or at least the unreliability is now apparent.) Will administration and trustees propose the right moves to deal with these issues? Will students and faculty be able to accept that the gravy train is going to have to cut back on service? Stay tuned.

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October 20, 2009

Ron Medley, `73

“Will administration and trustees propose the right moves to deal with these issues?”

I suspect “the right moves” will vary according to with when you graduated from Wes’. Pre-1959: 1) shrink enrollment to 900 students, 2) eliminate Sociology, 3) bring back the MAT program. Pre-1973: 1) eliminate the doctoral programs in math, science and world music, 2) only shrink enrollment to 1,500 students. Post-2001: 1) keep enrollment where it is, 2) keep the doctoral programs, but, add a Masters degree in Film Studies, 3) eliminate varsity sports.

Take your pick.

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October 20, 2009

David Lott, ’65

Ron:

Nice commentary on the lack of imagination of Wesleyan graduates. Shrinking enrollment is a nonstarter. That’s where the revenue is.

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October 21, 2009

Anonymous

well, I believe the trustees actually had to commission a study-group in order to arrive at that conclusion, about ten years ago. And, the numbers were pretty close, as to which saved more money: cutting staff vs. cutting enrollment. Oberlin, in fact, did a similar study a few years ago and came to the exact opposite conclusion. So, it’s no wonder people fall back on familiar solutions for familair problems (“if it worked for Butterfield, why can’t it work now?”)

My real point, however, is simply that when you say, “appropriate solutions”, you really have to posit which Wesleyan you’re talking about?

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October 24, 2009

David Lott, ’65

Cutting staff and cutting enrollment came out with the same result on cost?

Damn, no wonder the college is having some financial hiccups.

Cutting enrollment reduces income. Students pay–or attract funds from donors who want to help them pay–to go to Wesleyan. There is some incremental cost to each student on campus, but largely their tuition goes to cover already imbedded cost.

Cutting staff reduces expenses.

Now why would each path lead to the same financial result?

I’m not sure what the opposite is that you are referring to with respect to Oberlin. Your syntax got a little wavy. But I don’t think Oberlin is a very good financial model.

Note that one of the responses of the administration to the current shortfall was to increase enrollment. Why? Because it increases income without a corresponding increase in expense, if you resist the temptation to add staff.

To be clear, the Wesleyan I am talking about is today’s Wesleyan. The school is in more financial danger than is being admitted, or understood. It’s going to take some tough decisions and a little luck to get to a more stable position.

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October 27, 2009

Ron Medley, `73

I apologize in advance for my syntax, David.

Let’s see if I can state it better this way: for every incremental increase in enrollment (and, assuming you want to maintain the same quality in students) you have to figure in an increase in the financial aid budget. That’s why the differential in forecasting models, between cutting enrollment and cutting staff (in particular, faculty), wind up being so marginal. Oberlin decided, among other things, that it could not afford the additional financial aid expense and cut back on enrollment. To reiterate, Wesleyan, looking at very similar data (size of student body, faculty, institutional mission), arrived at a completely different set of palliative remedies.

Of course, every business model is a little different and I’d like to think that one of the things Wesleyan’s trustees put into the equation was the relative strength and generosity of our alumni body. It was not so long after that enrollment study that Wesleyan did embark upon, and ultimately conclude, a successful capital campaign. We need to do more of that sort of thing.

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Give it to Us Straight

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