Latest update from President Creighton on Mount Holyoke’s finances and budget
Dear Mount Holyoke Alumnae and Parents,
I would like to take this opportunity to update you on the financial status of the College and our budget planning. While this environment is challenging throughout higher education and beyond, we are hard at work on campus to adjust to our current economic realities while giving priority to our academic mission and student financial aid. I have been heartened by the good will and constructive spirit and the many suggestions we have received from the Mount Holyoke community.
Our revenue comes primarily from three sources: about 63% from tuition, room and board (minus financial aid), 17% from annual fund gifts and grants, and 20% from endowment income. This year, primarily because of increased financial aid costs and decreased gift giving, we are projecting a budget deficit of $2 million, a gap we will work to close thorough a variety of measures. While it is too early to know any definitive numbers for 2009-2010, we do have some “leading indicators.”
- In admission, our application total to date remains well over 3000, which is a positive sign in light of the uncertain economy and the sudden declines a number of peer institutions have experienced. Still, we won’t have a sense of what the Class of 2013 will look like until April or May. We do know that families are feeling great financial pressure, which we anticipate will affect requests for financial aid and our ultimate enrollment.
More immediately, we were delighted to welcome 80 new first-year, transfer, and Frances Perkins students who just entered the College this semester. While spring enrollment numbers may yet evolve, we have not seen sizeable attrition to date: another positive sign.
- In development, this year’s Annual Fund is currently 14% behind last year’s record-setting performance. We are redoubling our effort to reach out to alumnae who have supported us so generously over the years. The Development Committee of the Board of Trustees recently held a special meeting and reviewed a number of special solicitations that will be sent early in the spring term. Now more than ever, alumnae support will make a tangible difference in maintaining our commitment to financial aid and our academic quality.
- The endowment performed very well in FY2008 and reached a record-level of almost $660 million. Since that time, it has dropped to just over $500 million as of December 31, 2008. This reduction will have a significant impact on the budget over time, although its immediate effect will be tempered since our spending policy uses a three-year average market value. While the markets have been volatile, our Investment Committee is monitoring the endowment closely and will shepherd it carefully through this turbulence and beyond.
So while each of our revenue streams is adversely affected, the resourceful and tireless work of our dedicated corps of staff and volunteers is making a positive difference.
The Budget Process
Developing the 2009-2010 budget will, as always, be an iterative process that will last into April when we must submit a budget to the Board of Trustees for its review and ultimate approval in May. Let me articulate what I believe must be our guiding principles as we proceed through this year’s process:
- We must maintain the academic strength of Mount Holyoke College, now and for future generations.
- We must be sensitive to the needs of all members of our community, but particularly of those who may be the most financially vulnerable in the current economic climate.
- We must look for efficiencies through greater cooperation and restructuring of our work including eliminating nonessential work.
- We must understand that these are unusual times, and we may employ temporary, unusual actions that might not be sustainable in the long run.
- We must, if the financial situation worsens over the course of the next year, take an even harder look at cost-cutting and revenue-enhancing opportunities for subsequent years.
We will continue to engage the campus community in this process. My administrative colleagues, in turn, will provide ongoing updates on how the budget is developing, available at http://www.mtholyoke.edu/offices/fs/budget2010.shtml.
Our Current Thinking on the Budget
While it is still too early to make firm decisions about items in the budget, here is a summary of our thinking on several key areas.
- Financial Aid. We will maintain our financial aid commitments to current students, and we will do all we can to provide comparable aid packages to incoming students.
- Salary. It seems likely that salary increases this year will need to be minimal or nonexistent. We have received many compelling ideas from faculty, staff, and trustees alike about how to weight any salary increases toward lower-paid employees.
- Positions. Our goal is to minimize layoffs, although we are not confident that they can be avoided entirely. We are working diligently to make the most of every position vacancy, and we are trying carefully to ensure that individuals who may be in positions that could be reduced have an opportunity to be placed elsewhere in the College.
- General spending. From the many communications to me and other College leaders there is clearly a desire on the part of the community to be careful and frugal in our expenditures: fewer entertainment events, fewer paid-for meals, less paper, more electronic communication, etc.
- Revenue enhancement. We are also looking for opportunities for improving revenues, as we have with the recent expansion of our post-baccalaureate program. These include the active exploration of Five College certificate programs, more outside use of our conference center and other Five College initiatives.
Again, I want to thank all of you for your many contributions to the College and the community. As I have said before, I have enormous confidence in our ability to work together through difficult times to sustain this wonderful institution.
Sincerely,
Joanne V. Creighton
