To: The Campus Community
From: James F. Jones, Jr., President and Trinity College Professor in the Humanities
At its regularly scheduled winter meeting on January 22, the Board of Trustees ratified the fiscal year 2011 budget that commences on July 1, 2010. Given the important and necessary attention focused on the preparation of this budget, as well as the engagement of faculty, staff, and students in the process of offering advice and recommendations to the Board of Trustees, I want to provide a timely update.
As is the case with virtually every college and university preparing their respective budgets for next year, Trinity is faced with several financial challenges that require strategic thinking and crucial choices. Critical to the College is the impending fact that endowment income in fiscal year 2011 will decline by approximately $5 million. This is a result of a decline of nearly $100 million in the market value of the endowment, from its highest value of $440 million on June 30, 2007, to an approximate value of $346 million as of November 30, 2009. (We will have an updated December 31, 2009, value soon.) It is equally clear that tuition and fee increases will require moderation from models developed before the College and our country were faced with the economic conditions we have all witnessed in the past 18-24 months.
Cognizant of the income limits just described, our collective work in building this new budget was guided by three key principles:
After a report from the Finance Committee of the Board, acknowledging its unanimous support of the on-campus budget recommendations coming from the Planning and Budget Council, the full Board of Trustees has approved a fiscal year 2011 budget of $112,270,000, a budget that is approximately $70,000 less than the present fiscal year 2010 budget. Among the critical decisions included in this new budget are:
$5 million in permanent budget cuts, plus an additional $6 million in strategic reallocation of spending priorities.
A moderating of tuition and fee increases, down from 5.7 percent in fiscal year 2010 to a new level of 3.85 percent in fiscal year 2011.
A financial aid budget of $31.5 million in fiscal year 2011, sustaining a target of 36 percent of our students on Trinity financial aid.
An increase, by 10 students, in the size of the Class of 2014. The target number will now be 580 for each entering first-year class.
The setting of the rate of endowment spending to 5 percent and a reformulation of the spending formula whereby for fiscal year 2011 that rate will be applied to the value of the endowment at the close of fiscal year 2009.
A salary freeze for faculty and staff for fiscal year 2011.
A reduction in benefits for faculty and staff, including a lowering of Trinity’s pension contribution to 8.5 percent, and an increasing of employee contributions to health care costs via plan design changes related to deductibles.
The budgeting of $5 million for plant renewal, a $1 million reserve for special campus needs, and the sustained growth of the general reserve appropriation, initiated five years ago, with the goal of reaching a reserve of $10 million by 2015 (at present the reserve stands at $6.5 million). In particular, new allocations to campus facilities reflect our need to increase our attention to maintaining our physical plant.
The work of the various committees included the development of a five-year budget projection, predicting balanced budgets through 2015. The fiscal year 2011 budget is in balance and, within that context, a five-year balanced budget model has been developed; modest tuition and employee compensation increases have been factored into the budget assumptions for 2012 and subsequent years. We will review future-year budgets and underlying assumptions annually and make revisions where necessary.
Regarding the permanent budget cuts referred to earlier, academic cuts total nearly $2 million, and include a 50 percent reduction in the College’s complement of short-term adjunct professors, generally those hired on a course-by-course basis or for the year, further resulting in a reduction of approximately 90 course offerings from the total of approximately 1,000 courses and labs presently offered. Also included are reductions in budget support for the library and the athletic department. Non-academic budget cuts total $3 million, including freezing salaries and increasing benefit deductibles referred to earlier. Program budget cuts touch all administrative areas except Admissions, an area requiring strategic investment to help sustain effective student recruitment. In financial aid, while sustaining the College’s investment overall, the Presidential Scholars program has been reduced by 50 percent (to six students a year) until sufficient new endowments can be fundraised to increase the number of Presidential Scholars recruited.
We wish to commend the Planning and Budget Council; faculty committees on financial aid, financial affairs, and benefits, respectively; the senior leadership of the College, especially Vice President for Finance and Operations Paul Mutone and Dean of Faculty Rena Fraden; an ad-hoc committee of Trustees; the Trustee Finance Committee; and ultimately the full Board, for the careful, thoughtful, and wise manner in which each group deliberated and shaped its recommendations. For most colleges and universities in the past six months, building next year’s budget has been an extremely difficult task, one that has required painful reductions. That was certainly the case with Trinity.
Further details about the budget will be provided later this week by Dean Fraden and Paul Mutone as they list decisions made program by program. We will continue to be explicit and forthright.
In closing, I will not suggest that our budget decisions were arrived at easily, or that they are without sacrifices. Because of our courage and collaboration in making difficult choices, we have produced an operating budget that insures that we will live within our means. This process has also developed a projected five-year budget that is in balance, based on current assumptions.
We have protected financial aid and resources even as we acknowledge that one of the major priorities of the Cornerstone Campaign is to find increased opportunities for aid for even more students.
While acknowledging the important contributions that adjunct professors have made and will continue to make, we have reaffirmed the central importance of faculty who are tenured, in the tenure stream, or engaged in long-term contracts.
We have, to the best of our ability, protected our core academic offerings, and tried with equal vigor to minimize the effect of this new budget on the Trinity experience for our students.
And, finally, we have affirmed our commitment to increase our attention to campus facilities. Our campus is a precious resource that needs far more nurturing than we have been able to offer recently.
I am convinced that we have acted wisely and strategically. Even as Trinity is leaner, it has been strengthened and better positioned for its future. I am proud of our community and appreciative for your support.