College sees stable financial footing
MIDDLEBURY — More than a year after the stock market fall shot a huge hole in Middlebury College’s endowment and sent the institution scurrying to right its financial ship, college President Ron Liebowitz this week will present balanced budget proposals through 2015 to the college’s board of trustees.
The announcement of what Liebowitz termed “remarkable progress” in an address at the college last Friday, came just over a year after Middlebury began paring down its operations, attempting to combat what was projected last year to be a budget deficit totaling nearly $30 million over the next five years.
But the fiscal caution that has overshadowed many of the college’s initiatives in the past year will remain front and center. On Friday, Liebowitz made it clear that the institution’s period of unbridled growth was over.
“The model under which we operated for two decades is no longer sustainable,” he said. “The major assumptions upon which our revenues and expenditures were based are no longer valid.”
To that end, he went on to detail the recommendations he will make to trustees — some that signal an end to the college’s economic crisis, but also others that signal a new, more conservative era in college finances.
Liebowitz had some good news for students and parents: He recommended that the college rein in its yearly tuition hikes to within 1 percent of the Consumer Price Index, a common measure of inflation. Last year, Liebowitz said, the college’s comprehensive fee increased by 3.2 percent, more than 3 percent higher than inflation.
He also said that he would recommend no change in the college’s policy of need-blind financial aid — domestic students who are admitted to the college will continue to receive as much financial support as they need, and admission will not be based upon ability to pay the cost of a Middlebury education.
“We need to recognize that the demand for a four-year liberal arts degree, while still great, is not inelastic,” said Liebowitz. “There will be a price point at which even the most affluent of families will question their investment; the sooner we are able to reduce our fee increases the better.”
College Treasurer Patrick Norton said in an interview this week that last year’s comprehensive fee increase, which brought the charge to $50,400, was made in order to gain control of the projected budget deficit. Now that the difficult financial times have passed, the comprehensive fee raises are more flexible. Now, rather than raising the fee based on the college’s need, the fees collected will define the college’s spending, Norton said.
“The cost structure will be predicated on our comprehensive fee increase,” he said. “If it’s higher, we’ll have some flexibility in the budget.”
Liebowitz also had good news for faculty and staff. Over the past year the institution eliminated around 10 percent of its staff, or close to 100 positions, through early retirement and voluntary separation packages combined with a hiring freeze. It also implemented a salary freeze for all employees making more than $50,000 per year.
In his speech, Liebowitz said he expects staff numbers to remain fairly stable, and that he will recommend lifting the salary freeze starting in 2011.
“I am happy to say that, barring any unexpected deep decline in the economy — and I mean a really deep decline — staff layoffs are now off the table,” he told his listeners.
According to Norton, the college is hoping to eliminate another 50 positions over time with early retirement packages, bringing the number of full-time staff to around 850.
Norton said that 70 percent of the college’s projected deficit was eradicated with cost-cutting measures, which will continue to be implemented in the coming years. The other 30 percent came from the comprehensive fee increase and other revenue enhancement.
Although Liebowitz has long supported decreasing the number of students attending the college, one of the items of the financial plan he outlined last Friday was an increase of the student body from 2,400 to 2,450 over the next two years.
This change, he said, would not be enough to change the student-faculty ratio of nine-to-one, so the college would retain the small classes that, he said, many consider to be “the most essential aspect of their Middlebury experience.”
And Norton said the projected increase would not put additional stress on campus housing resources, which would allow the college to adhere to Liebowitz’s recommendation of decreased funding for campus building and maintenance.
Liebowitz also said the college would lower its expected annual growth for the endowment to 5 percent, down from 9 percent in past years, and lower its annual fund-raising goals to more accurately reflect the current economic environment.
While the college has reduced its spending significantly, Norton said that these changes will not threaten the money it pledged in 2007 to make a $9 million contribution to the Cross Street Bridge project over the next 30 years.
“That’s already in the balanced budget,” he said.
Reporter Andrea Suozzo is at [email protected].
This article originally stated that the college had cut staff by a combination of early retirement packages and layoffs. That statement was incorrect — there were no layoffs. The article has been corrected.