To the Wesleyan Community:
Following upon the meeting of the Board of Trustees this past weekend, I’d like to bring you up to date on Wesleyan’s financial situation. First and foremost, Wesleyan, bolstered by the support of its entire community, is well positioned to cope with the downturn of the global economy. The trustees and I believe that while resizing Wesleyan’s budget is necessary, this does not preclude making significant advances by responding creatively to a rapidly changing environment.
The University’s endowment declined in value from July 1 through December 31, 2008, by 22 percent to $503 million, in the mid–range of declines reported by other colleges and universities. The Dow was down 24 percent during this same period, and the S&P 500 fell 28 percent. Since then, of course, market conditions have continued to deteriorate, and further losses in the endowment have followed proportionately. In response, we are reducing expenditures while protecting the core of the student experience and ensuring a robust financial aid program. We remain focused on providing a liberal arts education that helps students to discover what they love to do and get better at it in order to make a positive difference.
In November, we began implementing a plan to address long–range budget forecasts that showed a budget gap growing to $15 million over time. Then, in January, as the need to achieve an additional $5 million in savings or revenue became apparent, we identified other measures to maintain a balanced budget and ensure the University’s financial stability. The $5 million in additional savings has come primarily from reductions in the University’s debt service obligations. In other words, we are adding an estimated $5 million in new revenue and cutting $15 million over the next few years from a budget that in FY 2009/10 is about $218 million.
We are continuing to place all construction projects on hold except those that are fully funded, notably the renovation of the Davenport building to house the Allbritton Center for the Study of Public Life and our new Shapiro Creative Writing Center. We are reducing the growth in capital and major maintenance budgets during the next several years by $7 million. As I’ve emphasized, this is not a permanent reduction in the base budget for maintenance, and we will retain our ability to respond to urgent needs. We’ve deferred construction of the $160–million Molecular and Life Sciences building, thereby postponing the need to provide $3 million in annual debt service, which we had budgeted beginning in 2012. Recently, we reduced the cost of debt service by renegotiating interest rate swaps, gaining $1 million in annual savings while also providing better protection against potential increases in rates.
We are freezing compensation levels for faculty, staff, and librarians in 2009/10 for an expenditure reduction of $2 million, and we have eliminated the bonus pool for all administrative staff, starting, of course, with myself and the Cabinet. In support of our ongoing effort to reduce staff levels through attrition, we have offered a Voluntary Separation Program to eligible employees with 15 or more years of service. It is our hope that the program’s separation terms will benefit individuals who are ready to pursue other personal and professional opportunities and also help Wesleyan achieve its budget objectives.
Similar to actions taken by peer institutions, Wesleyan will temporarily increase the size of the student body by 30 students per class, which will yield $4.7 million in additional revenue given anticipated financial aid expenditures. We have developed plans to house more students and to ensure that this modest 4 percent increase in the student population does not have an adverse effect on course access. One piece of very good news is that our admission applications are up 22 percent this year, giving us great confidence that we will be enrolling a new class in the fall that is as strong academically as the classes of recent years.
The Board has set a tuition increase next year of 3.8 percent, one of the smallest hikes at Wesleyan in decades. We have increased our budget for undergraduate financial aid in 2009/10 by 8 percent to $38 million to ensure that Wesleyan remains accessible regardless of a student’s ability to pay. Beginning with the class that entered Wesleyan this past fall, we have eliminated loans for the most financially needy students and reduced the total four–year loan indebtedness for all other students receiving aid by 35 percent. It is important to us that students are able to attend Wesleyan based on their abilities regardless of means.
These stressful times are encouraging us to think creatively about new sources of revenue. I am convening a group of faculty, students, and staff to consider revenue–generating programs for the summer months when the campus is not fully utilized. Our goal is to introduce new programs beginning in the summer of 2010, but it is too early to count on any revenues from this effort to close our budget gap.
Taken together, our various efforts to reduce expenditures and enhance revenue will enable us to make progress on important initiatives while maintaining financial stability. As I’ve reported before, we are developing the College of the Environment, and we’ve received a generous gift to expand our writing program. We are enhancing our first–year seminars and exploring interesting ways to bring together a student’s academic experience before graduation into a capstone project. We have seen an increase in applications from international students, and we intend to make Wesleyan an even more cosmopolitan campus. We will continue to support creativity and innovation in the curriculum and are in the process now of augmenting opportunities for civic engagement by the student body. Our searches for new faculty members are continuing, and we are attracting applications from truly outstanding teacher–scholars.
The severity, speed, and duration of this economic downturn have forced us to make significant reductions in the University budget in a fairly short time, and I want to express my appreciation to trustees, faculty, staff, and students for working so constructively with us during this challenging period. We in administration remain committed to conducting a transparent process and consulting as widely as possible with stakeholders, including the Budget Priorities Committee created last year, the Faculty Executive Committee, and the Wesleyan Student Assembly leadership. I have discussed Wesleyan’s finances with many alumni and parents in my travels nationwide and will continue to do so. If you would like to send us a comment about our plans, please send an e-mail to firstname.lastname@example.org.
In all these conversations I hear great confidence in Wesleyan’s ability to cope with an adverse economy. Judging by the record 10,057 students who applied to Wesleyan this year, many others believe in Wesleyan’s future as well. Equally heartening is the number of alumni and parents who continue to give generously to Wesleyan. They understand that investing in Wesleyan is more important now than ever. In these difficult days such commitment is an inspiration. If you can make a gift to the Wesleyan Fund, you will help us continue to offer the best in liberal arts education. Thank you.
Michael S. Roth