Compared to What

"Corrective measureshave enabled the Collegeto avoid the budgetarycrises that many otherinstitutions are facing."

THE COLLEGE BUDGETING PROCESS this year reminded me of the time-worn joke about the Vermonter who, when asked how he was, responded, "Compared to what?"

Many business enterprises and virtually all academic institutions in the country are experiencing significant budgetary pressures. Dartmouth is no exception. But early corrective measures taken in the last two fiscal years have enabled the College to avoid the budgetary crises that many other institutions are facing.

As the press has widely reported, one Ivy League institution is anticipating deficits as high as $50 million next year and $87 million the following year. Another has announced plans to eliminate two academic departments and to abolish large numbers of faculty positions. Still others are burdened with staggeringly large deferred-maintenance problems one in excess of $1 billion.

The budgetary challenges facing Dartmouth this year are not nearly as severe, because we began to implement corrective budgetary measures three years ago. That does not mean, however, that the reductions implemented at Dartmouth have been either painless or easy. They have meant the elimination of some excellent programs, the loss of important job positions, and the termination of valued employees. But those difficult decisions have been necessary for Dartmouth to keep its fiscal house in order and to remain a robust and responsible institution.

Over the last three years balancing the budget has been made more challenging by the College's commitment to slow the annual rate by which tuition increases. Tuition and fees now account for 59.5 percent of the College's annual revenue. The Board of Trustees, concerned about spiraling costs of college education, voted in November 1989 to slow the rate of tuition increases for three consecutive years. For the last three years tuition has increased 6.4 percent, 6.26 percent, and 6.15 percent, respectively. No longer can the College rely on tuition increases that are significantly larger than the increase in the Consumer Price Index (or the Higher Education Price Index) to cover rapidly increasing expenses. No longer can Dartmouth decide what next year's expenses will be and then establish a tuition increase high enough to cover those expenses. Now moderated tuition increases set a ceiling under which the College must keep its expenses.

The principles that have governed our budget planning for the past two years have not changed: • Core academic functions and programs will not be significantly affected. • Tenure-track faculty positions will be protected. • Admissions will remain needmoot. • Competitive compensation increases will be provided. • Improvement of academic facilities will no longer be deferred. Dartmouth's budget has grown by about five percent in each of the last several years, and it will continue to grow at about the same rate during the next three years. But because some expenses including physical plant, library acquisitions, and financial aidmust go up at a faster rate than the budget as a whole, resources must be reallocated or cut from other areas in order to cover these additional costs.

Two years ago the College balanced its budget by reducing expenses by $2 million. Approximately 55 positions were eliminated, a number of J.V sports were canceled, and most areas saw programs reduced. Last year the College saved another $1 million by holding non-compensation increments flat.

This February I announced additional expense reductions of $2.5 million in order to balance the fiscal 1993 budget. While budget assumptions are inevitably imperfect and some adjustments will certainly be needed, our best budgetary modeling anticipates that these reductions will produce a balanced budget not only for next year but for the following two years as well. Steps to contain costs this year include:

• Limiting financial aid given to new international students, employing a financial-aid waiting list for new transfer students, and increasing the loan component of aid for students in their junior and senior years. These steps will bring the College's practices into line with those of most of our competitor institutions and permit Dartmouth to admit the most talented, ambitious, and idealistic students in the country without regard to their ability to pay.

• Reducing personnel through an early-retirement incentive program and a flexible-retirement option, along with elimination of 20 jobs l4 by attrition, six by layoff.

• Eliminating the continuing-education program.

• Eliminating one of four design workshops in the Hopkins Center.

• Reducing the number of administrators in the athletic department and elsewhere in the College.

• Eliminating 15 (out of more than 1,400) academic courses.

• Reducing the program by which the College pays part of employees' tuition for job-related courses.

• Reducing custodial and grounds-maintenance expenses.

Particularly as Dartmouth begins the Campaign to Excel, it is essential that the College's financial house be in good order. As a result of the budgetary reductions of $5.5 million during the last three years, I am convinced that the class of 2000 will graduate from a Dartmouth that is stronger fiscally and even more highly respected academically than it is today.