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Recalibrating the Budget, A Fireside Chat

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October 1, 2009

Students at the fireside chat. Photos by Se Eun Gong.

Last night, Student Council hosted a Fireside Chat on the school budget, inviting Acting Dean of Students Garikai Campbell and President Rebecca Chopp to speak on, and field questions about, the current and future fiscal state of the College. The chat was a preliminary follow-up to the recent Board of Managers decision to begin deliberations on a new budgeting plan due to improving economic conditions.

In March of this year, the Board projected a 30% drop in the endowment, coupled with an increase in financial aid. Swarthmore, as a private institution, is dependent on the endowment for over half of its operating budget. As an immediate response to the crisis, then, the College drew upon reserve funds and proposed several plans for decreased spending and increasing revenue.

Initial ideas included enrolling more students, significant slashes to Facilities costs, departmental budget cuts, and salary and hiring freezes, all discussed in more detail by College Treasurer Sue Welsh at a Fireside Chat hosted last semester.

Now, a full year after the recession began, the endowment has only seen a 16.8% decline, thanks to savvy spending management prior to the financial crisis. At last night’s discussion, President Chopp emphasized that the nearly 17% drop was still a big loss, but acknowledged that budget constraints put in place last March could be eased.

“What we did at the [Board of Managers’ meeting] this week,” Chopp explains, “we decided that since the endowment is not down 30%, we may not need to implement the $15 million plan, which was the amount that was initially estimated by the Board for budget adjustments.”

The $15 million plan was an initial outline of revenue raising strategies and budget cuts as designed by the Ad Hoc Committee, an impromptu group of administrators and faculty appointed by the Board last spring. The Board now predicts an $8 million plan to be sufficient for sustaining the College over the next few years.

President Chopp warns that the $15 million plan will “remain in our back pocket” in order to protect the College from risk of near future financial market meltdowns. Chopp admitted that nobody can predict the long-term implications of the recession. “We’re keeping the $15 million plan but recalibrating and focusing on the implementation of an $8 million adjustment,” Chopp said. “If we want to protect our institution, we have to have several scenarios.”

Acting Dean of Students Garikai Campbell speaking at Wednesday’s fireside chat.

The majority of the night’s presentation was then handed over to Dean Campbell, who showed a PowerPoint that should be available online soon. The slideshow highlighted what had already been put into action for the current year – increased student enrollments as well as heavy cuts to employee compensation, facilities, departments, athletic, and library/ITS budgets.

Campbell noted that the overall goal of budget adjustments was to bring the endowment spending rate back to an acceptable 5%. Lay-offs, however, were not included in any proposed budget cuts.

Campbell stressed that “front and center is the need to protect values of the College that is academic excellence, commitment to social responsibility, commitments to diversity, and an understanding of the importance of our community, just to name a few.”

He went on to emphasize the importance of student feedback. “The budget decline hits you, the student,” Campbell said, “in almost every facet of your life here at Swarthmore.”

As part of an initial push to bring students into the process, StuCo VP Nate Erskine ’10 and StuCo President Rachel Bell ’10 announced the creation of a new student-run “ad hoc” committee to serve as an advisory panel. Both Erskine and Bell will serve on the committee along with SBC manager Simon Nin Zhu ’11 and StuCo Financial Policy Rep Dan Symonds ’11. Four more spots will be opened up to interested students next week.

Despite this initial effort for student involvement, the roughly 20 students at the chat remained largely skeptical. Questions and comments after Campbell’s presentation centered around the lack of student representation on the Ad Hoc Committee as plans were made last spring and over the summer.

President Rebecca Chopp listening to Campbell’s presentation.

Adam Bortner ’12 attended the chat but left with unanswered questions. “I understand that the current fiscal situation is a complicated matter, however, it seems out of line with the College’s values to exclude students from the conversation of the Financial Planning Group,” Bortner said in an email.

Dean Campbell and College Treasurer Sue Welsh noted that students might have been left off the Ad Hoc Committee out of concerns for confidentiality since the Committee was privy to sensitive, private financial information that most administrative departments aren’t completely aware of. Welsh nevertheless asked students to put in suggestions (all of which are relayed to the Ad Hoc Committee) via the planning website.

One senior complained that she had no context for what the overall budget looked like and thus couldn’t seriously weigh in on the budget cuts.

President Chopp again suggested applying for the new student advisory committee, which would be charged with negotiating the specifics of the budget and relaying that information to the student body.

Other students voiced concerns about fairness to lower-income employees of the College and the possible institutionalization of budget adjustments like attrition even after the economic climate improves.

The President’s Staff promises to reflect on these concerns as they take on the iterative $8 million proposal revision process over the next coming month. The administration will host another Fireside Chat in November once more tangible ideas are on the table before presenting to the Board of Managers at their next meeting in December.

The question of budget transparency and direct student involvement still remain. “I’m still wrestling with that in my head,” Campbell said, “We’ll work on structuring this process in a way that gives students voice.”

12 Responses to Recalibrating the Budget, A Fireside Chat

  1. Matt Stafford

    October 1, 2009 at 7:34 am

    Stop spending a million dollars on McCabe online journal and database subscriptions that nobody uses.

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  2. 5

    October 1, 2009 at 9:21 am

    Nevermind committees, there was an ABYSMAL student turnout for this event.

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  3. Not-So-Great Expectations

    October 1, 2009 at 10:58 am

    5, what did you expect for an event scheduled at 6:00pm, when the vast majority of Swarthmore students are at dinner? I mean, the budget is very important, but food trumps budget. I dunno why StuCo decided on the time it did, but I imagine it had its reasons…

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  4. an observer

    October 1, 2009 at 1:42 pm

    Students, alums, and parents interested in more depth on budget issues could start at the Finance Department's website:

    http://www.swarthmore.edu/x25471.xml

    I would recommend reading the most recent annual financial report (from the left column links) as a baseline. Ms. Welch includes in-depth management discussion that is a terrific overview.

    Then, all the links in the right column provide detail about recent developments. The 2009-2010 budget document is particularly helpful.

    I've tried to follow this fairly closely. From what I have seen, Swarthmore has weathered the recession in far better shape than most. There are some other big endowment colleges and universities that are really hurting. Some have had serious cash flow problems forcing them to borrow heavily to cover operating expenses this year. The debt service on that borrowing is now compounding their budget problems.

    I think the more you dig into the issues, the more you will appreciate Swarthmore's financial management.

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  5. Parth Lakhani

    October 1, 2009 at 2:11 pm

    @Matt: Just wait until you've got that research paper due tomorrow and you really need that one article that deals EXACTLY with your topic…and then our system doesn't have it. It has happened WAY too many times to me for me to grudge the journal subscriptions we spend on.

    @5: That's probably because nobody feels that they can do anything about the changes being made. Maybe that's just a cynical senior talking, but the article seems to say that even some of the students who went came away with that impression. Despite the administration's attempts to reassure us, we don't know what it'll amount to. Perhaps we ought to make such an important meeting happen during that Friday afternoon collection time we're supposed to have, so everyone can make it and speak out?

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  6. Andy Reid

    October 1, 2009 at 2:15 pm

    Matt Stafford, your complaints of waste are kind of hypocritical. The Lions are wasting millions of dollars on you, unable to upgrade their offensive line from large bags of potatoes to people who can maybe run block.

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  7. Andy Reid

    October 1, 2009 at 2:15 pm

    p.s. bring me food!!!

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  8. Matt Stafford

    October 1, 2009 at 2:21 pm

    Andy I thought you were on a diet, wasn't it your goal to lose 200 lbs in a year so you don't die from a heart attack while throwing out your challenge flag, a complex movement that supersedes the boundaries of all human physical abilities.

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  9. Andy Reid

    October 1, 2009 at 2:26 pm

    Fortunately, I win a whole 2% of all my challenges, so the joy of all that success outweighs the stress of throwing the flag. COST BENEFIT ANALYSIS, what?

    Also, I may weigh 1000 lbs, but I can still run the 40 faster than you. You're lucky you don't play us this year or Trent Cole would sack you 1000 times.

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  10. Urooj Khan

    October 1, 2009 at 2:36 pm

    Erm, can we please keep discussion mildly relevant here?

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  11. Soren Larson

    October 2, 2009 at 5:21 am

    Matt-

    Actually I would say the opposite. Swarthmore's online journal collection is lacking! Spend less on new volumes and more on online resources I say. Swarthmore subscribes to few econ databases compared to larger universities. I'm really not sure how one would go about getting such access.

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  12. Peter '11

    October 3, 2009 at 2:17 am

    If you can find a particular article you want, just email it to Interlibrary Loan peeps and they'll usually email it or possibly have it shipped in for you…

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