March 11, 2009
To the Colby Community:
The Board of Trustees Budget and Finance Committee met by telephone earlier this week to approve Colby's budget for the fiscal year beginning on July 1. I write to update you on the budget and on the College's financial situation.
Today I sent a letter to Colby families informing them that the comprehensive fee for the next academic year will rise 3.7 percent, to $50,320, which places Colby on the lower end of peer colleges in terms of percentage increase in cost. As Doug Terp and I have noted in presentations to employees and students, Colby derives about 70 percent of its operating funds from comprehensive fee revenues, with the remainder coming from the Colby Fund and revenues from our endowment and short term investments. Contributions to the Colby Fund are at least $500,000 below projections for this year, and we are concerned that annual gifts will be lower next year, as well. We estimate Colby's endowment has already lost about 25 percent of its market value, with additional losses possible by June 30 (the end of our fiscal year).
As you know, we have identified several areas where the College can reduce expenses without affecting our core mission, and we have already implemented a number of budget reductions this year. We have received many helpful and thoughtful suggestions from employees about ways the College can further trim expenses - those suggestions have been forwarded to the appropriate vice presidents and deans for consideration.
Colby's conservative practices, including our cautious approach to endowment spending and the growth of operating expenses, have stood us in good stead for the near term, and we are in the enviable position of hiring faculty at a time when some exceptionally talented teachers and scholars are seeking positions. However, as the recession deepens, Colby is confronting some difficult financial choices.
Most immediately, because of the loss of endowment and Colby Fund income, our budget for 2009-10 will be reduced by approximately $1.6 million, or 3.2 percent. The reductions we have identified include:
- A freeze on most capital projects;
- A freeze on salaries for those employees earning more than $40,000 (with the exception of the one-third of our faculty members eligible for merit raises next year, the final year of a three-year cycle). Employees who earn less than $40,000 (on a full-time-equivalent basis) will receive a $400 pay increase next year;
- Waiting longer to fill vacant staff positions, reducing the number of temporary workers we hire, and cutting overtime budgets;
- Eliminating overnight infirmary care at the Health Center (an F.A.Q. document on this item is available at http://www.colby.edu/healthcenter);
- Placing initiatives identified in Colby's strategic plan, but as yet unfulfilled, on hold;
- Moving from a three-year to a four-year replacement cycle for computer equipment (the industry standard);
- Reducing dining hall hours on weekends;
- Reducing staff travel, playing host to fewer events, and relying more on electronic communications;
- Reducing work done by outside vendors.
Although we cannot predict that further budget reduction strategies will not be called for in the future, Colby remains committed to:
- Continuing the "no-loan" financial aid initiative inaugurated this academic year and making additional funds available to families with increased need;
- Filling faculty positions as usual, which is a tremendous advantage for the College at a time when academic positions are dwindling across the country;
- Planning for key capital/academic projects such as a new science facility, so that the College will be ready to move forward when conditions improve.
Colby has faced many challenges in its long history, and, thanks to the combined efforts of every constituency, has grown stronger at every turn. As we cope with the uncertainties of the near future, we will draw on the strength of our community and our history.
William D. Adams