BY ALEXANDER ROLLE

In print | Published March 5, 2009

In an unusual move, the Board of Managers decided to postpone a number of decisions regarding the 2009-10 budget until May instead of releasing a comprehensive budget after the February meeting. According to a summary of the Board’s decisions made public by Suzanne Welsh, Vice-President for Finance and Treasurer of the Board of Managers, “budget decisions are being made in phases due to the changing economic climate.”

According to the release, the Board is waiting until their May meeting in order to have “as much information as possible about the economy and its impact on the endowment, students’ and families’ financial situations, and our donors’ ability to give.”

At the Feb. 21 meeting of the Board, four important decisions were made regarding the budget for the upcoming school year. First, student charges (the sum of tuition, room, board and the student activities fee) will increase by 3.76 percent next year, which is, by percentage, the smallest increase in 10 years. According to Welsh, the college was “trying to be responsive to the economy and its impact on families.” In recent times, student fees have usually increased by about 4.5 to 5.5 percentage points each year.

Secondly, the Board renewed its commitment to loan-free financial aid awards and decided to hold the suggested summer earnings and term-time work components of financial aid awards constant.

In a move that has been affected by economic circumstances but is also in line with one of the college’s long held policies, a third decision was made to increase on-campus enrollment next year by 16 students, with another jump in enrollment expected in the near future. “Swarthmore’s enrollment has historically grown at a slow measured pace, primarily to enlarge the curriculum offerings,” Welsh said.

The average on-campus enrollment has increased steadily for several decades, and is now approximately 26 percent larger than it was in 1970. While the increase in enrollment is consistent with the college’s history, economic conditions provided additional impetus for the decision. According to Welsh, because the college has excess room in its residence halls, the enrollment growth “leads to a growth in revenue without increasing much additional costs.”

In another cost-conscious move, the Board made a fourth decision to reduce spending on facilities projects by more than $5 million next year, totaling about $3.3 million.

Money from the endowment will continue to fund much of the college’s spending next year, but the reduction of the endowment’s value in recent months has forced the school to spend a greater percentage of the fund than usual. In 2009-10, a little less than 6 percent of the endowment’s value will go to the college’s expenses, according to Welsh’s release.

According to Mark Kuperberg, Professor of Economics, the percent of the endowment the college spends every year is subject to change, but the school usually tries to spend within a range of percentages, the high end of which is about 4.75 percent. In recent years, Swarthmore has spent at the low end of this range, which is around 3.5 percent. While this reduction in spending during good economic times is proving helpful now, Kuperberg wishes the college had done more. “Like all schools we chased the mirage of a high return … we did the conventional thing. We were conservative, but we were also conventional,” he said. “We were falsely assured. It seemed prudent enough.”

Among the budget decisions left until the May meeting of the Board of Managers are salary decisions and departmental budgets. According to Welsh’s release, “Salary freezes for faculty and staff are under strong consideration. No employee lay-offs are anticipated at this time for the 2009-2010 fiscal year.” However, when asked about the possibility of lay-offs in 2011 and beyond, Welsh said that “if the economy continues to deteriorate, nothing can be ruled out for the future.”

According to Constance Hungerford, provost, the college’s budget will not show dramatic cuts for the upcoming school year. However, it could show much graver changes for the year after that if the economic climate does not improve. According to Welsh, the college does not want to make any drastic moves that are not necessary. “We’re trying to take a measured approach in our response to the economy,” Welsh said.

While this means that the college’s operations shouldn’t be drastically different next year, changes might be on the way. “I think there will be changes that will be noticeable [to students],” Kuperberg said, pointing to the joint challenges of the recession, which hurts the ability of parents to pay tuition and alums to give money to the school, and the stock market crash, which has devalued the endowment.

“The college has been around since 1864, and it’ll stay around, but I do think we’ll have to change how we do things,” Kuperberg said. “We were living high on the hog.”

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