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BY DANTE FUOCO

In print | Published September 3, 2009

Though classes just started this week, members of the college will begin discussing next year’s budget today in an effort both to seek financial sustainability and preserve the college’s values.

The Ad Hoc Financial Planning Group, composed of board members, administrators, faculty and staff, is having its first meeting today since last school year, during which it met four times. On Sept. 26, the Financial Planning Group will inform the Board of Managers about its discussions. Last February, the Board created this group as a way to annually develop a sustainable budget in light of a declining endowment and looming recession in the next five years.

“[We ask], what are our priorities? What do we look to maintain moving forward?” said Dean of Admissions Jim Bock ’90, who is a member of the group. “And that includes everything — programming, financial aid. Everything.”

No decision has been made yet about next year’s budget. Bock said that while he can’t say anything about the class of 2014, the college was able to maintain all of the its policies for the class of 2013 amidst a recession. Such policies include need-blind admissions and loan-free financial aid, which promises to meet a family’s demonstrated need.

From the end of June 2008 to the end of June 2009, the endowment dropped from $1.4 billion to $1.1 billion. As a response to the declining endowment, the college set this year’s current budget at $107.0 million, which is a 7.1 percent decrease from last year’s $115.2 million.

According to a budget report last May by Suzanne Welsh in the Finance and Treasurer’s Office, “Budget decisions were made in phases … in order to have as much information as possible about the economy and its impact.” While in February the Board approved the tuition, financial aid, enrollment decisions and a reduction in facilities capital projects, Welsh said that all other decisions were deferred to the May meeting. This was the first time that such decisions have been pushed back to the May meeting.

Last year, the Board of Managers gave the planning group a set of assumptions that it should accept, Welsh said.

One was that families’ financial need would increase. Another was that the college should prepare to deal with a smaller-sized endowment predicted to decrease by about 30 percent last year.

Welsh said that the college believes the endowment has decreased by only 17.5 percent this past year — in other words, 12.5 percent less than expected.

“[It’s] good news basically,” Welsh said.

But while this news is positive, the college still has to aim for economically sustainable decisions, she added.

Welsh said that though the economy has been remarkably volatile in the past year, it has seen some recent improvements. She said that the economy reached its lowest point last March, but that since then there have been “very good returns.” Still, the planning group members need “to evaluate how confident [they] are” for the future.

To name a few changes, the college has decided for this school year to freeze faculty, staff and student salaries, increase student charges by 3.76 percent, start to have an additional 16 enrolled students, and reduce spending in facilities capital projects for the next three years. The reductions can be viewed on the Swarthmore Finance and Investment Offices website.

At the same time, however, Welsh said that this year’s increase in student charges was the smallest in ten years, citing both inflation and the college’s consideration for families’ dwindling incomes as reasons. Moreover, Welsh’s May report said that in the 2009-2010 budget there wouldn’t be any employee layoffs or changes in the financial aid program.

Welsh claimed that the college was financially stable going into the economic downturn. The Board of Managers published a report supporting this last December and updated it in March. The report said, for example, that the college had “a balanced budget” and a “low endowment spending rate.”

“[The college’s] decline is going to look relatively better than other endowments’,” Welsh said.
The Ad Hoc Financial Planning Group is open to feedback on the Swarthmore Finance and Investment Offices website, the Student Dashboard, and the Faculty and Staff Dashboard. Welsh said that several people have already commented and that it has been “very constructive.” Comments can be viewed on the website.

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