Town Hall Meeting Summary

February 05, 2009 |

On January 30, President Sanford Ungar held a campus Town Hall Meeting for Goucher faculty and staff to discuss the impact the current economic crisis is having on the college, and the decisions that he and key trustee committees are recommending to the Board to decrease spending and balance the budget. Following is a synopsis of the primary points made at the meeting, and attached is a pdf of the Powerpoint presentation that was shown.

       ◊ In light of the national economic crisis, the college has established key principles and priorities that will guide the institution in its financial decisions:

          -Provide a quality educational experience for students

          -Preserve and enhance financial aid for students

          -Sustain and grow enrollments

          -Preserve jobs

          -Protect salaries

          -Continue to build our community spirit and implement our community principles

          -Provide a quality work environment for employees and foster open communication

       ◊ Goucher is certainly not the only institution of higher education experiencing financial challenges. The endowments of several major universities have experienced significant decreases in value over the past six months. (See slide entitled “Impact of Economy on Colleges and Universities.”)

       ◊ The current economy is affecting colleges and universities in numerous ways, causing a loss of endowment value, a loss of endowment income, a decrease in gifts, and an increased demand for financial aid. (In Maryland, where there is a long-established program of public subsidy to the operating budgets of independent colleges and universities, that funding has also been reduced.)  To battle these losses, some institutions have implemented salary reductions, hiring freezes, benefit reductions, and layoffs.

       ◊ The majority of Goucher’s revenues for FY2008-2009 come from tuition and fees, followed by funds from the endowment, the annual fund, income from the graduate programs, and state funding. (See slide titled “FY 2008-2009 Revenues.)

       ◊ The value of Goucher’s endowment reached a peak in October 2007 and has since declined by almost 30 percent. It will likely take until 2016 to restore that lost value at an endowment spending rate of approximately 5.3 percent, assuming the receipt of an average of $500,000 worth of new gifts to the endowment per quarter and a quarterly growth of the endowment of 2 percent. Because of the loss in the endowment’s value and the system of calculating the endowment yield on the basis of a 12-quarter trailing average of its value, the college will experience a loss in endowment income for several years. (See slides titled “Recovery of Goucher’s Endowment” and “Decline of Future Operating Endowment Income.”)

       ◊ Changes in Goucher’s current budget include decreases in revenues from state funding, in net tuition revenue (because of slightly lower enrollments than budgeted), and in other revenue streams. Some expenses have been curbed by implementing additional utilities savings, waiting to fill some vacant positions, and identifying savings in this fiscal year’s operating budget. (See slide titled “Changes in the FY2008-2009 Budget.”)

       ◊ Financial challenges that might continue to face Goucher in the next fiscal year will depend on several factors, such as enrollment projections for the incoming first-year and transfer class, the retention rate among current students, a decrease in state funding, and the stress on financial aid funds. (See slide titled “Fiscal Year 2009-1010 Budget Challenges.”)

       ◊ In order to meet future financial challenges and to continue to preserve jobs, the administration and the Budget and Executive Committees of the Board have made the following recommendations to the full Board when it considers the preliminary budget for FY 1010 at its February meeting:

          -There will be no layoffs or salary reductions at this time;

          -Faculty and staff salaries will be frozen for the 2009-2010 fiscal year;

          -There will be a modest tuition increase for the 2009-2010 fiscal year;

          -Financial aid will be enhanced rather than cut, with the result of a possible increase in the college's "discount rate";

          -A hiring freeze is in place, except for positions that have already been budgeted and are regarded as essential to the successful day-to-day operation of the college, or positions that are funded through grants or other outside income sources; and

          -Administrative and academic divisions identified eight percent in potential operating budget savings.  Part or all of those budget reductions may be used if there is a potential operating budget deficit.  This determination will be made as soon as the student body count and financial aid numbers are definitive, likely by the end of this month.

       ◊ All faculty, staff, and students are encouraged to submit their ideas to solutions@goucher.edu for how Goucher can continue to spend wisely and decrease overall spending, without compromising its high standards.

       ◊ The Goucher community will continue to be updated about budget matters via email and Town Hall meetings.