Board approves budget, considers related matters, at meeting

On Thursday and Friday, February 5 and 6, Kenyon's trustees met in New York City for their annual winter meeting, whose primary business is the approval of the budget for the next fiscal year. As a result of the recent problems in the American economy, this year's gathering found the board members particularly focused on how best to address the challenges of the current climate.

"The meetings went very well," reported President S. Georgia Nugent, who noted that the trustees were pleased by the work done by the Kenyon administration and staff in preparing the proposed budget. Among the recommendations of the proposal was a 3 percent increase in tuition and fees for the 2009-10 academic year, the lowest since 1977.

Thursday began with a joint meeting, which all trustees were invited to attend, of the board's Budget and Finance Committee and Executive Committee. Nugent described to the trustees the current operating environment for institutions of higher education, which has elicited a diverse array of responses, as revealed in a spreadsheet she distributed. She noted that wealthier institutions have been affected more dramatically—Harvard University, for example, will experience a $125 million shortfall this year, while Kenyon anticipates none; Cornell University may draw as much as $150 million from its reserves, while the College does not plan to use any funds from its reserves. But the fact remains that Kenyon is much more dependent on tuition income than are better-endowed counterparts. That means, of course, that the College's health is determined by its enrollment. At present, enrollment looks to remain healthy despite a 12 percent decline in applications for the incoming class. However, it is impossible to predict what may happen in the coming year or two. Because of these factors, a major strategy for Kenyon will be the building of a contingency fund that can be used to address financial-aid needs and other needs that may arise.

Nugent emphasized that the development of the budget this year focused on "our core mission—teaching and learning—and our people," and she credited a process by which the College's division heads were asked to bring forward suggestions for reductions in spending, which were then considered by the Senior Staff, for a proposed budget that takes account of this unique economic climate while also trying to retain Kenyon's traditional values. As a result, the final budget calls for retaining employees' salaries at their present levels. (The single exception is that group of approximately nineteen faculty members whose eligibility for merit increases at predetermined points in their careers falls during the coming year.) In a time when many other institutions are laying off staff members, reducing compensation, or requiring unpaid "furloughs" of employees, continuing to fund salaries fully represents a strength, based on the College's decades of careful financial management. Kenyon will also continue to support employees' health-care costs at present levels, which range from 73 to 84 percent of costs. However, any increases in health-care costs will be borne equally by the College and the employees, which might result in increased costs of approximately $7 per month for the lowest paid employees to about $41 for the highest. Nugent relayed these decisions in detail in an e-mail announcement sent to Kenyon employees on February 7, 2009.

In the joint meeting, the trustees also revisited the topic of Kenyon's planned construction projects, including the new buildings for studio art and art history. They agreed to continue the pause in construction but to proceed with rebidding for the projects to determine whether costs may have declined in the current economy.

Thursday also saw a three-hour meeting of the Investment Committee, which heard from Vice President for Finance Joseph Nelson that the College's funds are performing comparatively well. While Kenyon has experienced an overall decline of 18 percent in its portfolio, a number of wealthier institutions have seen drops of 30 percent or more. Nelson noted that an external analysis of about thirteen hundred endowments shows that the performance of the College's funds consistently ranks from the second to the fifteenth percentile. Some trustees had raised concerns about liquidity (or easy conversion to cash) of Kenyon's investments. Nelson reported that the liquidity of the College's assets is quite high—and documented that information extensively for the committee. While he is confident of sufficient liquidity in the endowment, he said Kenyon will take some steps in its investment strategy to increase that liquidity even more.

On Friday, the Admissions and Financial Aid Committee heard from Dean of Admissions and Financial Aid Jennifer Delahunty about the preliminary profile of the incoming class. While the pool of applicants for Early Decision increased by 8 percent, the pool of regular-decision applicants is down somewhat, resulting in an overall decrease in applicants of about 12 percent. Delahunty noted that this drop is being experienced by many peer institutions, and she reported that measures of academic achievement among the College's applicants remain as strong as those in other recent classes. In addition, she observed that, judging from applications for financial aid, the ability of applicants and their families to afford Kenyon's tuition and fees remains strong. Also on Friday, the Trustee Affairs Committee met for a discussion of two openings on the board, one for an "at-large" position and one for a parent, for which it will bring forth candidates at the April meeting.

In Friday's full meeting of the board, the trustees unanimously approved the College's proposed budget, which Nugent characterized as "not panicked, but prudent." The president also provided an update on the search for a new provost. She noted that nine candidates had been interviewed by the search committee last week and that four "very strong, well-qualified" finalists would be visiting the campus in the next several weeks. Nugent also gave a brief report on Kenyon's upcoming North Central Association of Colleges and Schools reaccreditation, which she said will provide people at Kenyon with many opportunities for self-reflection and learning.

The president indicated that she planned to focus attention in the coming months on student retention, which she described as "good, but not good enough." "A focus on retention makes particular sense at this time, both financially and in terms of mission," she said. "Retaining a student is more efficient than attracting a new student. And we need to do all that we can to close the small gap that exists between completion rates for majority and minority students."

Vice President for College Relations Sarah Kahrl reported on progress in the "We are Kenyon" campaign, whose proceeds now stand at $155 million (toward a $230 million goal). She noted that new gifts, including $12 million since July 2008, continue to be secured at a steady pace. Kahrl also announced that donations to the Kenyon Fund and Kenyon Parents Fund are slightly down from last year, although Kenyon is faring "very well" in fundraising relative to its peers. Because the College budgets conservatively, the annual funds are on track to meet the dollar amounts expected from them in the operating budget.

The February meeting closed with an exercise, led by Nugent, in which the trustees were asked to reflect on a learning experience that had been especially important to them. The exercise was in anticipation of the board's summer retreat, which will focus on the future of a liberal arts college in the twenty-first century. The retreat is scheduled for June 11-12, 2009, in Gambier.