Kenyon's 2009-2010 Operating Budget
The Kenyon College Board of Trustees met yesterday and approved the budget for the 2009-10 academic year. The Board's actions will be reported fully, as usual, in a forthcoming Fortnightly article, which will appear on Wednesday. But, in addition to that official report, I wanted to write personally to Kenyon faculty and staff members to convey what the Board has decided and clarify the basis for those decisions.
As I have indicated in previous letters and meetings this year, Kenyon is, in a number of ways, in an enviable position, in this extremely challenging financial climate. Our tradition of frugality and fiscal conservatism serves us well in these difficult times. Of course, that frugality and conservatism grow from necessity. Compared to our well-endowed peers, we simply must budget very carefully, because we do not have a large endowment to support the College.
In the current economic climate, however--as many of you have seen in the national news media--America's wealthiest colleges and universities are in particular difficulty precisely because they have relied so heavily on their endowments. As the value of those endowments has declined dramatically, with the collapse of the stock market, wealthy institutions like Harvard, Cornell, or Williams are experiencing difficulties in funding their current operating budgets. Some are having to cut those budgets as much as 20%. That is not Kenyon's situation. Because the total of our investments is modest, decline in their value has not had such an immediate or substantial impact on our budget.
On the other hand, Kenyon is much more dependent than well-endowed colleges on the comprehensive fees paid by students and their families. Approximately 75% of our operating budget is funded by the comprehensive fees paid by our students and their families. Thus, the major factor in our financial health will be students' and families' ability to afford a Kenyon education. In these times, this factor is no easier to predict than is the stock market. Consequently, the Trustees have adopted a budget which intentionally maximizes the contingency funds available to meet a downturn or shortfall-for example, a need to offer more financial aid. If we do not face such a situation in the coming year, those contingency funds will then be available for other College priorities. We believe this is the most prudent course in these uncertain times.
With these factors in mind, the budget approved by the Trustees includes, on the revenue side, the lowest comprehensive fee increase in 30 years (3%). Naturally, this will mean that our operating budgets will be very lean. The approved budget, on the expenditure side, maintains all staff salaries at their current level, but does not increase them. (Approximately 19 faculty members present an exception. Since, according to our faculty salary system, faculty members are only eligible for merit increases at specific intervals during their careers, that system will not be disrupted for the cohort whose eligibility falls this year.)
In a deflationary economy, maintaining salaries actually represents a slight increase. However, one aspect of the economy that is not deflationary is health care costs. The College will maintain its current contribution to employee health care, which covers 73%-84% of health care costs, depending upon the staff member's choice of plan and salary level (with the College paying the highest percentage for employees with the lowest income). The projected rise in costs--which are, of course, outside our control--will be borne equally by the College and the insured employee. We project that increase will range from approximately $7.00 per month (for those in the lowest income bracket, with the low plan with single coverage) to $41.00 per month (for those in the highest income bracket, with the high plan with family coverage).
In preparing this year's budget proposal, we worked with two principal objectives in mind: protecting our core mission of teaching and learning and protecting our people. Our effort was to keep all of Kenyon's employees as whole as possible, in a time when the entire world's economy is in turmoil. We know that some other colleges are laying off staff members, reducing salaries, or requiring employees to take "furloughs" to reduce expenses. We wanted to avoid such measures, if at all possible, and we have done that. I realize that maintaining salaries at their current level is not particularly sunny news, but I am hopeful that the budget the Trustees have adopted will enable all of us to come through this rainy day together.
2 February 2009