A Letter from President Oxtoby: Budget Plans

February 4, 2009

Last October I wrote to the community to alert all of you to the implications of the U.S. and world financial crisis for Pomona College. I am writing now to bring you up to date on the impact of these developments and to outline a number of steps that we will be taking to move forward. I welcome your comments and suggestions.

In these difficult times, our overriding priority is our people—students, faculty and staff. For students, this means maintaining the core principles of accessibility and excellence: preserving our policy of need-blind admissions and meeting demonstrated need while continuing to provide an education of the highest quality. For faculty and staff, it means, above all, doing everything that we can to preserve jobs. This is a time of great concern for everyone, and it is important for us to do what we can to take care of each other as we continue to guide the institution through this challenging economic period.

Underscoring the gravity and difficulty of this situation is the news from other top colleges and universities around the country. Several have announced plans for significant lay-offs. Many more have announced one- or two-year salary freezes for faculty and staff. All are looking at every possible means of reducing expenditures.

In our own case, most of our primary sources of income have been reduced, and there is no immediate prospect for improvement. In particular, our endowment (which provides over 40% of our operating budget) decreased by 25% from July 1 to Dec. 31. The Annual Fund was down by about 14% at year’s end, although we are working hard to bring in additional gifts and remain optimistic about the support we will receive from our dedicated alumni, parents and friends. We anticipate raising tuition and fees for next year, but we expect that increased demand for financial aid will keep any net increase in tuition income modest at best.

Given that we cannot significantly increase our income, we must take a hard look at expenditures and reduce them as much as possible. We are working to find ways to keep our operating budget, with the exception of financial aid, at or below the level of 2008-09. If projections for the economy do not improve, the challenge of balancing our budget may demand even more savings in the coming years.

I wish it were possible to accomplish such reductions solely through programmatic cuts, but since 52% of our operating budget is salaries and benefits, that is simply impossible. In order to protect as many jobs as we can, we have reluctantly decided to join many of our peers in instituting a salary freeze for both faculty and staff for the coming year. Increases will only be possible for promotions or for special cases when specific market pressures require them. Although inflation remains very low, I do not underestimate the hardship this will cause for many among us. We remain committed to a competitive compensation policy for faculty and staff and hope to return to regular salary increases as soon as economic conditions permit.

Other steps that we will take to reduce the operating budget include the following:

• We will decrease the amount set aside for facilities renewal and replacement from about $5 million per year to about $1.3 million. Over the last decade we have made major investments in our physical plant and, although there is more to be done, we will slow the pace of that work over the next few years.
• Effective January 1, all staff vacancies have required approval from my office before being filled. We anticipate a small net reduction in staff through attrition. While the expectation is that most faculty vacancies will be filled, as in the past, decisions will be made case by case upon recommendation from the Faculty Planning Advisory Committee.
• Each Vice President has been asked to propose reductions in the operating budget of his or her area of 5% for fiscal year 2009-10, as well as to reduce spending as much as possible in the current year.
• We plan to move from a 3-year to a 4-year replacement cycle for computers.
• We will reduce expenditures on food and entertainment. This encompasses several components: reductions in dining hall costs, reductions in catering costs for campus events, and tighter controls on reimbursement of meals.
• We will explore ways in which operating costs can be covered by income from restricted endowment funds.
• We will work closely with the other colleges of the Claremont Consortium to explore cost savings through cooperation. In particular, consultation among the academic deans has already allowed us to reduce our spending on leave replacements for 2009-10.
• We will step up sustainability efforts to save on energy and other resource costs in both the short and the long term.

As you know, our Board of Trustees has approved an ambitious strategic plan and we have begun raising gifts to meet the goals of that plan. We will move forward, but our fundraising success is likely to be slowed. New initiatives, programs and buildings will be put in place only as funding sources are identified. In accordance with that policy, construction of the new residence hall project and the south campus parking structure—for which restricted funds from a bond issue are already in hand—will proceed.

In spite of the difficult budget environment, we are also moving forward with several new steps that will be of significant benefit to the College. These include the following:

1. We have put in place a new long-term disability benefit for all eligible faculty and staff, paid for by the College.
2. We will be discussing with the Board of Trustees later this month an expansion of the faculty rental housing policy for entering faculty.
3. Over the next year, we will put in place new procedures for classifying staff positions and for evaluating performance, in order to achieve greater equity and openness.

The Budget Planning Advisory Committee (BPAC), which includes representatives of the faculty, staff, and students, will be meeting on a regular basis through this semester to advise the College on budget priorities, and we welcome the input of the entire community into this process. Students are invited to an open forum on the budget sponsored by ASPC to be held tomorrow (Feb. 5) at 4:15 p.m. in Rose Hills Theatre. Interested faculty and staff are invited to two open discussions on the budget to be held in the Frank Blue Room on Tuesday, Feb. 10 and on Thursday, Feb. 19. Your suggestions and recommendations are welcome and may be sent to me, Karen Sisson or members of the BPAC.

There are difficult choices to be made, both immediately and in the years ahead, but I am confident that Pomona College will emerge from this process with renewed focus on its core values and well positioned for the future.