Town Meeting 2010
President Durden addresses the campus community during the annual town meeting.
President Durden's Remarks
Welcome everyone to the 2010 Town Meeting. Since I became president in 1999, we have brought the campus community together every January to provide you with an update on the status of Dickinson College. This annual gathering is one of the most visible ways we celebrate our commitment to this extraordinary community. Our sense of community is, in fact, one of our greatest assets.
We have come to refer to this annual gathering as a “Town Meeting.” I believe it is an appropriate title for a number of reasons. First of all, the notion of “town” reinforces the special sense of community we share on campus. Secondly, it reminds us that we are also part of a broader community—the borough of Carlisle—and that this relationship brings with it its own set of responsibilities. Dickinson has been a mainstay of the borough for over two centuries, and we are currently among the largest employers in Cumberland County. Many of your families, therefore, depend on Dickinson for their livelihood, and the town depends on our employees and our students to support businesses and to contribute an important cultural element to borough life. It is extremely important, therefore, that we are good caretakers and stewards of Dickinson so that the College can continue to offer employment and opportunity to future generations of Carlislians, many of whom may be members of your own families.
One of the ways we develop and sustain our shared sense of purpose is by being open and transparent in what we value and how we make our decisions. This forum, for example, is intended to provide us all with a baseline of information about the status of the College that allows each of us to understand the challenges Dickinson faces and the role each of us must play to advance the institution. The All-College committee system is also a key component of our effort to keep the campus community informed and involved. These six committees include representatives from the faculty, students and administration. The Planning & Budget Committee, in particular, has focused its attention on combating the fiscal crisis and will continue to make recommendations to me about the allocation of College resources. This committee includes two support staff representatives who, last year, were given full voting rights.
Each of us, I believe, understands that we work at a very special type of higher education institution. As a residential liberal arts college, Dickinson is a different kind of school than Penn State, Shippensburg or HACC. We have a different mission than large research universities that place a high priority on graduate and professional programs, or community colleges that serve a wide ranging student body both in terms of age and educational goals.
As such, we are part of a special sector of higher education known as liberal arts colleges—those institutions that focus exclusively on providing a high quality undergraduate education through individualized learning and a residential experience. This is a definable, relatively small category that numbers only 120 selective liberal arts colleges out of a total of more than 4,000 higher education institutions. And within that group, Dickinson now competes with the 50 most prestigious colleges.
Since we are competing with so many institutions—and particularly our liberal arts college peers—Dickinson must strive to remain among the most selective in our category by articulating what is distinctive about our College. We believe our most distinguishing characteristic is that we were founded during the closing days of the American Revolution by Dr. Benjamin Rush, a signer of the Declaration of Independence who believed the future of the young country would depend on an educated citizenry. We continue to believe that our students should be motivated to fulfill a higher purpose, and we focus intentionally on the entire student experience, providing opportunities both in and out of the classroom so that our students are prepared to become the engaged citizens and active participants who will lead and improve our democratic society.
We further recognize that there are certain core characteristics that we absolutely must preserve—even in a difficult economy—if we are to maintain and succeed in fulfilling this laser-sharp focus:
- Unlike much larger institutions, Dickinson distinguishes itself by offering individualized and small group instruction made possible by a low student-faculty ratio;
- We admit only those students who demonstrate the promise of becoming all that Dickinson expects from them;
- At the same time, we are firmly committed to offering that education to students of all backgrounds and income levels—this is not a school only for kids from rich families; and
- We pride ourselves in offering a liberal arts education that responds to societal needs by directly confronting the world’s most pressing challenges. This is why we have developed strengths in key areas such as global education and environmental sustainability and why we have created certificate programs in health studies and security studies—two areas that will demand leadership from those who have benefited from a useful liberal arts education and are capable of “connecting the dots.”
When we convened for the Town Meeting one year ago, our College and our nation were coming to grips with the most devastating economic crisis since the Great Depression. Our endowment had lost nearly one-third of its value and we recognized immediately that we were facing a multi-year challenge that would require the involvement and sacrifice of everyone on campus.
During the past year, I have made every effort to keep the campus community informed about our strategy to navigate this crisis. You have all received periodic updates to keep you apprised of the institution’s fiscal situation and to inform you of the measures we are taking to ensure that the College not only weathers this difficult period, but also emerges from it a much stronger institution. To date, our strategy has been successful. We were able to present an FY 2010 balanced budget to the trustees last spring, and our efforts to contain costs allowed us to create a recession reserve at the end of the last fiscal year that will be of great help as we move forward.
Each and every one of you are to be congratulated for the part you have played in our successful navigation of the first year of the economic crisis:
I am all too mindful of the fact that no one received an annual salary increase last year, a sacrifice that you accepted and one that you did not allow to affect the quality of your work or your commitment to this College. For that, I thank you.
You also did your part as we identified and implemented cuts totaling $2 million in our expenditures for services, supplies and capital projects.
We have all contributed to the College’s bottom line by curtailing our consumption of water and electricity for a total savings of $166,607. And even though I know it was a huge sacrifice to close the College for a full two weeks over the holiday break, that decision proved to be extremely cost effective, as Dickinson realized nearly $40,000 in energy savings during that time period.
We must, however, remember that we have navigated but one year of what is still a serious multi-year economic challenge. While there are some signs that the economy is rebounding as the fluctuations in the stock market lessen, the country still faces fundamental fiscal problems. I am sure you are aware that the unemployment rate remains stubbornly around 10 percent nationwide; the housing sector of the economy has a long way to go to fully recover; and recent data indicate that retail spending was not as strong in December as had been hoped.
While we will spend most of our time today focusing on the fiscal measures we must take for the upcoming year, we cannot lose sight of the fact that the challenge we face will continue into the foreseeable future. We will continue to confront declining revenue from our three major sources—the endowment, overall giving, and net tuition—the result of broader global developments that are well beyond our control.
Earlier this week, a major credit-ranking agency, Moody’s, affirmed that the financial outlook for higher education is negative, and particularly for liberal arts colleges. While “the partial recovery in equity markets has helped many colleges,” the report stated, many institutions face “fundamental and cumulative risks of weakened student demand and donor support” as well as greater outside scrutiny. The risks, moreover, are greater for private institutions than public institutions.
Dickinson is well aware of the tenuous future that awaits higher education, and we continue to confront these challenges head on in our planning and budgeting strategies. The point is that we are still facing a multi-year problem. We are not out of the woods yet by any stretch of the imagination. We must still find ways to trim significant amounts from our operating budget, and we all must redouble our efforts to maintain the quality of a Dickinson education in the face of reduced resources. It is, after all, the excellence of the education we offer that dictates our ability to recruit students and attract donors. The quality of our product, if you will, is the key to a successful financial future. To maintain our excellence with a more stringent budget—to do more with less—will be a tough balancing act over the next several years. But it is a challenge we simply must successfully negotiate if we are to preserve the progress and accomplishments we have made during the past decade.
Let’s take a closer look at the numbers and begin by looking at the sources of Dickinson’s revenue.
At last year’s Town Meeting, we focused a lot on the endowment. We were reeling because it had lost nearly one-third of its value—down from a high of $354 million to $259 million—and the end did not appear to be in sight. As I mentioned earlier, the wild fluctuations in the stock market have slowed, and our endowment has rebounded somewhat and is currently back slightly above $300 million.
While we are pleased that our endowment is once again ascending, we cannot forget that our endowment is comparatively very low when we look at the resources of those top-tier liberal arts colleges with which we now compete. Those schools with substantially larger endowments, quite simply, reap greater income from this revenue source and, as a consequence, are able to spend significantly more per student than Dickinson. The fact that we are competing head-to-head with these institutions means that we are offering our students a high quality education at a lower cost – a testament to the hard work, ingenuity and dedication of our faculty and everyone in this room.
That said, we must continue to do all we can to increase the endowment significantly if we are to achieve our goal of remaining permanently among the top tier colleges in the country. We are currently between $300 million and $1 billion behind our competitors, and they are not standing still. We will not catch up overnight, but we must do everything in our power to close this gap.
And we must remember, that even though the endowment is rebounding, the College will still feel the repercussions of the downturn spread out over at least the next three years. The return on our endowment is averaged over that period and, as this slide shows, we have not yet felt the full impact of the economic crisis on our revenues. A lower return on our endowment will mean that we will have less to work with over the next several years and that we will have to be even more diligent and creative in order to preserve the excellence of the educational experience we offer.
But let’s return to the Revenue Pie Chart. The funding stream that is now of most concern to us is the huge amount reflected in the tuition slice of the pie, which, when combined with room & board totals 80 percent of the College’s operating revenue. This is typical of liberal arts colleges. We are, in other words, overwhelmingly dependent upon our students’ families ability—or willingness—to pay. And in the current economic climate, this has become increasingly hard to predict.
As you know from your personal situations, many families have experienced a significant decrease in their assets as a result of the economic crisis. Some parents may have lost their jobs, or seen a reduction in hours or salaries. In many cases, the value of the family home has stagnated or, even worse, declined, thus lessening the ability of families to borrow against this valuable asset. And the contraction in the credit market has simply compounded these problems.
While admissions has always been a make-or-break element of our budgeting strategy, it has become increasingly important in the current economic climate. Due to our enhanced efforts to recruit the right students for Dickinson—efforts that include the new Web site design that Vice President Balmer will address in just a few moments—our admissions numbers are holding fairly steady over last year. But as Vice President Balmer will also explain, we are not experiencing any growth either.
At the same time, we are operating in a changed and much more competitive marketplace than existed before the economic downturn. Students and their parents are increasingly evaluating the cost of a college education and questioning if or how they can afford highly selective liberal arts colleges like Dickinson. Even though a Dickinson education costs $12,000 more than the $50,000 per year we charge in tuition, room & board, even the most ardent advocates of liberal arts colleges are thinking twice before agreeing to send their children to us.
The reluctance to invest in a liberal arts education in this challenging economy was starkly apparent at a recent meeting of the 392 institutions that participate in the Common Application. Of that 392, 36 institutions reported a decline in applications, and all but six were prestigious, high-priced liberal arts colleges. In this economy, students and their parents are, quite simply, choosing cheaper alternatives such as large public universities.
The challenge for all liberal arts colleges, therefore, is to intensify our efforts to explain to the families of prospective students the value and the relevance of a liberal arts education. The future of not only Dickinson, but also the liberal arts college sector, will depend on how successful we are in articulating the lifelong return on investment that characterizes a high quality liberal arts education.
As a result of all these factors, Dickinson has already experienced mounting pressure for additional financial aid from many of our students. This year, we increased our financial aid budget 12 percent above that spent last year for a total of $32 million. As we look to recruit the class that will enter next fall, families will be basing their financial aid requests on their 2009 tax returns—a year that reflects the worst of the economic downturn. We, therefore, expect the demand for financial aid to continue to increase for the foreseeable future. Spending more on financial aid means that we will experience a net decrease in the revenue that comes from tuition for which we will have to compensate by implementing additional cost containment measures.
In this increasingly competitive and uncertain marketplace, our ability to attract and retain each and every student who demonstrates the promise of becoming a Dickinsonian is absolutely critical. If we look at it in terms of dollars and cents, every student adds, on average, $35,000 to the College’s operating revenues. Spread over four years, this amounts to a total of $140,000 per student.
And of course, it is not enough to bring them to Dickinson. We must provide them with the high quality total educational experience they expected when they enrolled and do our best to keep them for the full four years.
Although our retention rate has improved somewhat in recent years, if we were able to increase it by 12-14 students or two percentage points from 92 to 94 percent, this would add more than $2 million in revenue over four years – an amount equal to what we cut out of this year’s operating budget and must cut again for the upcoming year.
We all have a part to play in attracting and retaining students. As those in the Admissions Office like to remind us, we are ALL admissions officers; we are ALL retention officers. The ways in which we interact with our students and their families contributes to an overall impression of Dickinson before a student matriculates, just as it contributes to the educational experience once the student is enrolled.
I am NOT suggesting that we cave in to every demand our students place upon us; that would be foolhardy. We are first and foremost an educational institution. To say “yes” to everything is not educative, nor is it reality.
What I am suggesting is that we continue to comport ourselves individually and collectively as we fulfill our responsibilities with that clear sense of shared purpose, that stellar understanding of what it means to be a Dickinsonian. Our ability to demonstrate the distinctiveness and value of a Dickinson education through our actions, our civility and our commitment speaks volumes to current and prospective students and their families. And the result does, indeed, have an important and profound impact upon Dickinson’s bottom line.
Now let’s take a look at the flip side of revenue – expenditures. How do we allocate our resources?
First of all, you can immediately see that a significant amount of money goes to financial aid. From a gross budget of $135 million, nearly one-quarter of those resources are dedicated to recruit and retain students through financial aid. It is a commitment that we must continue to uphold as we seek to attract a student body that includes those who promise to become distinguished Dickinsonians – regardless of their ability to pay.
Later this month, I will recommend to the Board that we increase tuition by 3.5 percent for the upcoming year. The amount of revenue this will generate will largely fund an increase in financial aid—an estimate of almost $2 million again next year—that will allow us to attract the right class with the right mix of students for Dickinson. The quality and composition of our student body define the excellence of our educational program—it is part of the Dickinson “brand.” We must, therefore, have adequate resources to fulfill this vital component of our mission.
If we are to arrive at a balanced budget for FY 2011, we must—as we did last year—find $2 million in cost savings in our operating expenses. Last year, we were able to save $2 million by cutting our budgets for services, supplies and capital projects by eight percent. While we anticipate we can save another half million dollars in these areas through new sourcing initiatives that we are developing through our shared services consortium, this still leaves us with $1.5 million in savings we must identify.
Where will we find these savings? If you combine the salaries and benefits slices of the pie, you will quickly see that our employees—our human capital—is the single greatest expense that we incur. As it should be. Education is a labor intensive endeavor and you, our employees, are the key to our excellence.
At the same time, we must look to these areas if we are to generate the cost savings we need. Let me quickly point out that we are not talking about lay-offs. Although some of our peer institutions have already resorted to such measures, we are doing everything we can to avoid a shrinkage in our workforce other than that resulting from natural attrition. That said, we are examining every position that becomes vacant to assess if it needs to be filled, and we are creatively evaluating any number of positions to see if responsibilities can be shifted or combined both within and across divisions. This close examination and, in some cases, resulting restructuring must take place if we are to balance our budget.
Unfortunately, these measures will not begin to get us to the $1.5 million in savings that must be identified. How do we propose to do this?
First of all, beginning next year, we will reduce the College’s Emeriti Health care contribution by $100,000. This is the health program that supplements health care in retirement to which some of you have opted to make additional contributions.
Secondly, the College has undertaken a thorough review of its early retirement alternatives and made some changes that we anticipate will generate over $1 million in savings. A word of caution before I briefly describe these alternatives: These options are not available to all employees and there are complex issues associated with some of them. If you are eligible for any of these programs, you received more detailed information via email or campus mail. Even so, you should meet with a representative from our Office of Human Resources who can more fully describe your options.
- The current early retirement plan will be continued for another 18 months, but then replaced with options available to more employees.
- It will be replaced by a phased retirement option that allows the employee to reduce their workload for up to three years, after which he or she is fully retired.
- And we are offering a one-time buy-out option in 2010 that will require interested eligible employees to retire at the end of the current calendar year.
What is important to note about these programs is that they are totally voluntary. We are not asking or forcing anyone to do these; they are for interested and eligible employees on a purely voluntary basis. And it is through this voluntary participation that we hope to arrive at the level of cost savings we will need to balance next year’s budget while providing incentives to employees.
Again, I encourage those who are interested to talk with someone in Human Resource Services about your options. To learn more about these programs, you may also want to consider attending one of the information sessions Human Resources will offer early next month.
As long as we are on the subject of salaries and benefits, I know that many of you are anxious to learn if you will receive a raise next year. I wish that I was able to give you a definitive answer today. Unfortunately, we do not yet have enough information to make that decision. The amount we will need to devote to financial aid is so important and such a central component of our budget, that we must defer some key budgetary decisions until we have a better understanding of that need, a need that will be determined by our admissions performance—not just in terms of overall numbers of students, but in the amount we must dedicate to financial aid for both first-year and returning students.
The All-College Planning & Budget committee will be working extremely hard over the next several months to develop a balanced budget that it will recommend to me and I, in turn, to the Board of Trustees at their May meeting. I can only assure you that I will continue to keep you informed of all budgetary decisions and, as always, welcome your inquiries by email, telephone conversation or appointment. Please know that we are doing everything we can to arrive at a budget that will permit salary and wage increases. But above all, we must make responsible decisions that protect the future of the institution, and we just don’t have all the facts we need at present.
Maintaining our dynamism and momentum throughout this troubled economic period has been a consistent theme that we have emphasized over the past year. We have come so far in so many ways during the past ten years, and we simply cannot lose the advances we have worked so hard to achieve.
I firmly believe we are positioned, moreover, not only to sustain our position, but also to actually make significant strides. Periods of adversity are not without their opportunities.
As a unified and committed campus community, we exhibit a unique confidence in what and why Dickinson is what it is. Now, more than any other time, we must communicate consistently and repeatedly to our public those characteristics that define a Dickinson liberal arts education. Done well, this will give us a huge advantage over other institutions. Remember that comparative endowment slide that showed how low our endowment is compared to our peer institutions. Yet we are competing with these same institutions for students precisely because we are able to offer an educational experience that matches theirs in quality and because we have developed and can articulate the benefits of the Dickinson educational experience.
While many institutions have become paralyzed by the economic crisis and adopted a strategy to “sit it out,” we are not about to stand still. Now is our moment to demonstrate what our Dickinson “can do” attitude and our ability to think and act imaginatively and flexibly are capable of achieving. And we already have in place a number of key initiatives that will allow us to keep the College moving in very significant ways.
- The All-College Planning & Budgeting Committee has begun the task of drafting what will be the third Strategic Plan of this administration. Discussion about the new plan was initiated by the trustees at their meeting last spring as they deliberated over those key premium assets that add unique value to a Dickinson education. P&B further refined the focus last fall when it chose to make our students and the useful education we provide to them the primary focus of Strategic Plan III. Centering the Strategic Plan on students allows us to ask and answer critically important questions, and then devise and implement policies and practices accordingly. This is also wholly consistent with our preeminent mission, and it reflects the critical role admissions will continue to play in determining the institution’s fiscal health.
While many institutions might be tempted to delay the strategic planning process until better economic times, I would argue that the timing for Dickinson could not be better. Sharply honing our focus in this intensely competitive era is precisely what we must do to take full advantage of the opportunities that emerge from adversity. Developing a plan that is student-focused will allow us to articulate the distinctiveness of a Dickinson education, to demonstrate through concrete examples how our useful approach to a liberal arts education provides our students with a lifelong return on investment, and to define that 21st century skill-set that will prepare our students to become the engaged citizens and leaders of their generation.
- Within the next 18 months, we believe the College will arrive at the successful completion of the largest capital campaign in Dickinson’s history. The fact that we will be able to meet our $150 million goal on time despite facing what many consider to be the second greatest financial crisis in our nation’s history is nothing short of remarkable and cause for great celebration. The “First in America” campaign has helped give us focus and confidence as we work to fulfill our aspirations for Dickinson. These funds have been dedicated to advance the College’s highest priorities—the Rector Science building which opened in the fall of 2008; student scholarships; and support for faculty excellence. Last spring, the Board of Trustees agreed that the campaign had proved so energizing that they voted to move immediately into a mini-campaign following the successful completion of the current campaign to, in their words, “optimize this historic moment.”
- As you all know, on November 18th, Dickinson launched a new Web site as part of a new comprehensive and integrated communications strategy. Vice President Balmer will talk with you in greater detail about this strategy in just a few moments. Increasingly, an institution’s Web presence is its most important face to the outside world. Dickinson needed a new look, a new way to present itself, that reflects the remarkable advances we have made in the past decade. The new site provides us with many and varied opportunities to highlight what we do best—prepare our students through a useful education in the liberal arts and sciences, for engaged lives of citizenship and leadership in the service of society. Even the Patriot News has applauded our new Web presence. In last weekend’s, “Cheers and Jeers” column, Dickinson received a “cheers” for its new Web site. “I’ve always thought [Dickinson] did a great job of highlighting all the wonderful events and projects at the school,” wrote the reporter, “and the new look only enhances it.” Now that’s the kind of response we like to hear!
- Finally, the College’s facilities and physical amenities are key components of our competitiveness. They make a material difference in whether students choose Dickinson over another institution and, equally important, whether they elect to stay with us the full four years. In May 2008, the Board of Trustees gave their support to a comprehensive master plan that lays out a long term vision for our campus to complement our curricular and extra-curricular programs. I realize that some of you wonder why we are moving forward with capital projects in the midst of an economic crisis. I assure you that the projects we are undertaking are of the highest priority and strategically designed to enhance the College’s competitive ability to attract the right students. Neglecting maintenance, moreover, is extremely short-sighted and more costly in the long run. Interim Vice President Ken Shultes is going to talk with you in a few moments about the master plan and how our current projects are designed to advance the vision laid out therein.
But before I ask Ken to come to the podium, let me conclude by thanking you for holding up so well under the strain of the economic crisis and for your willingness to implement the changes we must make on campus to respond to the fiscal challenges we face. These are uncertain times for all of us, and uncertainty and change do create discomfort. Change and discomfort, however, are not necessarily bad. They are, in fact, in many instances necessary, especially if significant advances are the ultimate objective. Indeed, I would argue that complacency and the status quo are the greater evil, as they temper ambition and aspiration. In my judgment, Dickinson College has never been so vibrant a place. Let us all work together to keep our edge, to maintain the vitality that characterizes our community, to lean into the positive aspects of change and discomfort. By so doing, I am absolutely confident we will solidify Dickinson’s position among the nation’s most prestigious liberal arts colleges.