The following is a message from President Rebecca Chopp to the Colgate community:
As I meet and speak with Colgate students, faculty and staff, it is clear that the recent credit crisis and its impact on the financial markets and economies around the globe is a topic of concern to us all.
I am heartened by how many of you have asked me how our endowment is faring, how our alumni are doing in this situation, and how you can help.
Colgate, as we are all aware, has been and will continue to be impacted by the multitude of challenges present in the national and global economies, and I write to provide some early insights about how this significant financial downturn may affect our campus.
While we don’t yet know the full measure of its impact I want to begin a collaborative approach that will ensure Colgate continues to thrive as a leading liberal arts institution.
First and foremost, we should recognize that Colgate faces this uncertain economic time from a position of financial and institutional strength. Generous gifts to endowment and operations in recent years have provided us with a solid foundation.
Our community’s long history of strong and collaborative fiscal management is a tremendous asset, one that will be especially important as we navigate through this turbulent time. Our strategic plan includes many initiatives to support our robust academic, residential and athletic programs and provides a framework that keeps us focused on what we need to achieve to sustain the terrific momentum we have established.
Ultimately, we confront this crisis with confidence that we will continue our trajectory because of our most enduring asset – the excellence of our faculty, staff, students, alumni, and families.
As we track this issue and adapt to the situation at hand, each of us will have a role to play in developing an effective response. We will need to work together and be flexible as it may not be clear for some time exactly how the university will be affected.
What is clear is that each of Colgate’s principal sources of operating budget revenue (tuition, room and board, endowment support, and annual fund gifts) are under pressure and those resources are less predictable than in years past.
Similar to our peer colleges and universities, our endowment has lost significant market value throughout 2008, and most acutely over the past month. A lower endowment market value will require Colgate to, at the very least, substantially reduce the annual growth rate in endowment spending beginning in 2009-10.
We also anticipate that while Colgate donors will remain quite supportive of the university, contributions to the university may be more tempered.
Perhaps most importantly, we are very concerned about a broad economic recession and how such an environment might impact the financial circumstances of Colgate students and their families.
While this will place additional pressure on the university’s financial aid budget, we remain committed to meet the demonstrated need of our students from the time they are admitted to the time they graduate. We must ensure that our enrolled students have the opportunity to continue their studies at Colgate based on their ability, not their ability to pay.
In terms of where we are able to look for savings, Colgate has three main controllable areas of spending – departmental operating budgets, allocations to capital projects reserves, and compensation. Moving forward, we will make every effort to accomplish the reductions through operating budgets and allocations to capital projects reserves.
This effort will have shorter and longer term components. Firstly, we need to control our expenditures in the current year so that we can be prepared to address emerging financial aid needs, or shortfalls in annual giving. Secondly, we need to prepare the university for what may be an extended period of slower revenue growth by planning for a similar slowing in our expenditures.
I trust that we, as a campus community, will join in this important collaborative effort.
As a first step, I am asking that all departments and divisions work to identify savings in current year budgets so that Colgate has the flexibility to address the potential of emerging financial aid needs of our students in the current academic year. Ideas for savings and realized savings should be communicated to your dean or vice president.
I have also asked Provost & Dean of Faculty Lyle Roelofs, Vice President for Finance and Administration David Hale, and their respective staffs to collaborate regularly with the on-campus Budget Committee as work on the 2009-10 operating budget begins in earnest. We plan to update the community again later this fall, likely with more specific strategies to address our significant budget pressures.
While we are fully confident that these fiscal challenges are manageable, we also anticipate that we will be asking deans, vice presidents and their respective directors and budget managers to identify potential savings for next year’s budgets.
Undoubtedly, these are challenging and uncertain economic times and each of us is going to have to make some tough decisions and sacrifices to ensure that we are able to address the challenges presented by this economic downturn. While I am uncertain of what the global economic future holds, I am confident that we have the practices and people necessary to lead Colgate through this difficult time.
We will keep you apprised throughout this budget process and I thank you for all that you do on behalf of the university and our students.