Budget suffers, expenses examined
Hillsdale College Board of Trustees to discuss 2010 projected budget in Naples, Fla. Tuesday
Jillian Melchior
Issue date: 2/12/09 Section: News
The Hillsdale College Board of Trustees could approve the preliminary 2010 budget at its meeting in Naples, Fla., on Tuesday. Administrators expect the board to decide on a final budget in May.
After the college endowment took a hit of about 20 percent when the economy plunged last fall, the college had to cut costs this financial year and decrease the proposed budget for next year, said Ken Cole, the college's chief administrative officer, treasurer and chief financial officer.
"We're in such different waters," Cole said. "The economy is affecting everything. I've never seen our endowment drop so quickly in such a short amount of time."
The cuts will affect each department differently, though it will likely hit departments requiring equipment harder than others.
Provost Robert Blackstock said the college is being careful with the budget to keep the harsh economy from harming the college for years to come.
"This could spiral the college into decades of ill health if it's not handled properly," Blackstock said. "We have to keep the institution healthy, and everyone has cooperated."
2010 Budget
The proposed budget for the next financial year, which runs from July 2009 - July 2010, works with about $5.5 million less than this year's budget did.
Cole said administrators developed the budget with two priorities: They do not want to raise tuition or room and board for students, especially because many parents are already under financial strain from the bad economy; and they do not want to lay off any employees.
Cole said the 2010 budget would also include an equal, if not greater, amount of financial aid as was provided in 2009.
Next Tuesday, the Board of Trustees will decide whether those goals will stand. In the past, the board has often taken the president and college managements' recommendation.
The proposed 2010 budget makes cuts elsewhere.
It includes no salary increases and puts a freeze on hiring. Those who retired or left would not be replaced. The college would also reduce travel and professional development.
Furthermore, Cole said, the college would pay some professor salaries from the restricted fund - or from money donated for a specifically designated purpose - instead of from the general fund. That move helped the college reach its 10 percent reduction goal.
Because Hillsdale College does not take government money, the details of its budget are not public, and administrators would not yet share the exact breakdown of the proposed budget.
But in the current, 2009 financial year, the college's overall budget was $79,439,288. The unrestricted fund accounted for $54,598,259 of those dollars. The proposed 2010 budget would be $74,554,114, with $49,088,903 from the unrestricted fund.
The budget process
The budget was compiled after a lengthy process involving discussion within all departments that began in October. After the endowment's plunge, Cole said, administrators e-mailed all departments.
"We immediately could see we had some reductions happening in the endowment, and we needed reductions in the budget," Cole said.
Most departments submitted their proposed budgets in December, though some submitted theirs in January.
The budget was reviewed by the college's senior staff, which Cole compared to a presidential cabinet. It includes 14 administrators, including Cole, Blackstock and President Larry Arnn.
In the beginning of January, the senior staff members met for two days and compiled a budget, which they developed throughout January. They have sent the proposed numbers to the Board of Trustees to review before the meeting next week. The Board of Trustees will decide about the preliminary budget and finalize it at their meeting in May.
"At this point, we've put together a very solid budget," Cole said. "We're not anticipating many changes before May, but if we find other ways to be efficient with funds, we will reduce it more. There's more stress involved in it this year, but it's not so stressful that we can't handle it."
Finishing the current year
The college has also had to cut back this year in an effort to balance the projected unrestricted budget despite the endowment's decrease, and so far, it's on track, Cole said. The restricted budget will either have a surplus or a deficit, but it's too early to tell.
Immediately after the recession began, the administration asked departments to cut any unnecessary spending. The college curbed equipment purchases and froze positions. It will not replace the 8-10 employees who are leaving or retiring.
Mickey Craig, dean of social sciences, said the cutbacks have been tranquil even though some professors have had to forgo professional development conferences, end journal subscriptions and cancel travel plans that had not yet been paid for or committed to.
Craig said in his 23 years teaching at Hillsdale College, he has never been asked to exercise such budgetary restraint, but faculty have met the challenge without conflict.
"Voluntary restraint seems to have met the immediate problem," Craig said. "I expected a lot more whining about it than there has been. Everybody pulled together. There was a common sort of purpose and sacrifice. There was no pettiness."
Despite the whittling, the college managed to get by without raising tuition between semesters. The college has not raised cost between semesters in the 27 years Cole has worked here.
"We're holding our own quite well," Cole said.
Effects within departments
Because the exact details of the budget are not public, percentage decreases are unclear. Several departments said they were originally asked to cut between 10 and 12 percent and later asked to cut 15 percent from their total budgets. However, smaller departments reported less change.
That decrease will likely play out mostly in less travel, professional development for professors and purchase of equipment.
Several department heads said the budget cuts have been handled gracefully.
James Holleman, chairman and associate professor of music, said Hillsdale has done a better job of communicating with college employees and consulting them about where to cut money than many colleges.
"I like that we're being asked where to make cuts," he said. "I'm happy to be at a small institution. We who run programs are being asked where we can cut without hurting students."
There will still be effects, though. The music department may not be able to pay its half for the biennial musical, which could mean canceling it altogether (see Feb. 5 Collegian article).
The theater department will no longer consider taking the Yeats plays performed last year to Scotland for a theater festival, said George Angell, chair of theater and speech. It will also forgo equipment purchases for next year.
The science departments will continue running the same labs as always, said Chris Van Orman, dean of natural sciences.
"The only concern we might have is we had a piece of equipment that went down or quit working," Van Orman said. "Many of the things we have are older pieces of equipment, and it's tough to find replacement parts. If one of them went down, we'd have to replace it."
Craig said the social sciences departments had originally planned to hire a new economist and a new historian, but the search has been put on hold. Some classes could be bigger next year, depending on enrollment, Craig said.
The classics department's professors already teach more than a full load of classes, and no one else will be hired, said Chairman David Jones. But he said he hadn't had to cut anything out of the budget so far.
"We're just a tiny little department moseying along," he said. "Our budget is so small. There's been nothing untoward or hurtful to us in the least."
No department said the budget cuts would be unmanageable or would affect the quality of education. Several employees said they're willing to meet the challenges wrought by the bad economy because the administration is doing its best not to lay off any employees.
"I think part of it is just the state we live in, Michigan, seeing the unemployment rate in double digits, so many people losing their jobs," Van Orman said. "People look at that and say, 'We have to be careful, make some cuts. But we won't lose our jobs.' They look at it more from the big picture side of it."
After the college endowment took a hit of about 20 percent when the economy plunged last fall, the college had to cut costs this financial year and decrease the proposed budget for next year, said Ken Cole, the college's chief administrative officer, treasurer and chief financial officer.
"We're in such different waters," Cole said. "The economy is affecting everything. I've never seen our endowment drop so quickly in such a short amount of time."
The cuts will affect each department differently, though it will likely hit departments requiring equipment harder than others.
Provost Robert Blackstock said the college is being careful with the budget to keep the harsh economy from harming the college for years to come.
"This could spiral the college into decades of ill health if it's not handled properly," Blackstock said. "We have to keep the institution healthy, and everyone has cooperated."
2010 Budget
The proposed budget for the next financial year, which runs from July 2009 - July 2010, works with about $5.5 million less than this year's budget did.
Cole said administrators developed the budget with two priorities: They do not want to raise tuition or room and board for students, especially because many parents are already under financial strain from the bad economy; and they do not want to lay off any employees.
Cole said the 2010 budget would also include an equal, if not greater, amount of financial aid as was provided in 2009.
Next Tuesday, the Board of Trustees will decide whether those goals will stand. In the past, the board has often taken the president and college managements' recommendation.
The proposed 2010 budget makes cuts elsewhere.
It includes no salary increases and puts a freeze on hiring. Those who retired or left would not be replaced. The college would also reduce travel and professional development.
Furthermore, Cole said, the college would pay some professor salaries from the restricted fund - or from money donated for a specifically designated purpose - instead of from the general fund. That move helped the college reach its 10 percent reduction goal.
Because Hillsdale College does not take government money, the details of its budget are not public, and administrators would not yet share the exact breakdown of the proposed budget.
But in the current, 2009 financial year, the college's overall budget was $79,439,288. The unrestricted fund accounted for $54,598,259 of those dollars. The proposed 2010 budget would be $74,554,114, with $49,088,903 from the unrestricted fund.
The budget process
The budget was compiled after a lengthy process involving discussion within all departments that began in October. After the endowment's plunge, Cole said, administrators e-mailed all departments.
"We immediately could see we had some reductions happening in the endowment, and we needed reductions in the budget," Cole said.
Most departments submitted their proposed budgets in December, though some submitted theirs in January.
The budget was reviewed by the college's senior staff, which Cole compared to a presidential cabinet. It includes 14 administrators, including Cole, Blackstock and President Larry Arnn.
In the beginning of January, the senior staff members met for two days and compiled a budget, which they developed throughout January. They have sent the proposed numbers to the Board of Trustees to review before the meeting next week. The Board of Trustees will decide about the preliminary budget and finalize it at their meeting in May.
"At this point, we've put together a very solid budget," Cole said. "We're not anticipating many changes before May, but if we find other ways to be efficient with funds, we will reduce it more. There's more stress involved in it this year, but it's not so stressful that we can't handle it."
Finishing the current year
The college has also had to cut back this year in an effort to balance the projected unrestricted budget despite the endowment's decrease, and so far, it's on track, Cole said. The restricted budget will either have a surplus or a deficit, but it's too early to tell.
Immediately after the recession began, the administration asked departments to cut any unnecessary spending. The college curbed equipment purchases and froze positions. It will not replace the 8-10 employees who are leaving or retiring.
Mickey Craig, dean of social sciences, said the cutbacks have been tranquil even though some professors have had to forgo professional development conferences, end journal subscriptions and cancel travel plans that had not yet been paid for or committed to.
Craig said in his 23 years teaching at Hillsdale College, he has never been asked to exercise such budgetary restraint, but faculty have met the challenge without conflict.
"Voluntary restraint seems to have met the immediate problem," Craig said. "I expected a lot more whining about it than there has been. Everybody pulled together. There was a common sort of purpose and sacrifice. There was no pettiness."
Despite the whittling, the college managed to get by without raising tuition between semesters. The college has not raised cost between semesters in the 27 years Cole has worked here.
"We're holding our own quite well," Cole said.
Effects within departments
Because the exact details of the budget are not public, percentage decreases are unclear. Several departments said they were originally asked to cut between 10 and 12 percent and later asked to cut 15 percent from their total budgets. However, smaller departments reported less change.
That decrease will likely play out mostly in less travel, professional development for professors and purchase of equipment.
Several department heads said the budget cuts have been handled gracefully.
James Holleman, chairman and associate professor of music, said Hillsdale has done a better job of communicating with college employees and consulting them about where to cut money than many colleges.
"I like that we're being asked where to make cuts," he said. "I'm happy to be at a small institution. We who run programs are being asked where we can cut without hurting students."
There will still be effects, though. The music department may not be able to pay its half for the biennial musical, which could mean canceling it altogether (see Feb. 5 Collegian article).
The theater department will no longer consider taking the Yeats plays performed last year to Scotland for a theater festival, said George Angell, chair of theater and speech. It will also forgo equipment purchases for next year.
The science departments will continue running the same labs as always, said Chris Van Orman, dean of natural sciences.
"The only concern we might have is we had a piece of equipment that went down or quit working," Van Orman said. "Many of the things we have are older pieces of equipment, and it's tough to find replacement parts. If one of them went down, we'd have to replace it."
Craig said the social sciences departments had originally planned to hire a new economist and a new historian, but the search has been put on hold. Some classes could be bigger next year, depending on enrollment, Craig said.
The classics department's professors already teach more than a full load of classes, and no one else will be hired, said Chairman David Jones. But he said he hadn't had to cut anything out of the budget so far.
"We're just a tiny little department moseying along," he said. "Our budget is so small. There's been nothing untoward or hurtful to us in the least."
No department said the budget cuts would be unmanageable or would affect the quality of education. Several employees said they're willing to meet the challenges wrought by the bad economy because the administration is doing its best not to lay off any employees.
"I think part of it is just the state we live in, Michigan, seeing the unemployment rate in double digits, so many people losing their jobs," Van Orman said. "People look at that and say, 'We have to be careful, make some cuts. But we won't lose our jobs.' They look at it more from the big picture side of it."
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