Goucher College fell short of its projected net-tuition revenue goals this fiscal year by nearly $2 million, forcing senior staff to make tough budgetary and faculty cuts
in addition to searching for new sources of revenue.
This past academic year, the college contracted with a higher education consulting service called Noel-Levitz to help predict the number of incoming students for the 2013-2014 year. The final goal was 479 first year students and 54 transfer students. With an expected incoming class of 533, the college began to plan the budget incorporating the increased revenue from the incoming class. However enrollment was much lower than anticipated, leaving the college over 90 students short of its goal and with about $2.4 million extra in the budget that they could no longer fund.
The shortfalls in the net-tuition revenue goals, or the total gross tuition Goucher receives minus scholarship, grants and financial aid, has been an issue for private liberal arts colleges throughout the country. And, according to Vice President for Enrollment Management Michael O’Leary, even with the increases in tuition, the current economic situation has resulted in less tuition revenue for the college.
“In the fall of 2011, the average Goucher student provided the college just over $23,000 in net tuition revenue,” O’Leary said. “Fall 2013, it’s just over $18,000. So as prices go up, financial aid goes up. We don’t realize more net tuition revenue through a tuition increase.”
O’Leary explained that each year the college’s discount rate increases because more students need financial aid. In addition, people are questioning the value of going to and paying for a liberal arts college.
“People do not have the home equity they once had in their homes to borrow against and help fund an education,” he explained. “There is a vocal course of people throughout the country who are questioning the value of having a liberal arts education. There is increasing concern on my part, and many people like me, about families’ willingness to pay for private higher education versus their ability to pay. People, in the past, who have the ability to pay, pay.”
In order to offset the deficit, the Board of Trustees agreed to hold at a 5.25 percent spend rate from the college’s endowment, which as of September 30 was an estimated $206 million.
“To figure out how much we can spend each year, we look at the average value [of the endowment] over the last 12 calendar quarters,” Provost Marc Roy explained. “Once a year, in December, we set that value … and then we spend a percentage of that [as income].”
The endowment spend-rate also made it possible to provide faculty and staff with a 2 percent salary increase and 125 percent match to their retirement fund (TIAA-CREF). Before the recession, Goucher provided faculty and staff with a 200 percent match, meaning that with every personal contribution he or she made, the college would match it two-fold. But starting in the 2009-2010 fiscal year, the college lowered it to 50 percent and has slowly been able to raise the percentage in hopes of getting it back to 200 percent.
“Many of us came here because of ‘the match’ because it’s very attractive,” Chair of Faculty La Jerne Cornish said. “Even though some salaries are not as high as people would have liked for them to be. The match really brought folks here. So that’s a reduction in benefits. In the long run, it’s the hit that keeps on hitting.”
The 2 percent salary increase, as Vice President for Finance Tom Phizacklea explained, “is more of a cost of living adjustment, I would not say it’s a raise.” President Sanford Ungar explained that with the current financial situation, the college cannot afford to pay the faculty and staff more when there isn’t an increase in student population.
“These are tough times for higher education overall … I believe our salaries are below the peer average at the moment … and we are working very hard in trying to increase them,” Ungar said. “Last summer I appealed to the executive committee of the Board of Trustees, we got a temporary increase in the endowment spending rate so that we can have at least some salary increases for faculty and staff this year. … That involved my putting myself on the line and saying this is an extremely high priority and very important for us to do. So we did it. I spent my political capital where I thought it needed to be spent.”
The college and the employees will also have to pay more for health insurance since the premiums went up. The Provost said that this is the first time in several years that faculty and staff will have an increase. “[It’s] remarkable. You look out across the country, most health insurance providers … there is an annual increase,” Roy said. “It hit us this year… Every year we solicit bids from insurance companies for coverage … and the bids came in much higher. … That’s largely out of our control.”
With all these changes, however, some members of faculty are frustrated with their financial compensation.
“It costs to live here … These things all add up,” said tenured Physics and Astronomy associate professor, Ben Sugerman. “I think that I am underpaid by 10 to 20 thousand dollars … The College isn’t paying me what my market value is … Love of an institution doesn’t put food on my table. And there are only so many austerity measures you can take. And it’s safe for me to say that the faculty is losing patience with this issue because this is a persistent issue that has gone unchanged. It has a real cost where some of us are going to have to start saying, ‘Do I need to look elsewhere so that I can earn the amount of money that I need to provide for my family?’”
The Board made it clear that next year, the college will go down to its long-term endowment spend rate goal of 5 percent, which is also the industry standard. They also informed Provost Marc Roy that by fall semester 2015, the student-teacher ratio must raise from 8.8:1 to 10:1, the average ratio for Goucher’s peer institutions.
As a result, Roy will have to cut about 12 percent of the Full Time Equivalent (FTE) faculty. FTE is a way colleges and universities calculate how many full time, half-time, and part-time faculty they have, with those less than full time counted as 1/3. As of last fall, Goucher had 162 2/3 FTE. The cutbacks will cause the college to go down to 145 FTE. Roy and Cornish recognize that the half-time and part-time professors are especially vulnerable; therefore, more than 17 part-time and half-time professors will lose their jobs.
“It’s a horrible position for the college to be in, and specifically for employees,” Roy said. “At the beginning of the semester in a faculty meeting, I let the faculty know about this, which understandably was a very difficult message for them. I have subsequently met with the department chairs. … What I want is faculty input. I can’t and I won’t ask them to make the decision. But I want their input on the ways that will approach that. In ways that will minimize any harm to the quality of the academic program.”
The changes in faculty could affect class sizes and the amount of courses offered. Some departments will feel it more than others. The English department, in particular, has seven part-time and half-time faculty.
With these cutbacks looming in the near future, Professor Sugerman emphasized that senior staff should not take these cuts lightly.
“In total numbers, this is small – but these are real human beings, with real livelihoods and real commitment to the campus who are being asked to leave,” Sugerman said. “This is what upsets me. Somehow it feels better for all of us to say that we are going to eliminate part and half timers because then we say, ‘Oh we’re not going to eliminate full time faculty.’ No, these are real people, they are colleagues of mine, they are friends of mine that are going to be eliminated. It shouldn’t be any easier.“
The Board of Trustees also urged senior staff to find ways to be more efficient with the staff and find other sources of revenue.
Vice President for Finance Tom Phizacklea explained that the senior staff balanced the budget, therefore eliminating the deficit for this fiscal year. The cutbacks came from various places, including reducing facility and infrastructure improvements, lowering the utility budget and working with the college’s vendors to reduce their fees. The balanced budget will now go to the Board of Trustees for approval at their October 19 meeting.
On the staff side, the vice presidents decided not to fill every vacant staff position but rather distribute those responsibilities to various staff members in the department.
For example, in the student life division, Vice President and Dean of Students Bryan Coker asked each division to cut 10 percent from their operating budget this year. In addition, he decided not to fill the director of new student programs position, which Kia Kuresman held for five years before leaving this past July.
“Did we want to do that? No. Did we feel like we had to do that? Yes,” Coker expressed.
Although the restructuring will result in some title changes in various departments, they will not necessarily come with a salary increase. Coker explained that he did his best to work with Human Resources to “make some small salary adjustments.” But he reiterates that the salary increase was not generous.
In addition, the office of alumnae/i affairs experienced many changes when Janet Wiley, the former vice president for development and alumnae/i affairs, left last December. Margaret-Ann Radford-Wedemeyer, who was the associate vice president for development and alumnae/i affairs at the time, was the acting vice president until she was officially hired for the position in July. After a consulting firm encouraged the department to reorganize and be more data driven, Radford-Wedemeyer decided to fill two key vacant positions that focused on research and writing reports. She also eliminated two other positions, including her previous position of associate vice president. With the restructuring, the department is going through a transition year and the staff is feeling the effects of not filling the vacancies.
“Yes, it’s a lot harder to do the work without those positions,” she said. “Was it a good decision? It was a necessary decision, and it is going to force us to take a much more critical look at what’s effective and what isn’t.
Phizacklea explains that these staff changes alone won’t permanently fix the problem.
“Our revenues are not keeping pace with our expenses,” Phizacklea said. “What we have to do is find new sources of revenue and that’s challenging. … [We are trying to find] something that we can build a consistent revenue stream.“
One source of revenue that has been successful for the college is the limited residency masters programs and the college plans to add more over time. Developers have also approached the college about building office buildings on the edge of campus. Phizacklea explained that the Crossroads task force is continuing to focus on new forms of revenue.
With all the changes and cuts facing Goucher now and in the near future, Professor La Jerne Cornish wants faculty and staff to put Goucher’s current situation into perspective.
“At the end of the day, the economy tanked, enrollments declined, net tuition revenue declined, the discount rate increased and all of those things came together to create a perfect storm, if you will. We must figure out a way to ride through,” Cornish said. “These kinds of situations impact morale and we have to be mindful about why we are here. And to have an attitude of gratitude about the privilege we have in working at a place like Goucher. … We get weighed down by things that are sometimes beyond our control.”