To: Grinnell College Community

From: The Budget Steering Committee:
Jonathan Brand, David Clay, Tom Crady,
Bob Grey, John Kalkbrenner, Mickey Munley,
Jack Mutti, Russell Osgood, Todd Reding,
Helen Scott, Paula Smith, Jim Swartz,
Frank Thomas, and Karen Voss.

Date: November 16, 2001

Re: Preparation of Next Year's Budget (FY 2003)

The Budget Steering Committee met on Wednesday to discuss next year's budget (FY 2003). There was an optimistic and constructive tone as representatives of every budget area of the College gathered to begin the process. We expressed multiple viewpoints and had an open discussion about making trade-offs to further institutional goals and ensuring wider college participation in the budget process. We reviewed the larger budget matters on which the Board focuses: revenues such as comprehensive fees, the endowment contribution to the base budget, gifts and grants; and expenses such as financial aid, salary pools, and base operating costs. In addition, we reviewed the contours of next year's budget in light of budget requests submitted by all areas of the College.

The financial environment has changed post-September 11th in ways that directly affect Grinnell's budget. It is very likely that our students will have greater financial need, which necessarily decreases available revenue for other areas of the College. In addition, we currently face significant fundraising challenges. Many people's giving priorities have shifted and it is probable that Grinnell will have difficulty meeting its fundraising targets for unrestricted giving. In addition, while Grinnell's endowment has not decreased, it has also not increased appreciably in the last three years. None of us can predict how the endowment will perform in the future. In sum, the College is facing serious challenges on the revenue side of the budget.

As in any year, Grinnell cannot fund all budget requests. Yet, we do not want to propose an across-the-board cut to bring the budget in line. This might foster an environment that fails to encourage innovative and more flexible thinking. As a result, during our meeting, we discussed the College's most strategic priorities as a way of guiding our budget recommendations. We confirmed that our two highest priorities are meeting the full demonstrated need of students and ensuring that faculty and staff compensation enables us to attract and retain the best. We also discussed other strategic priorities such as student-faculty research and larger efforts at ensuring that people know about Grinnell nationally and internationally. We are preparing for a significant fundraising effort, which will require increased funding for development efforts. Finally, there are ongoing costs related to the new facilities approved by the Board of Trustees. The Committee will consider these and other priorities as it develops its budget recommendations.

With that in mind, we turned to the budget requests and discussed how to proceed from this point in developing next year's budget. If all budget requests were funded, we could face a $2 to $3 million deficit. We reached a consensus that people overseeing budgets should resubmit their budget requests by Friday, November 30th anticipating, in the aggregate, a zero percent increase over this year's budget in the non-salary operational expenditures. It is not yet clear what additional resources, if any, will be available after funding our top priorities, discussed above. Therefore, we invite people to outline those strategic initiatives in their area, together with their projected costs, that they would like to see funded if resources permit. It would be great to learn that some budgets can be effectively reduced below this year's level in order to focus resources on the College's higher priorities.

Finally, we agreed on the importance of promoting a wider discussion regarding the budget. Individuals developing budgets are encouraged to engage in conversation with those to whom they report as a way of ensuring that their budget requests are in line with the parameters of next year's budget. In addition, we plan to schedule a larger open forum in the next few weeks during which everyone can discuss the development of next year's budget.

Thank you for participating in the budget process.