Setting the Framework
I thank the members of the on-campus Budget Steering Committee for providing input into the priorities used to guide our deliberations. These priorities include:
- Protect and maintain resources and on-going initiatives.
-Protect the academic core. Maintain the quality of students’ educational experience.
-Continue the College’s commitment to need-blind admission and to meeting the full demonstrated financial need of its domestic students.
-Adequately support the programs begun or expanded as part of the strategic plan as well as select recently-established initiatives.
-Avoid deterioration of college buildings and equipment; ensure that programs are not languishing for lack of sufficient funds. - Invest in new initiatives distinctive and beneficial to Grinnell College and its mission and core values.
-Celebrate and strengthen the distinctive attributes of Grinnell College, with a special focus on the Grinnell College Young Innovator for Social Justice Prize and related academic and co-curricular programming. - Identify opportunities for savings.
-Review existing programs and processes for opportunities for reconfiguration, reallocation, reduction, or deletion where this is advisable and where this will not threaten the core mission of the college.
Overview of the FY 2012 budget
Budgets are shaped by our understanding of available resources (revenues) and needs (expenditures). In some cases, we have control over those revenues and expenditures, and in other cases we have little or no control (e.g., the cost of food or of energy, government regulations). The resulting budget reflects both a set of assumptions about factors that are outside of our direct control and a series of choices for factors that are directly controlled by the institution.
5% increase in the endowment’s contribution to the operating budget to $40.9 million:
In doing so, the College draws the maximum allowed by the rules governing the flow of endowment spending into the operating budget. Spending from the endowment is governed by three rules set by the Board of Trustees. First, the College may spend no more than 4% of the twelve-quarter moving average of the endowment’s value in any one year. Second, the College may not apply the entire 4% to the operating budget (in the past, this practice allowed us to build a reserve used to help build new buildings and save to pay down debt). Third, the amount of the endowment’s contribution to the operating budget may increase or decrease no more than 5%. This last measure helps us grow thoughtfully during times when the market is booming and helps protect the college program from sudden and dramatic drops during difficult economic times.
9.1% increase in financial aid to $39.3 million:
We anticipate the financial need of our students to remain at historically high levels. We base this amount on our projections that, on average, students will pay less than 40% of the tuition and fees. This increase in financial aid is greater than the increase in the endowment’s contribution to the operating budget and more than offsets the planned increase in tuition and fees.
6% increase in comprehensive fees:
For FY 2012, the comprehensive fee (tuition, room and board, fees) will increase 6% to $49,144. Comprehensive fee increases have been held to 3% for the previous three years. In setting our fees, we examine how our own fees compare with our peers’ to get a sense of how institutions similar to Grinnell are addressing this important source of operating revenues. In the past ten years, Grinnell’s comprehensive fee has been one of the lowest: 11th or 12th, out of the list of twelve, except for a single year when we rose to 10th place. Even with the 6% increase proposed for FY 2012, Grinnell’s comprehensive fee will rank no higher than 10th place on this year’s list.
8.2% reduction in unrestricted gifts (or, a $250,000 reduction):
In reducing this budget line, we seek to bring our expectations for revenues from unrestricted gifts to a more realistic number. The amount received for such gifts these past three fiscal years has been below budget. Clearly, this area will need attention as the College strives toward a stronger fiscal balance.
2% increase in salary and wage pool (an increase of approximately $1.0 million):
Salaries and benefits make up about two-thirds of the operating budget’s expenditures. As we weigh our revenues against all expenditures, setting the correct level for salaries has a significant impact on our budget. You may remember there are separate pools for faculty and staff members, and in the past, increases often differed between the two pools. In FY 2010, we held all salaries flat across the board, and for this year we were able to increase the salary pool by 2.5% for both faculty and staff. In determining increases in wages and salaries, we study data for our national and local labor markets. We also examine particular positions in cases where we have reason to think that compensation is below “market.” The FY 2012 wage pool will be augmented with additional funds for “market corrections” for faculty and staff.
4.1% increase in expenditures (approximately $3,350,000):
Overall, the allocation of resources followed the priorities set forth by the Budget Steering Committee. They included:
- Reinstating the regular cycle of facilities renovations and repairs to avoid an expensive build-up of deferred maintenance
Completing key elements of the strategic plan, including:
-Student health
-Library upgrades to research tools and a redesign of the listening and viewing room in conjunction with measures in support of the Creative Media Initiative
-Enhancing alumni engagement
-Strengthening student recruitment and retention, revising admission materials
-Completing important IT upgrades, some of which were significantly slowed in response to the economic downturn - The Grinnell College Young Innovator for Social Justice Prize
- The increase in salaries and benefits mentioned above as well as newly funded positions tied to the completion of the Strategic Plan
Deficit of approximately $1.0 million:
The budget for FY 2012 is unusual in that total expenditures/transfers exceed total revenues. The additional funds will be taken from the College Operating Reserve, which was established for helping Grinnell address the uncertainties of the current economic environment. We have already incorporated these expenditures in our early budget models and do not anticipate an unfunded balance in FY 2013.
