Friday, November 16, 2012
Dear Fellow Alumni,
Please allow us to (re)introduce ourselves and explain why we are sending this message about the future of Grinnell’s admission policies. We want to convey to you the information you need to completely understand the issues that face the college when it comes to continuing our need-blind, full need coverage admission policy. President Raynard Kington has asked for alumni input on this very important issue by the end of November. In December, President Kington will be formulating recommendations for the Board of Directors’ February meeting. At that meeting, the Board will decide how our current admission policies must change to become financially sustainable into the future. Alumni input, by the end of November, is vital. Please take a moment to read this letter and access the links provided for more information. We encourage you to have your say about the future of Grinnell.
As Alumni Council members, we advocate for the Alumni Association and represent its interests to the College. All of you are members of the Alumni Association because you either received a Grinnell degree or accrued a minimum of sixteen credit hours at Grinnell. We do our best to represent you and help create strong alumni connections with each other and with the College.
President Kington has initiated a broad discussion about Grinnell's financial future, specifically as it relates to our admission policies. The College is currently struggling with how best to balance a need-blind, meet full-need admission policy with the responsibility to manage our finances in a way that will preserve the Grinnell experience for future students. The recommendations that President Kington will make to the Board of Trustees as well as their ultimate decision will impact Grinnell for years to come.
Grinnell is one of only 45 institutions that pairs need-blind admissions with a policy of meeting 100% of demonstrated student need. On average, our students have more need than those at these 44 peer institutions. We have the second-highest percentage of students with significant need (behind Vassar), and we provide the second largest average tuition discount to our students (behind Harvard). With returns on our endowment declining due to the sluggish economy and the number of high-need students growing for the same reason, our ability to afford our current need-blind, meet full-need model is at risk.
The Alumni Council values and supports the College’s current policy on need-blind admission and meeting 100% of demonstrated student need. We hope for both policies to be continued to the extent that funding allows. However, after meeting on campus in October with key members of the administration, we recognize that despite Grinnell's sizable endowment the College can no longer continue to meet 100% of every student's demonstrated financial need without building an operating deficit that would jeopardize the College’s ability to provide an outstanding accessible education to future generations.
The College has been very transparent about how they are working to achieve fiscal sustainability. Details, including an online video with additional details about the financial challenges Grinnell is facing and the enrollment levers Grinnell can “pull” to address them is available at Grinnell's Future. Here are some broad budget highlights:
- There are three revenue streams in the budget: net student revenues, fundraising gifts and grants, and endowment spending. The College currently has a $98 million operating budget. The revenues that support this budget come from the following sources: 53% from the endowment, 38% from student revenues, 6% from gifts and grants (including alumni giving), and 3% from other sources.
- The Board of Trustees allots 4% of our endowment, based on a 12 quarter rolling average of the endowment balance, to help with our operating expenses. This equates to roughly $52 million in the current fiscal year. A sustainable withdrawal rate from any endowment is generally considered to be between 4% and 5%.
- The College devotes a full 35% of its total annual spending to institutional grant aid for students.
- Only 10% of students pay the full comprehensive fee at Grinnell, while 25% of students have a very high level of financial need. We have a tuition “discount rate” of just over 60%, meaning that the average Grinnell student pays slightly less than 40% of the list price for tuition and fees.
- This tuition discount rate has been increasing at roughly 2 percentage points per year. Grinnell has two innovative programs that are rare among our peer institutions, but which add to the cost of this increase: a $3,000 cap on the total amount of a student’s aid package that can come in the form of loans every year (known as “the loan cap”) and a commitment to index merit aid, meaning that if the price of attending Grinnell goes up, the College promises to increase a student’s merit award (distinct from need-based awards) by the same amount.
- The current model needs to be changed to remain sustainable. Grinnell is looking at a significant number of strategies to build a sustainable model and is cutting expenses wherever possible. Strategies include: looking for additional spending cuts and economies of scale such as joining institutional purchasing consortia, increasing the loan cap, expanding the merit aid program (as an enrollment incentive to students who could contribute more toward the comprehensive fees), increasing the number of Iowa students (who require a lower discount rate), eliminating scholarship indexing, increasing early decision admissions, implementing financial aid policy changes, increasing international students with an ability to pay, becoming need aware in final stages of reading process, and other options.
There is no quick fix. Because the shortfall is structural, cutting expenses one time will not resolve the continuing problem that costs are growing and revenues are not keeping pace. Drawing down the endowment is not an option as long as we are not replenishing it through philanthropy and other revenue streams. Given current market conditions, it is also unwise to count on improved endowment performance: Moody’s, among other agencies and reporters, have noted that investment officers at many major colleges and universities nationally are revising their expected returns downward. Harvard, for example, is projecting a .05% negative return this year. Grinnell’s analysis assumes an endowment growth rate of 4%. This is equal to our withdrawal rate, which, when combined with projected inflation rates of 3%, translates into zero endowment growth or more likely gradual endowment erosion in the face of increasing need from families, among other demands on our available funds.
This is an informational letter, not a solicitation for gifts but, frankly, improved alumni giving can be a significant part of the solution. We are among the bottom 10 institutions in terms of alumni giving per enrolled student compared to our 45 peers who are also both need-blind and cover full need. As a point of comparison, alumni gave a total of $5.6 million to Grinnell last fiscal year, while Carleton College's alumni gave nearly 3 times as much, at $15.4 million. Carleton also exceeded 50% alumni participation for the 16th year in a row while only 32.3% of Grinnellians made gifts in the 2011-12 year. If we could match Carleton’s level of giving, that additional $10 million would significantly strengthen Grinnell’s ability to uphold both our academic excellence and our commitment to access. If you are moved to increase your year-end contribution to the College, it would be greatly appreciated.
The College recognizes that it must do more to engage us so that we will consider increasing our philanthropy to Grinnell. President Kington is working diligently to improve relations and communications with alumni. In the meantime, your input is urgently needed to help inform the discussion of Grinnell’s near-term options for a solution.
Again, key decisions will be made in the February Board meeting. President Kington is looking for input by the end of November. So, please review the materials at the links above and express your opinion. All points of view are welcome. To make your voice heard, you can simply send an email to firstname.lastname@example.org.
Thank you for taking the time to read this letter. Feel free to contact any of us on the Alumni Council if you have questions, comments, or concerns.
The Alumni Council: Matthew E. Welch '96, President; P. Carter Newton '77, Past President; Nancy Schmulbach Maly '61, President Elect; Carl Adkins '59; Mary Brooner '71; Lorrie Buchanan Alves '73; Alexia Brue '95; James Decker '75; Joan Vander Naald Egenes '58; Catherine Gillis '80; Susan Henken-Thielen '80; Mark Henry '05; David Holmberg '81; William Ingram '53; Theretha Nelson-Littlejohn '70; Barbara Hunt Moore '65; Angela Onwuachi-Willig '94; Renee Bourgeois Parsons '96; Jonathan Richardson '10; Rania Robb '03; Pamela Dryden Rogacki '64; Saurabh Saraf '05; W. Ed Senn '79; Kirpal Singh '97; Lara Szent-Gyorgyi '89; and Sherman Willis '01.