Have a question of your own? Please ask. We will continually update this FAQ as the conversation progresses.
- I hear you're eliminating need-blind admission. This is a core value!
- Why are we just hearing about this now? Why the rush to action? We need more time!
- How did we get into this situation?
- Grinnell has a big endowment. You should draw it down to keep Grinnell affordable, instead of hoarding it.
- Why don’t you spend down the College's operating reserves and the Strategic Funds?
- It's always easier to talk about wanting more money: you need to make cuts.
- The College has an almost $100M annual budget. Where is all that money going?
- The College has too many highly-paid administrators and staff.
- Eliminate the Grinnell Prize. How can you talk about social justice if you're cutting need-blind admission?
- The College needs to raise more money from alumni: you're talking about changes to financial aid, but what about fundraising?
- In the Strategic Planning process I've heard you talking about increasing support for innovation, possibly through a new Innovation Fund. How can you think about spending money on innovation at a time like this?
- How are other colleges dealing with these issues?
- Couldn't you just keep need-blind but not commit to meeting 100% of need?
- Are international students admitted need-blind, as well?
I hear you're eliminating need-blind admission. This is a core value!
The goal of this community conversation is to preserve and extend our core values, not eliminate them. But those core values—educational excellence, diversity and social commitment, including access—cost money. Money to hire and retain the best faculty and staff. Money to recruit and nurture a diverse community. And money to keep Grinnell financially accessible to students. If we continue as we are, our modeling shows that the costs of operations are likely to outstrip Grinnell’s revenues. Rather than waiting until the crisis point, President Kington began setting out the challenges soon after he arrived in 2011, through his Choosing Grinnell’s Future remarks. This fall begins the next phase of this community-wide conversation, toward the goal of choosing the best strategies to sustain our core values.
Why are we just hearing about this now? Why the rush to action? We need more time!
The issues are not new. They are the same ones President Kington set out for the community soon after he arrived in 2011, through his Choosing Grinnell's Future remarks. In 2011 and 2012 he gave versions of this speech on campus and to alumni in 32 cities across the world, introducing Grinnellians to the challenges and calling on all of us to work together in response. He also published his remarks in The Grinnell Magazine and on the College's website. What is happening today is just the next phase of this ongoing two-year discussion. We want to ensure that the community has information about the structural imbalance within the College's budget, so we can collectively assess and prioritize possible solutions. Grinnell as a community needs to understand our tradeoffs and then choose to protect our values. As President Kington explained during his October 2012 conversation with Grinnell's alumni volunteers, Grinnell's prudent financial management enabled us to avoid a difficult budget conversation during the 2008 economic downturn, when other institutions were having to slash costs and lay off staff. But the discussion was only delayed: in the absence of a strong economic recovery, we believe it is now the necessary and responsible thing to talk as a community about our values and our financial future.
How did we get into this situation?
Every college makes choices between desired goods every day. We strive for excellence, but we also work for diversity. We aim to stay at the forefront of great teaching, but we also want to stay affordable. Some of what Grinnell is experiencing is this natural tension, inherent in any organization holding itself to high standards of social commitment. In recent years these tensions have been brought to the fore by important changes in the global economy:
- Sluggish markets: Grinnell's endowment is the source of more than half of our $100M annual operating budget. So changes in the financial markets directly affect how much money we have to spend on scholarships and teaching and other core functions.
- Increased demand for financial aid: Students and families are contending with the tough economy and a stalled job market. More students are coming into the application with need, and the amount of their need is steadily growing. As a need-blind institution that also meets 100% of demonstrated need, Grinnell is committed to providing every additional dollar they require.
- Inflation: Education is labor-intensive. A great education requires a highly-trained and committed faculty and staff. And as the cost of living goes up, so does the cost of maintaining academic excellence in our teaching and programs.
For many years, during the boom economy, Grinnell's revenues did stay ahead of our expenses, and the College increasingly relied on these funds to pay its bills. More than 50% of our operating budget now comes from the endowment, likely a greater share than at most other liberal arts colleges. Relatively little attention was given to cultivating alternate streams of support, including tuition revenues and alumni giving. Over time, Grinnell's growing reliance on the endowment has led us to the point at which our ability to "afford our values" depends too heavily on the markets. As astute and prudent as our investment managers are, this can never be the most reliable way to support our principles. Unless we do something to increase and diversify our revenue streams, the models indicate that sometime in the near term Grinnell is likely to incur an operating deficit, which could then continue to grow. Fortunately, we have time to come up with a plan... and a community that is passionate about keeping a high-quality, relevant Grinnell education accessible.
Grinnell has a big endowment. You should draw it down to keep Grinnell affordable, instead of hoarding it.
It is true that Grinnell is fortunate to have a large endowment, at least relative to most other liberal arts colleges (Harvard's endowment, by comparison, is 30 times bigger than ours). That endowment is the fruit of the generosity and painstaking financial management of generations of alumni, Trustees, and staff. But endowments are often misunderstood: they are not like a savings account that can be drawn down to zero. They are a long-term investment for the future: the goal is to steadily grow the core value, and draw from the interest at a sustainable level for ongoing support.
Endowments have to be carefully managed: If we don't cover both the payout and inflation, then we erode the principal. That leaves fewer resources for future generations.
Here's how the process works: Grinnell takes the average of the endowment's market value over the last 12 financial quarters (three calendar years) and moves 4% of that amount into its budget as revenue. This policy, which is an industry best practice, enables the College to sustain the endowment so that it will keep generating income every year into the future. In theory we could draw these funds at a higher rate, like 4.5 or 5%. This would give us more money now, but would erode the principal faster than investment returns can replenish it. Over time, the principal would decline. We would be robbing future generations to pay our bills today, without resolving our underlying structural problem. This fall's community discussion is designed to solve the problem instead of violating our commitment to intergenerational equity.
Why don’t you spend down the College's operating reserves and the Strategic Fund?
The amount of money in the College's reserves would be insufficient to address long-term structural deficits. The College also counts on operating reserves as insurance against needs that we can't predict in their specifics, but which we know will come up eventually: for example, a new boiler for the campus heating plant, or higher-than-anticipated energy costs. Similarly, the Strategic Fund is a resource the College can draw on to continually strengthen and improve our core academic mission; create a better College website to attract applicants and engage alumni and campus, etc.
Building your reserves is like putting money in your savings account: you wouldn't want to run your balance down to zero for a new roof on the house, only to have your car's transmission die the next day. Similarly, emptying the College's reserves might buy a year or two before we had to face our problems, but in the process would leave us exposed to more risk.
It's always easier to talk about wanting more money: you need to make cuts.
When the global fiscal crisis began, staff and faculty worked together to find new ways to economize, streamline, and reduce costs. Those efforts continue, and we invite your suggestions at firstname.lastname@example.org.
But no matter how frugal we are, providing a high-quality educational experience will be expensive. The core elements of Grinnell's distinctive education, including a highly individualized curriculum and mentored learning experiences, require the intensive commitment of highly-trained and dedicated faculty and staff. So do programs in experiential and service learning, career development and other areas that Grinnell students and their families count as essential. As at any college, a majority of our costs are in labor.
It is also important to recognize that, while leanness is important, a one-time fixed cut of any amount cannot protect us against a shortfall that will grow every year in pace with inflation and the cost of living—not to mention the emergence of new needs and opportunities. Forty years ago Grinnell had no instruction in Arabic language and culture, for example, disciplines that are now essential for helping students understand geopolitics and world cultural pathways. On top of this, and perhaps most crucially, we are seeing a sustained pattern of increasing student financial need, which is outpacing any growth in revenue.
Cuts are important, but not the basis for a solution: As President Kington has noted, we want to trim the fat, but never so far that we cut into the "muscle and bone," harming our ability to provide the very experience we treasure.
The College has an almost $100M annual budget. Where is all that money going?
It goes to our core mission: An excellent, accessible liberal arts education. Most of the costs for this kind and quality of education are in labor for faculty and staff: highly-trained and committed educators and administrators who over four short years can mentor a student for an entire lifetime of success. Grinnell is frequently recognized nationally for our teaching excellence.
We are also proud of our reputation for outstanding commitment to access. And indeed the next largest College expense after salaries and benefits is financial aid. These values come at a cost, which Grinnell is proud to pay. The current conversation is intended to make sure we can continue to pay it for the next generation... and the next after that.
The College has too many highly-paid administrators and staff.
Grinnell runs on a leadership structure that compares favorably with our peers'. A recent analysis of Grinnell and 12 peer institutions revealed that the College is right in the middle of the group in terms of number of executive- and management-level staff per student, and close to the middle in the ratio of all staff to students.
Indeed, in some areas of Grinnell's operations, such as Development and Alumni Relations, Admission and Communications, President Kington believes the College has been understaffed to our collective detriment. He is investing in these areas because over time they can generate revenues that will pave a sustainable path to excellence and access.
Eliminate the Grinnell Prize. How can you talk about social justice if you're cutting need-blind admission?
Every year the Grinnell Prize brings to campus innovative leaders in social justice who engage students by leading seminars, mentoring, hosting informal discussions and providing internships with their organizations around the world. Many Grinnellians also take pride in the Prize as a public sign of the College's commitment to social justice, making the Prize an important tool for engaging alums and earning their philanthropic support. These benefits would all be lost if the Prize were eliminated.
The Prize budget—$100,000 per recipient, plus program costs—is a small fraction of the College's annual budget. And a one-time cut of any size won't address a deficit that grows every year due to inflation, growth in programs, and increasing financial need. However, recognizing that savings of all sizes matter, President Kington has reduced the College's financial commitment to the Prize by $100,000, limiting the Prize to a maximum of two awards per year rather than the three awarded in 2011 or 2012. The College will continue to assess our ability to support the Prize program in light of our evolving financial position.
The College needs to raise more money from alumni: you're talking about changes to financial aid, but what about fundraising?
Donor support is an essential part of the solution. The schools around the country that are successful in sustaining both academic excellence and access will likely do so on the basis of generous alumni giving. Right now Grinnell's giving rates are low compared to our peers. To cite one common peer comparison, almost half of all living Carleton alumni give to their school annually, compared to 32 percent of Grinnell alums. What does this mean in terms of dollars? Carleton reported $15.4M in total giving during fiscal year 2011–12, versus $5.6M for Grinnell.
We do not believe this is because Grinnell alumni are less passionate. To the contrary: Grinnellians are known for the strength of their commitment to the College community and its values. But the schools that have been most successful in fundraising have spent decades investing in convincing their alumni of the need for their support; Grinnell has not. President Kington has begun making those investments now in order to grow our revenue for the future. But research by the Art & Science firm suggest that the College has a long way to go. We will need to address our revenue shortfalls by other means in the short term, while building alumni support for the long term.
In the Strategic Planning process I've heard you talking about increasing support for innovation, possibly through a new Innovation Fund. How can you think about spending money on innovation at a time like this?
In the face of financial challenges, one instinct might be to hunker down and economize on innovation. But we can't pretend the world will go back to the way it was. We need to teach to a changing world. Innovation is crucial: it ensures that our students get the best and most relevant education. It attracts the most desirable applicants. It contributes to our reputation, and to confidence in our graduates among employers, graduate school admission committees and others.
The Innovation Fund is about not spending more, but differently: trying new approaches to teaching and learning, measuring their impact, investing in them if they work and cutting them if they don't. The goal, as President Kington has said, is to avoid "the danger of providing first-rate access to a second-rate education."
Every college in the country is facing financial pressures, and each is looking at their own revenue sources and spending, trying to ensure that they're in a sustainable position. Public institutions across the country, for example, are struggling with declining state support. Each institution is trying to have conversations about its finances in the way that they believe is most appropriate to their community. At Grinnell, we have decided on a transparent and inclusive process. This approach is true to who we are as a community. It also makes us pioneers: many of our peers are watching to see if we succeed.
Other schools are making hard and sometimes undesirable choices: for example, last spring Wesleyan University ended their need-blind policy (although they will still admit the first 90% of their incoming class need-blind). Only 45 institutions nationwide, including Grinnell, uphold the "gold standard" of need-blind and a commitment to meet 100% of demonstrated need. Grinnell is fortunate to have the resources to plan ahead so we can work to sustain this commitment. But the threat is real, and not far off. We as a community need to come up with long-term, financially sustainable strategies that enable us to stay true to what we believe in.
This is theoretically an option, but not one that we think is ethical. Admitting students in a need-blind fashion without committing to meet their financial need might encourage families to go into debt with high-cost private lenders or other alternative loan sources. Grinnell is proud of the fact that our students graduate with lower debt (approximately $15,000 on average for last year's graduating class) than students from any other public or private institution in Iowa, or most of our peers nationally. In today's economy and competitive job market, this low debt load gives Grinnellians an essential leg up on lifelong success. The goal is to admit the most qualified students without regard for their financial means and ensure their access to the best liberal arts education we can provide.
No. Grinnell continues to admit and fund international students on a need-aware basis.