timber_wolfThrough the last 6 months of blogging about the financial crisis and its effect on Williams, I have tried to avoid purple-mountains-are-falling alarmism. Although my posts (highlights: here, here, here and here) have taken a more bearish, skeptical stance than many other observers, I have not yet cried “Wolf.” Until now:

Wolf!

Why now? Although I still hold out hope that the College will make the needed cuts, that the Trustees will provided the necessary discipline, that Morty will do the right thing so that his successor is not completely trapped, the passage of time has provided too little evidence of seriousness. The College is not nearly rich enough to be able to hire new staff and invite more visiting professors. Now, to be fair, many of these decisions were finalized months ago. I would not expect the College to renege on offers already made. Still, there is little evidence of meaningful budget tightening in the future. The Transcript reports:

Williams College is looking to cut approximately $10 million from its budget over fiscal 2010, according to the private institution’s provost and treasurer.

Any time you read a story about budget “cuts,” whether for the Federal Government or your local youth soccer league, you should wonder whether the baseline against which these cuts are measured is actual spending this year or proposed spending for next year. Which do you predict is the case for Williams?

“What we’re budgeting for FY10 is approximately $10 million lower than what we budgeted for this fiscal year,” Provost and Treasurer William Lenhart said Thursday.

It all depends on what the meaning of “this” is. I do not mean to accuse Lenhart — a good and competent Provost who answers my questions professionally — of trying to mislead anyone. He isn’t. But interested Ephs still need to pay very close attention, all the more so since the College makes it almost impossible to understand the budget crisis from the outside. (Luckily, you fortunate readers have EphBlog to help.)

He said the college originally had budgeted $216 million for operating expenses for FY09, but by the end of the fiscal year (June 30), the college expects the actually amount spent to be $213 million or maybe less.

That’s fine, but still sort of pathetic. The worst financial crisis in a generation hit last October, and the College has managed to save around 1%. If this is belt-tightening, then we need shorter belts. And, per usual, we have the recurring confusion in these discussions about whether or not the budget includes financial aid spending. In the College’s official financial statements, it does not. Financial aid is just a decrease in revenue. It does not count as “spending.” Here, Lenhart is including financial aid. That’s fine, if the College were to provide us with a time series of the budget measured in this way. But the College won’t do that. We have to do the translation ourselves. At least it is good training for all you future forensic accountants in the audience!

The $10 million decrease for FY10 would result in a budget of $215 million.

Bingo! The College’s endowment is down by, at least, 30% and Williams is going to spend more in 2010 then it is 2009. This is how a first-tier college enters the second-tier, by refusing to cut costs, by avoiding the hard choices, by hoping that things turn around, by spending its seed corn. If Morty really wanted to help out his successor, he would leave him with a budget of no more than $200 million. Even that is excessive, but at least it is a start.

Lenhart said cuts will be made across a number of areas. Of the four essential operating budget areas: Salaries, wages and benefits; financial aid; managers budgets — which include individual operating budgets for departments excluding salaries and the renewal budget — which includes spending for ongoing maintenance and modernization projects to the campus and its buildings, financial aid will increase because of the college’s ongoing commitment to make sure students can afford to attend the college, he said.

He said college departments have been asked to submit two budgets, one with a 12 percent cut and the other with a 15 percent cut. The idea behind submitting two budgets was if some areas couldn’t reach the 15 percent cut, it could be made up with other areas that could take a the cut.

In addition to cutting department budgets, the college will spend “markedly less on renewal spending next year,” the hiring freeze instituted for FY09 will continue and salaries will be frozen at current levels for the coming year, Lenhart said.

He said there have already been some changes in the college’s programs with the reductions made to the FY09 budget, and the reduction in what is available as part of programs in FY10 “will be noticed.”

He said the college is not planning to cut any programs, including its community outreach programs, at this time.

Great! Let’s just keep handing $500,000 to the town each year. Why not?

“We haven’t identified yet any larger, dramatic program elimination,” he said.

The Record reports on the activities of the AHACOBP. I have no doubt that these serious folks are identifying meaningful cuts. I question whether the Administration/Trustees have the fortitude to make them. We need to cut now.

He said the college contribution to the local community will remain largely intact for FY10.

A Feb. 26 letter from Williams College President Morton Schapiro to the college community stated the college had formed an Ad Hoc Advisory Committee on Budget Priorities made up of faculty, staff and students to meet weekly and advise the college’s senior staff on programs that should be protected most if the college is forced to cut its budget further than anticipated.

Lenhart said college officials are in the process of determining how the budget targets for FY10 will be reached, and they hope to have a final budget ready to present to the college’s Board of Trustees in April.

We have some Trustee readers. Please, do your job! No one expects you to micromanage the College’s budget. But you need to step up and stop the Administration/faculty from screwing over the future of Williams to avoid necessary pain in the present.

Facebooktwitter
Print  •  Email