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Protecting the Student Experience
Dartmouth Confronts Endowment Downturn
The worldwide economic downturn has resulted in sharp endowment declines for many colleges and universities, including the entire Ivy League and its peer schools. Dartmouth has not been immune: in the six months ending December 31, 2008, its endowment dropped 18 percent. In response, in early February the Dartmouth Board of Trustees endorsed a budget-reconciliation plan that will cut Dartmouth's $700 million operating budget by $72 million by 2011. President James Wright announced the board's endorsement of the plan in a letter to the Dartmouth community on February 9.
The letter also underscored the board's support of Dartmouth's strategic priorities: to preserve the excellence of the College's academic programs, maintain its commitment to need-blind admissions, and strengthen financial aid. Under terms of the plan, no tenured or tenure-track faculty positions will be eliminated, the financial aid budget will increase 13 percent in fiscal year 2010 to an estimated $72 million, and undergraduate tuition will increase 4.8 percent. Almost half of all undergraduates receive some form of financial aid.
The plan also calls for layoffs of 60 employees, reduced hours for 28 others, the acceptance by 70 employees of a retirement incentive offer, and a hiring freeze on most positions.
"Approving these reductions, especially those affecting staff employees, has been one of the most difficult decisions of my presidency," said President Wright. But "in making targeted reductions, we have been guided by our commitment to protect the excellence of the academic experience for undergraduate and graduate students, to provide support for faculty and student research and scholarship, and to continue to provide access for the best students regardless of their financial means."
In 2008, Dartmouth expanded its financial aid program to offer full tuition to students from families earning $75,000 or less, eliminate leave-term earnings requirements, and expand the need-blind admissions policy to include international students. Applications for the Class of 2013 set a new Dartmouth record, with more than 18,000 applicants this year. The number of students in the early-decision pool who applied for financial aid increased 10 percent from 2007. "That's due in part to the new initiative and to the increased diversity in our early decision pool—something we've been working hard at," said dean of admissions and financial aid Maria Laskaris '84 in December. "But the economic crisis is also a factor."
Other institutions are making similar budget-cutting choices. Losses among Ivy League institutions range from 15 percent to 30 percent, with half of them in the 25-28 percent range. The value of MIT's endowment, which stood near $10 billion at the end of fiscal year 2008, is expected to decline by 30 percent in the second quarter. In FY 2008, Stanford's endowment was valued at $17.2 billion, but is expected to decline between 20 and 30 percent this fiscal year. Layoffs and hiring freezes at most institutions are common.
Dartmouth relies on its endowment to fund about 35 percent of its College-only operating budget. The 2008 decline reduced Dartmouth's endowment value by $700 million, to $3 billion.
Learn more about the strategic steps Dartmouth is taking in response to the international economic crisis.