To: Campus Community
From: Kenneth P. Ruscio, President
For the past two years, Steve McAllister, vice president of finance and administration, has shared with the University community our budget memo outlining our decisions on expenditures for the coming year in light of revenue projections. This year's version is posted here. But this is no ordinary year. And I would like to emphasize a few critical points that guided us as we positioned the University for this challenging time. I write this in the wake of the recent Board of Trustees meeting and with the benefit of extensive discussions with them.
First, our revenues will be at least $10 million less than we anticipated a year ago, due mostly, though not entirely, to shortfalls resulting from declines in our endowment. A wise decision the trustees made in 2001 will mitigate the impact. Each year since then, we have allocated resources to build up a reserve fund. This year, monies normally set aside for the reserve fund will be retained in the budget, thus making up for some of the endowment shortfall. The net result: not only are we able to make up a portion of the revenue shortfall this year, but we will also maintain the reserve fund for future years in case the worst of these economic times is not behind us.
Second, that does not mean business as usual. As Vice President McAllister outlines, departmental budgets will be limited, and in some areas, such as printing and travel, there will be cuts. Our salary pools will be less than our recent history, although we have decided, even in these difficult times, to adhere to our long-range strategic plan of gradually bringing salaries of staff to market competiveness in all areas and salaries for faculty to the mean of our peers.
Third, tuition will increase 4 percent for undergraduates and 5 percent for law students. Those figures are less than our long-range plan had projected. We have also prepared ourselves to do everything reasonably possible to meet the financial need of our students currently on financial aid, and to respond to new hardships imposed on any of our students whose families have been affected by the downturn. The decision to constrain expenditures in some areas and to buttress revenues by not making an allocation to the reserve fund reflects our priority to ensure adequate resources in financial aid.
Fourth, we have delayed all internally funded capital projects that are not necessary for meeting commitments for faculty hires, critical equipment repair and replacement, and safety. But it does appear that we have secured sufficient external funding to proceed with the Newcomb Hall project. We still have a few final details to confirm, but the trustees and the administration are confident we can pull them together within the month. At an appropriate time in the very near future, we will celebrate the philanthropy that has gotten us to this point. I would simply reiterate, for the moment, how gratifying it is to be at a University blessed with devoted and generous alumni whose support is strong no matter the challenges.
Guiding my own analysis as we face these difficult times are a few important considerations. One is that the University needs to be well-prepared for a prolonged slump, if that should occur. Thus, we will protect the reserve funds and make some short-term, though necessary, sacrifices. All of us hope we will be better off next year. If we are not, we have other weapons in our arsenal.
Another consideration is the realization that while our strategic plan made sense when we adopted it a couple of years ago under very different circumstances, it makes even more sense now. Our emphasis on building endowments for financial aid and securing competitive compensation for faculty and staff, as well as a focus on our core mission, will position us well for what will certainly be a different environment for higher education when we eventually reverse the current economic conditions.
Finally, and most important, we stand ready to work with our students and their families. They are why we do what we do. We will set aside resources to ensure that they will have the opportunity to attend Washington and Lee. I am confident that all of us who find ourselves fortunate to be in an institution that will fare better than most during these times, stand ready to provide the moral and emotional support that some of our students may need because of changes in their own personal situations.