Bryn Mawr College

30 July 2009

Dear faculty and staff:

In early May I reported to you on the results of our campus-wide discussions of anticipated Phase II budget cuts, and on the Campus Budget Committee’s initial recommendations for reductions based on this community input.  I can now provide you with updated information about the College’s financial situation, recent decisions on outstanding questions about the fiscal 2010 budget, and our assessment of economic conditions going forward.

The College’s 2009 fiscal year ended on May 31 with mixed results. 

• As we anticipated, widespread losses in personal wealth hurt our fundraising, and gifts to the College were $1.5 million below budget.  While this shortfall certainly causes concern, I am heartened by two successes our staff achieved in this difficult fundraising environment:  notable growth in the percentage of alumnae/i making gifts to the College, and a nearly 100% increase in foundation grants. 
• Financial aid need has increased substantially.  The entering class required $1 million more in financial aid than initially budgeted.  We have also seen increased need among returning students. 
• Endowment returns were better than anticipated.  The College earned a 12.7% return on endowment in the last three months of the fiscal year, thus limiting our year-end endowment loss to under 22% ($155 million).  While less severe than the 35% decline we had anticipated earlier in the year, the drop in value of our endowment is significant and it will take some years to recoup this loss. 

Clearly the $5.6 million in budget reductions we identified during the spring semester are crucial to our continued financial health.  Some of the changes we agreed upon have already been made.  Others will require additional time and work to implement during the upcoming academic year. 

In May the College Budget Committee postponed action on three proposed budget reductions pending additional information about FY09 financial results and anticipated costs for FY10.  In contemplating these three measures—increasing the percentage of medical insurance costs borne by employees; reducing the dependent tuition benefit; and eliminating salary increases—the Committee noted the community’s preference for sustaining benefits at their current levels.  This clearly expressed preference has shaped our decisions as we have worked to achieve a balanced budget for 2009-2010.  Consequently, the College will continue the current tuition benefit and make no changes to the formula that determines employee contributions to the health insurance.  [I should note that although we will not change the formula, it is probable that health insurance costs for both the College and employees will rise next year due to anticipated increases from our health insurer.]  While I am pleased that we can retain these important benefits, I am sorry to announce that our tight budget means that we must forego a salary increase in 2009-2010.  I am deeply disappointed that we cannot provide raises this year, particularly in light of the extraordinary commitment that our faculty and staff have made to the College through this period of economic turmoil.

As we look forward we must face the reality of a fragile economy.  While it presently appears that we have averted a global depression, most economists predict that the recession will last at least through the current calendar year and that economic recovery will be very slow.  Reduced personal wealth and high unemployment rates will have a significant impact on students’ college choices, their need for financial aid, and the ability of donors to support the College. 

We will respond proactively to these challenges.  Next year, for example, the Board of Trustees will form a task force of trustees, faculty, and staff that will examine the College’s competitive position, including consideration of financial aid policies and pricing.  A second task force of will look at how we can enhance alumnae/i engagement with the College, a necessary precursor to philanthropic support. 

I extend my thanks to the entire community for your support during the course of a difficult year and for your commitment to Bryn Mawr.  I look forward to seeing you in late August.

Sincerely yours,

Jane McAuliffe