Memorandum on Current Financial Situation

April 5, 2010

Dear Laurentian friends:

Very few books or texts remain in my personal library that trace back to my student days at St. Lawrence. One that has traveled with me in several revised editions, because I have worn out or given away copies, is a little handbook required of freshman students in English Composition written by Will Strunk and E. B. White. Without pretense, it is called The Elements of Style. For me, it was absolutely liberating to understand for the first time that “writing is an act of faith, not a trick of grammar.” There are, however, stern admonitions and a steady perspective about prose contained in this short classic.

A chapter in The Elements of Style called “Words and Expressions Commonly Misused” warns about the confusion between “that” and “which” or between “imply” and “infer.” And yet, the authors’ larger annoyance is reserved for the common term “the foreseeable future.” With tight-collar irritation, they dismiss the expression as “a cliché, and a fuzzy one” and go on to taunt “How much of the future is foreseeable? Ten minutes? Ten years? Any of it? By whom is it foreseeable? Seers? Experts? Everyone?”  They make a point and somehow speak to our circumstances, particularly the financial ones that we must face at St. Lawrence.

Let me report, therefore, on what we actually know at the moment and abstain from a discussion of “the foreseeable future.” First, we are coming to terms with a reality that the old financial model at St. Lawrence during a period of phenomenal expansion is now unsustainable. That we know for sure; and this is a truth everywhere. We simply have to reduce our operating costs for the next academic year by at least 5% or roughly $5 million. We cannot cover that difference by raising tuition, room, board, and fees at the rates of increase that were acceptable even a year ago. Our comprehensive fee, however, will go up by $1,800 (3.7%), which is the lowest rate in a very long time; and we are also adding more resources to our financial aid budget (in actual dollars, it will be record amounts). Meanwhile, endowment income remains essential to the “subsidy” every student enjoys at St. Lawrence, but the strain on this major asset is truly unprecedented. Our portfolio of investments is gradually recovering ($212 million at the moment), but our advisers caution that it may take ten years to return our total value to its worth of two years ago.

What are we doing about this challenge? We have divided our planning efforts into two phases, beginning last fall with a special campus task group that was charged to lead discussions, report its findings, and submit recommendations for reducing costs and ensuring efficiencies while preserving without equivocation the excellence of the student experience. As of now, over $3 million has been stripped out of our base operating budget for next year owing to the good work of the Recession Response Task Group. The next round belongs to the Senior Staff in consultation with standing committees on campus and within the Board of Trustees.

For us to achieve necessary financial equilibrium, we are seeking a further reduction of expenses that range between $1.4 million and $2.0 million. In numerous campus forums over the last two weeks, I have said to the community that our budget models include a compensation freeze for next year. It is also the case that because 60% of our operating budget is payroll, St. Lawrence must have a smaller staff in the new fiscal year that begins July 1. Reorganizing the staff, which includes the option to eliminate positions, in order to achieve overall reductions, is highly conceivable. We are approaching this challenge with care and heightened sensitivity for all the reasons you can imagine. We began the year with a pause on new job searches as the normal pattern of annual departures has occurred (though in several instances we made exceptions to position openings that were “mission critical” and also focused on student safety).

This week we introduced a new opportunity for early retirement intended to benefit staff members who qualify by age and years of service. The spirit and letter of this invitation to many of our long-serving co-workers is solely voluntary. Depending on the results of our early retirement program, which will conclude in mid-May, we will then make a determination about the remaining question of (non-faculty) staffing levels. Meanwhile, every academic and administrative department at St. Lawrence is participating in a comprehensive workforce study so that we may consider scenario plans that are evidence-centered and analysis-based as we continue our good faith efforts to secure the University’s financial strength.

As an extension of the intense work of budget-building, we are also preparing the way for Phase 2 planning that looks at a more distant horizon. As we start a new decade, already being called the “new norm,” the most important question standing between us and our future will be: What is the optimal academic and administrative structure of St. Lawrence University in the coming years? Can we operate 12-months a year and at what capacity? Is our curriculum remaining fresh? What innovations will it take to keep our vital edge? These all-encompassing topics will shape our strategic thinking, which will also draw from the results of a market research project now underway. Even without the external pressures of a recession economy, the timing of this exercise is right on schedule as we complete the major features of our ten-year-old campus facilities master plan.

We will introduce our students this fall to several new facilities, each totally donor-supported. The extension of the Griffiths Fine Arts Center will open and include the dedication of the Peterson-Kermani Performance Hall. The North Country Field will be completely renewed with a turf surface and other features. A long-needed football locker room will also be installed. A number of residential areas will be upgraded, including the return of the former Pi Phi house to student quarters. The old health center and bookstore in the new “center” of campus will be demolished and landscaped; its current use as Java House will be transferred to a refurbished “music barn” on the southwest side of campus. Everything we have agreed to do this summer will meet the criteria of giving our current students the most direct benefit.

Permit me one more reflection. When my class entered St. Lawrence in the fall of 1971, our world was defined as a moment between centrifugal brackets of human experience; it was a time of turmoil and transition. The women of our first year faced narrow roads of opportunity that have since widened. The young men arrived on campus carrying draft cards and, then, a few weeks before our commencement, we listened to Walter Cronkite describe the fall of Saigon and the end of the Viet Nam War. With all that going on, including the corrosive effects of recession and inflation, St. Lawrence got us through with a welcome calm and got us ready for a life’s work.

It is perhaps a similar time for our students today who face a world beyond our campus of enlarged uncertainty and unceasing conflict. Our job, therefore, is to remain steady, reassuring, and confident that we will do for this generation of students what St. Lawrence has done so superbly for others living in equivalent periods. I am deeply proud of St. Lawrence and grateful for it every day of my life—and I am grateful that it has so many friends and alumni who feel exactly the same way. We will do this…together…the work of this immensely good place.

Sincerely,

William L. Fox
President