Recession Response
From President Fox

To:                   St. Lawrence University Community
From:               William L. Fox, President
Date:               January 25, 2010
Subject:           Recession Response Planning Task Force Report

The purpose of my writing is to continue a discussion at the front of everyone’s mind: the economic recession and its aftermath. Many economists now argue that the recession has touched bottom, but they are also saying the recovery will be drawn out and difficult. Those economists who focus specifically on higher education are forecasting a very different financial framework for colleges and universities on the other side of the deep downturn.

Meanwhile, the almost-daily headlines from both public and private universities report more and more large-scale reductions, program eliminations, and canceled projects. St. Lawrence University has, so far, avoided some of the most drastic and dramatic remedies making the national news. Our relative strength, however, does not absolve us from preparing ourselves to reduce our expense base, which also makes inevitable many significant adjustments in how we will budget and function in the coming years. Everyone on campus will be asked to think differently, offer better ideas, and to unite around the common purpose of keeping St. Lawrence strong to its core.

From the first day of the first semester of the current academic year, fourteen members of our campus community took on the very important task of developing criteria, guidelines, and recommendations for the University’s next round of budget planning. The scale of changes necessary to operate university campuses nationwide represents much circumstantial variety, but the shared constant is that no one has escaped the pressure to operate with less revenue. St. Lawrence must also respond to the “new norm” with prudence, intelligence, creativity, calm, and dispatch.

The report of our campus Recession Response and Planning Task Group represents all of these qualities in its findings and recommendations. It is exactly what I asked of them; and they have delivered with thoroughness and toughness a solid piece of analysis. We salute and thank each of them for their dedication and hard work; and we also note the example of effective leadership provided by Alison Del Rossi and Ted Coviello.

This document features thoughtful study and offers numerous suggestions for serious consideration. It is not, however, designed to be the plan itself. Rather, the report compiles and distills a large body of data and many excellent ideas coming directly from numerous individuals and groups on campus. It will guide the budget deliberations of the senior staff; it will inform the advice that the campus Budget and Planning Committee is expected to offer each year; and it will help our Board of Trustees understand how deeply we have delved into the most pressing questions of the day. The report begins, it does not conclude, the work; it informs the already existing budget process. Soon, however, another phase of planning (as the report suggests) must occur around the long-range topic of the University’s optimal organizational structure.

I invite you to read this report carefully. I also invite you to consider several ways for your continued participation in this process of building appropriate budgets for the future that are both strategic and sustainable for St. Lawrence. Here are some very specific ways to engage in our campus conversation about developing financial equilibrium:

Kathy Mullaney, Vice President and Chief Financial Officer, will offer two budget seminars that will provide basic background to our faculty and staff about how the SLU budget is constructed, and the increasing pressures on the budget today. We would like to provide this information as a good foundation for the campus forums about the St. Lawrence Recession Response.  Kathy’s seminars will not discuss the RRPTG report itself. 

We offer two sessions on the same topic, budget basics, and a follow-up session for any who want more advanced understanding. Ideally, all faculty and staff would have the opportunity to attend at least one of the basic sessions and the follow-up session. Here is the schedule:

Budget Basics 1A:  Thursday, January 28, 12 noon, Eben Holden North
Budget Basics 1B:  Thursday, January 28, 4:30 p.m., Eben Holden North

Budget Basics 2 (Greater level of detail for those who wish to learn more)
Monday, February 1, 4:30 p.m. Eben Holden North

Then, we will have two all-faculty-staff forums to discuss the Task Group Report:
Task Group Forum 1:  Tuesday, February 9, 4:30 p.m., Eben Holden Main
Task Group Forum 2: Wednesday, February 10, 4:30 p.m., Eben Holden Main

We created a Web site that has a variety of resources for your understanding and consideration. These include links to peer colleges, showing summaries of their own recession response efforts; relevant media stories; links to IdeaConnect, budget reduction decisions made last year and already adopted in this year; and a Frequently Asked Questions (FAQ) section.  This Web site allows you a convenient way to submit feedback, pose questions to be taken up at the forums on February 9 or 10, or make general comments; access to the feedback feature on the Web site will be available only to campus audiences who can log-in with SLU credentials. You must attach your name to your submission, but we will withhold your name if requested to do so.

As we go forward with our budget strategies in total collaboration with the St. Lawrence Board of Trustees, let me also pass along a recent summary statement of its clear expectations:

Over the last several years, the SLU budget has been cash-neutral, but growing in size supported by increased revenues from 5+% increases in comprehensive fees, a growing endowment, annual giving, and decreased discount rate.  The current recession has decreased our endowment, limited annual giving, and put pressure upon us to increase the discount rate while limiting the comprehensive fee increases.   We do not have the resources to run a cash-negative budget (i.e., the capacity for additional borrowing), nor is it prudent for the long-term health of the University to operate at a deficit.  At our meeting in June 2009, the Board charged President Fox and the Senior Staff to bring forward a budget for FY 2011 and beyond that meets cash neutrality.  Our expectation was an update at the October 2009 meeting, a draft proposal for the February 2010 meeting, and a final budget for approval at the May 2010 meeting.  Given the continuing economic uncertainty, the Board intends to pursue this objective on the stated time frame. 

As our community works together in front of the hard facts, I offer a plain truth. We cannot grow or spend our way out of these new circumstances; and we cannot cut our way to prosperity. We must live with the fresh reality that the old and familiar ways enjoyed of recent years must give way to a new and different day in American higher education. And yet, we have a reasonable set of choices in how to face this problem: we can punish ourselves by a garish morbidity of standing still in passive gloom; or we can use our collective energies to focus on the many positive ways to meet our goals and feed our aspirations.

One of the dozens of recommendations made in the task group report is that the Senior Staff itself consider a 2% reduction in salary for the coming year. My colleagues, as loyal as any leadership team is anywhere, have readily agreed to do soas a way to mitigate the budget imbalance. I will be taking a 5% cut in my own pay to help ease reductions elsewhere.

St. Lawrence has something very special that we must never take for granted about its fundamental character. Perhaps as a way to explain its oft-noted authenticity, I believe we are able to describe our most special strength as a tradition of common sense. Now is the time for St. Lawrence to apply its combined creativity and intelligence to the kind of problem-solving we expect our students to accomplish. I remain confident that by working together in the coming months and years, St. Lawrence will—while its students flourish in learning, competing, and creating—regard these difficulties as the means, not the impediments, to ensuring the high resolve of our values.