Volume CXXXIII, Number 7 October 26, 2001 f

Budget could see red
ALISON McCONNELL AND SOPHIA BASSAN
ORIENT STAFF

Members of the Bowdoin community gathered at an open budget forum last week where Director of Budgets Gerry Boothby indicated that the past year was a tight one for the College.

"Last quarter," he said, " the numbers were on the downhill." "The endowment was at $433 million on June 30th of this year." This figure is down from $466 million reported in June 2000.

Boothby said that enrollment exceeded expectations by about 50 students last year, yielding $700,000 in unanticipated College revenue. Annual giving also "helped to offset some of the effects" of increased costs, "...but the bottom line was that we squeaked by," he said.

According to Boothby, there is a potential for the College to be looking at a $5 million deficit in five years. He mentioned several factors in this potential deficit problem. "We are facing the rising overall cost of medical insurance," he said. "The numbers are staggering; it could be in the 30 percent range.

"Something like that has to be looked at," he continued. "Anything above a five percent increase is extraneous to the budget."

Alumni giving, which made up 15 percent of budget revenue last year, is another concern. Next year's working budget estimated a three percent increase in annual giving, a rate of growth roughly equal to the inflation rate.

However, uncertain economic times may cause alumni giving to remain flat. "We could be looking at receiving the same amount of money as last year, which would have significant effects," Boothby said.

With a decreased endowment and sputtering economy in the background, the Treasurer's office is watching College spending carefully. "If nothing changes, we'll be at a $1.9 million deficit next year," Boothby said.

It is with these newly revised figures that the Budget and Financial Priorities Committee is considering its budget estimates for the next fiscal year, as well as estimates for years through 2005-06.

Boothby said that fiscal policy changes will be used to counteract rising expenses and lower endowment levels. One structural change will be in tuition levels, a change reflective of nationwide trends in higher education cost.

The working figure for next year's hike is 4.5 percent, but Boothby said that the estimate might change during budget committee deliberations. If it went up by five percent instead, he said, the College would yield $177,000 in additional revenue.

The budget director said that raising student fees is not something that the College takes lightly. "In terms of our responsibilities, we have to be very careful [with tuition hikes]," Boothby said.

Adding students to Bowdoin is another way to increase receipts. However, according to Clint Huston '02, student representative to the budget committee, the College risks diluting academic as well as other programs.

"Adding more students is probably not the answer," he said, due to "the increased academic costs of doing so."

Boothby said that soon-to-be inaugurated College President Barry Mills may play an important role in relieving budget rigidity.

"The President is committed to going out and raising financial aid dollars," Boothby said. "He would like to be able to raise money for the incremental cost of our diversity and financial aid programs."

President Mills has committed to raising $39 million over three years. "If he can do that, we will be able to have a balanced budget for 2002-2003; we'd actually have a slight surplus," Boothby said. "But anything he raises toward that helps to bring down the level of expenditure in financial aid."

According to Boothby, there are several steps being considered that offer potential relief. First, he said, is the revisal of salary increase estimates. "Raises will be less," he said.

The budget committee may also limit the IT (Internet technology) spending increase to $124,000 rather than the proposed $224,000, and similarly trim the $2.5 million athletic department budget's increase from $200,000 to $100,000. In light of recent studies, Boothby predicted that there would be a lot of discussion about athletics, including the financial emphasis placed on them.

Cuts in other areas-essentially stemming from putting off any new hiring-could relieve almost $250,000, he said.

These reductions have yet to be finalized. "We're going to look at the proposals that are on the table," Boothby said. "If we make those suggested changes, the deficits, starting in 2002-2003, will have an ongoing effect to bring subsequent years down."

"We're at the very beginning of discussion about the budget," said Rosemarie Roberts, chair of the Budget and Financial Priorities Committee. "It's early in the process, and we still have a lot of information to collect.

"The process is about a month earlier this year; we have to be finished with our recommendations to the President by the end of December," she added.
Until that time, Roberts said that the committee would be working diligently on trimming costs and reworking numbers. "We'll be meeting almost weekly," she said.

Members of the Bowdoin community are welcome to anonymously submit suggestions of potential cost-reducing ideas at budget_suggestions@bowdoin.edu.