Annual budget deficit offset by putting spending on hold



As students and staff were made aware at the start of the year, Trinity College currently is operating at a deficit, and has been for the past two years.  This year’s budget woes were exacerbated by a smaller-than- intended first-year class. The class of 2019 is about 50 students smaller than originally planned for when President Berger-Sweeney laid out the budget last year.   In a set of recent talks, the president has made an effort to keep the campus community updated on the progress and state of the College in light of this unexpected situation.

The College financing process is a peculiar method, unlike most other business’s and non-profits. College educational systems heavily rely on endowments, the large pools of money accumulated over the life of the college that accrue interest. The interest earned is not only used to grow the endowment, but also to fund essential college expendatures, such as scholarships  and  faculty salaries.   Trinity has one of the smaller endowments when compared proportionally among our peer institutions in the NESCAC and across the country.  This disadvantage has forced Trinity to lean more heavily on tuition money to balance the budget year to year.

When laying out the budget last fall, President Berger-Sweeney realized that the estimated number of students for the class of 2019 was somewhat optimistic. Yet, at the time she and her team felt that it was possible given the new energy that she had brought to campus. However, Trinity’s long-time Dean of Admissions, Larry Dow, had to step down unexpectedly due to health complications, and the recruiting efforts slowed down.  Without the proper leadership, Trinity was unable to attract the quality applicants whom Berger-Sweeney had hoped to fill the campus with.

So when it came time to make individual admissions decisions there was a difficult choice to make; to send out more acceptance letters and guarantee to meet the projected figures for enrollment, or to stay firm on expectations and only accept the quality students and risk an under populated campus.

Berger-Sweeney chose not to compromise on student quality, and when the prospective students mailed back their commitment cards in May, the concerns of a smaller first-year class were realized, as the yield rate was not high to pull the needed number of students out of the accepted pool.

Out of the 2,530 students given offers for the class of 2019, 559 enrolled, resulting in a yield rate of 22%, the lowest in the last 17 years of available data available in the 2015 report from the Office of Institutional Research.   Surprisingly, although this year had the second largest number of applications in school history at 7,570, it netted the smallest incoming class in the past 11 years.  For reference, the class of 2018 had an enrolled group of 611 students.

With the tuition deficit throwing an almost 5.25 million dollar curve-ball into the president’s plans, it was time to go back to the drawing board and make the necessary cuts and adjustments to bring the budget back into a reasonable deficit.  This total deficit already reflected the savings realized by the saved scholarship money that was allotted to some of the slots that were not filled.  In order to save money, the decision was made to not make an additional increase in faculty salaries.  It was a tough sacrifice to make, but it was necessary given the condition of the college’s finances. This slash in the budget was not for the typical contracted raise; it was instead for an additional increase that Berger-Sweeney had hoped to implement to bring Trinity’s compensation in line with its peer institutions.  Staffing funding was also cut by $400,000, with the decision to put filling vacancies and new positions on hold. Additionally, $275,000 were saved from the budget by cutting the line item for proportional budget increases.

Due to the economic boom in the stock market in 2015, the endowment rose significantly and was able to offset the deficit more than expected as well. This allowed Berger-Sweeney to more comfortably request the Trustees to reduce this year’s contribution to the reserves by $2 million. However, President Berger-Sweeney did warn that these gains could not be relied on to continue, as 2015 was one of the best years in the last decade.  Additionally, Berger-Sweeney highlighted that special draws on the endowment above the explicitly planned percentage are damaging to the long-term sustainability of the college.  Endowments are meant to grow in perpetuity, not to be continually used to cover budget overages.   That is one reason why the president stated that her team is considering a capital campaign to increase the endowment significantly.

In the short term, capital gains are in an interesting position. While the growth of the Trinity fund is at its highest level ever, the overall donations received by the college have been dwarfed by years past.   The president chalked this decrease up to the change in leadership of the college.  During these leadership changes, new connections with big donors need to be forged, so although the Trinity fund, which is composed of many smaller donations to be used for any purpose, grew, the big donations did not come through. Berger-Sweeney acknowledged that she is working to build these important relationships and secure the college’s future.

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