Financial markets continue to plunge and soar, often it seems, based on the headlines of the hour. The economy has wrought havoc with investment portfolios, budgets, operating expenses, and other myriad bottom-line operations. But, in the midst of this tumult, the primary focus of Barnard College remains constant. “Our mission is to educate,” affirms President Debora Spar, “and to provide the highest quality liberal-arts education to promising and ambitious young women.” Spar’s comment was part of her introductory remarks at recent meetings for faculty and staff to explain how this economic instability is challenging current and future College budgets and plans.
The keynote speaker was Gregory N. Brown, named chief operating officer of the College as of May 1, who served as vice president of finance and planning for the past three years. Brown, whose experience as financial officer at institutions of higher learning include the University of California-Berkeley, Yale, and most recently, the Hebrew Union College-Jewish Institute of Religion, elaborated on plans to cope in the near-term with strained resources. Articulate, and relaxed behind a podium, he quickly got down to the numbers.
The immediate question is the College’s endowment: once standing at over $200 million, it had declined to $163 million at the end of 2008. Because Barnard has a smaller endowment than virtually all of its peer institutions, the lower value of its investment portfolio has not affected operations to the degree that endowment-value declines have had on other institutions. Although over one-half of the endowment revenue funds scholarship awards, the spending from the endowment contributes only about 7 percent to operating expenses, notes Brown. The bulk of the College’s operating revenue comes from tuition, room, and board. A small tuition increase of 3 percent, the lowest increase in 10 years, has been approved for the fiscal year 2009-10 in order to minimize the strain on our students and their families during this difficult time.
A principal resource for financial aid is unrestricted gifts. In speaking of financial aid, Brown says, “Our biggest concern is to make sure that families who want to send their daughters to Barnard, or keep them enrolled during what may be a financially challenging time for them, can do so.” He himself is a firm believer in the importance of a liberal-arts education: a music major at Wesleyan University, he came to finance through a senior research project involving grants-writing for the arts, and shifted his focus from arts administration to higher education after he took his first job at Yale.
Based on recent estimates, Brown anticipates a rise in the demand for financial aid somewhere in the vicinity of 12 percent from 2008–09 to 2009–10, although it is still too early in the admissions cycle to know precisely what the figure will be. Brown says that Barnard will take full advantage of federal awards and loans to meet those needs. And, to make the loan process easier and less expensive for families, the College has recently become a federally approved direct lender. This designation will bypass the current uncertainties of the banking system. Another plus for financial aid was the Spring Scholarship Dinner and Auction fund-raiser this past April. The results were extremely encouraging with donors outstripping previous total monies raised before the event actually took place. The level of support from contributors, says Brown, has been gratifying, given the need and circumstances.
Both President Spar and Brown have high praise for the trustees of the College who have generously given additional financial support as well as their time to reach out to other potential supporters. Brown is the staff liaison to the investments, budget and finance, and audits and compliance committees of the board, meeting with the committee chairs and the committees themselves on a regular basis. He also works with the full board on various financial issues before the College. He and President Spar meet with her full cabinet at least every other week.
The College has been proactive in exploring ways to handle the strain on resources. Brown notes that at institutions much larger than Barnard, the decision-making process can be opaque and invariably slow. “We can be more nimble, both in our response to crises as well as to new opportunities.” In order to deal with the present situation, the College expects to defer new capital projects, reduce non-personnel expenses, provide no salary increases for staff and faculty, and closely scrutinize the need for new hires.
Fixed expenses, such as the intercorporate agreement with Columbia, and certain services like audits and elevator maintenance, account for 18 percent of operating expenditures. However, variable and discretionary expenditures will be closely monitored for increased cost-effectiveness and savings. The College has also engaged in a zero-based budgeting process to improve efficiencies in providing campus services while continuing to strengthen program activities.
Deferring capital expenditures will in no way imperil completion of the Nexus, as all the financing for the new multi-use building, to be completed in 2010, is already in place. Debt-service expenses related to the construction of Cathedral Gardens have been factored into fiscal plans for the next several years.
While the College’s mission of continuing to provide a top-quality education for bright and talented young women is the major focus of this concerted budget review, the administration has not overlooked the financial stresses on both faculty and staff. In partnership with Barnard’s Financial Fluency program (see Barnard, Winter 09), the College will offer a series of workshops in late spring on a variety of financial topics, ranging from savings and investments to retirement planning, for a cross-section of employees. The College has also increased the number of counseling and information sessions by its retirement-plan providers so employees can make informed choices about their personal finances during this difficult time.
Budget targets are expected to be reached for the 2009–10 fiscal year, but strategic planning calls for a watchful eye over future budgets for the next three to five years, particularly if the stock-market downturn and economic instability persist. The exception to this time line is the endowment: here, says Brown, the perspective needs to move beyond the near term to a horizon of 10, even 50 years, to secure the College’s future for generations to come.
Numbers are major focus for Brown, even away from Barnard. As treasurer of the board of an amateur choir group, he crunches more numbers, but true to that liberal-arts music major, he also sings with the group, as a bass-baritone.
-by Annette Kahn, photograph by Mark Mahaney