Committee Weighs Possible Budget Reduction

Oliver Bok, Editor in Chief

The College’s financial position isn’t healthy, and the community will have to make tough decisions about where to put resources in the near future.

At any rate, that’s the conclusion that many members of the Strategic Planning Steering Committee — the group of students, faculty, staff, trustees and administrators who are tasked with planning the College’s fiscal and educational future — seem to be coming to.

“To put it simply, we have made a lot of promises that cost money,” said double-degree junior and committee member Hayden Arp. “We promised to raise faculty salaries to the median of our peer group. We promised to be carbon neutral by 2025. And then there’s the things we want to do: We want to increase the amount of diversity on campus. We want to increase student support services, and all those things cost money.”

Since tuition provides the vast majority of the College’s revenue, cost increases directly impact tuition rates. To many members of the Steering Committee however, Oberlin’s tuition is so high and increasing so rapidly — tuition increased by four percent last year — that the school simply cannot continue on its current trajectory.

“Everyone understands that at a certain point it’s going to be impossible for large parts of the population to come here if tuition keeps going up the way it is,” said College senior and committee member Machmud Makhmudov.

However, if the Steering Committee recommends reducing the rate of tuition growth, the result would seemingly necessitate spending cuts of some kind.

“80 percent of Oberlin’s revenue is from tuition,” said Art History professor and committee member Erik Inglis. “80 percent of its expenses are from personnel. We want [them] to be well-compensated for what they do. We want to control tuition. And that just seems almost antithetical. They are two laudable goals, and they are in real tension with one another.”

Adding to the financial pressure, the Committee has also been debating the appropriate size of the endowment payout, the amount that Oberlin takes each year from the overall endowment for the operating budget. Some committee members reportedly feel that the endowment payout is too large and needs to decrease, which would further reduce the amount of funds available to spend.

“The endowment, which isn’t as large as some of our peer institutions on an endowment per student basis, has also not done as well as those in peer institutions,” Inglis said. “If the school is thinking about Oberlin in 2050, to track the payout rate to a level that’s sustainable for 2050, that means potentially, some people think we need to bring the endowment rate payout down.”

In a statement to the Review, Committee co-chairs Diane Yu and College President Marvin Krislov shed light on the current state of the College’s finances.

“The budget of the College and Conservatory projects a slight surplus this fiscal year. In fiscal 2017, we are projecting a budget deficit. In subsequent years, we will be faced with growing annual deficits unless we take action to balance costs and revenues effectively. … Oberlin’s financial situation is unsustainable unless we act strategically. That means we need to manage our finances carefully to achieve our goals. To become financially sustainable we will have to make some wise choices if we want Oberlin to live up to the aspirations that all of us share for this great institution. ”

Yu and Krislov also stated that the Committee has yet to decide on any specific recommendations and that the Committee’s work reflects student concerns about recent tuition increases as well as Oberlin’s overall financial situation.

To several students on the Committee, the real problem is that Oberlin does too much with too little.

“I think that Oberlin is a small school doing more than I think it can with its resources,” Arp said. “I think it’s better to do what you do best really well rather than doing everything at a pretty good level.”

However, several committee members stressed that the strategic plan will not include specifics about where exactly Oberlin should reduce spending. Instead, the Committee will leave the specific decisions to the community at large.

“We’re not making those tradeoffs,” said College junior Jasmine Anderson. “We will make it clear that those tradeoffs need to happen, and the tradeoffs will come from the community — the student body, the faculty and the administration — when the implementation process begins.”

Originally, the Committee was supposed to be finished with the plan by Dec. 3. However, they now plan to wrap up the process in March 2016.

In October, the Board of Trustees and the Steering Committee will both meet. The Board will reportedly weigh in on the financial considerations involved in the strategic planning process, such as the size of the endowment payout and future tuition increases.

The Steering Committee also plans to release the next public draft of the Strategic Plan in October, although it’s unclear to what extent the public draft will include discussion of the College’s finances.

According to Anderson, the level of student engagement directly impacts how effective the students on the Committee can be.

“It gives us credibility sitting in the room for them to know that the student body is paying attention,” Anderson said.