1997-1998 Budget Process to Focus on Cost Reduction

As part of a College-wide effort to reduce costs and achieve a healthy long-term spending level, administrative department heads are being asked to identify possible cost reductions for the next fiscal year equal to 5 percent of their current budgets. "There are no simple, magic solutions that will fix our financial problems and eliminate the structural budget deficit," President Joanne Creighton said at the December 4 faculty meeting. "Proposed changes to financial aid policies alone won't get us out of the woods without lots of other things also working in synch."

Treasurer Mary Jo Maydew notified managers of the need for budget tightening at a December 4 Operational Policy Committee meeting. A similar announcement was made at the faculty meeting later that day.

Maydew said that the College must reduce its expenses by about $5 million over the next three to four years. As a first step toward that goal, a cost-reduction target of $2 million has been established for the next fiscal year's budget. Each administrative division head accepted a proportion of that reduction as his or her cost reduction goal for the 1997-98 fiscal year, which begins July 1, 1997. To assist in identifying opportunities for cost reduction, department heads are being asked to propose reductions equal to 5 percent of their 1996-97 budgets.

Changes may involve improvements in productivity, shifts in departments' priorities, and altering the level of services that departments provide. "Instead of just thinking about how to spend less, this year we need a different approach to thinking about how we spend money," Maydew told managers.

The College's overall budget process will focus not only on proposed cuts, but also on ways to increase revenues and to sustain current employee salaries and planned annual raises.

In the search for ways to reduce costs, only the faculty compensation budget will be exempted for 1997-98. However, Creighton estimated that in future years a modest number of full-time-equivalent faculty positions, perhaps five in all, might be eliminated. According to Maydew, past budget cuts affected staff and faculty proportionally. This time, however, Creighton said that she was "privileging the academic core enterprise" and that faculty reductions are likely to be more modest than savings from administrative areas.

Although administrative department heads have not been told they should reduce the number of staff, managers may find it necessary to recommend reductions in the staffing levels within their departments. According to Maydew, if cuts must be made to staff positions, every effort will be made to accomplish this through attrition rather than layoffs.

She summed up the need for cost reductions this way: "At a place like Mount Holyoke, there are always more valuable things to do than there are resources available. We need to find thoughtful and creative ways to preserve what's most critical, to identify places we can scale back, and to work as efficiently as possible."