November 4, 2008
President, Provost Address Primary Questions Regarding Elimination of University-wide Deficit
To the Case Western Reserve University Community:
In the days since we announced the elimination of our deficit, we have heard two primary questions:
- What about the burdens individuals carried to allow the university to realize the savings that balanced its budget?
- What impact will the world-wide economic crisis have on our finances going forward?
In this letter we will answer both queries in detail, but want to begin by underscoring one primary message:
This university is full of enormously talented people committed to learning and discovery, research and teaching. You are responsible for our successes over the last year, and you are critical to our sustained excellence in the future.
1. With regard to the hardships borne in the effort to reduce costs:
First, to all of you, let us say this: Thank you.
We recognize that fiscal challenges have required exceptional efforts and sacrifice by individuals across this campus – and for more than just the past year. We are deeply grateful to all of you for the extraordinary contributions you have made to this university and to one another; more, we hope you understand the tremendous positive impact you have made on our collective future.
By balancing our finances three years ahead of schedule, we have put the university in a far stronger position. First, we are more attractive to donors. Individuals and organizations hesitate to invest in organizations with deficits, fearing that their dollars will go toward “filling holes” rather than new initiatives. Second, rating agencies look more favorably at us, which means we will not pay as much to borrow money – or at least we will not have to pay more. Finally, a surplus signals to everyone inside and outside the institution that we know how to manage our finances, a message that inspires confidence and support across a broad range of stakeholders and constituencies.
In short, fiscal stability leads to enhanced resources and greater overall confidence in the institution. By accelerating the resolution of our finances, we aim to reduce the burdens everyone carries, and begin to attract the support necessary to truly advance this university.
2. As for the impact of global financial developments:
Our recent efforts to resolve our finances and improve fiscal management mean that we are much better prepared to make thoughtful plans for the future. In addition, our investment office has done an outstanding job both in diversifying our portfolio and accumulating impressive returns when markets were more positive. Its sophisticated approach has protected us from the liquidity constraints faced by other institutions. At the same time it has provided some cushion to help us weather the current financial storm.
That said, predicting the impact of recent events is challenging for all of us. Just as many of you have done with your own investments, we too can do little more today than be as responsible as possible with existing resources. Our leadership team is examining this year’s spending to identify areas of potential savings, even as we prepare to build next year’s budget. We do not forecast any workforce reductions, but we do encourage all of our leaders to examine ways to postpone less critical expenditures.
Even in this time of uncertainty, a few key principles remain paramount:
1. Financial support for students: Over the last decade our need-based grant aid for undergraduates has more than doubled. This year 93 percent of our students received aid, and the average total award was $33,900. We will continue to do all that we can to make an education at Case Western Reserve University affordable, both by restricting tuition increases and investing in financial aid. We also hope to enhance support for graduate students.
2. Competitive compensation: Pay freezes represent a short-term solution that ultimately cost the institution dearly when talented individuals leave for other opportunities. We are committed to keeping our best people here, and are looking at individual and systemic adjustments to support that goal. Improvements will take time, but the process already has begun.
3. Investment in strategic priorities: Our community spent the past year developing an ambitious strategic plan that identified specific academic alliances. We plan to invest new resources toward select, high priority initiatives that promise progress in these key areas.
In the coming weeks we will be meeting with faculty and staff at each school. We encourage you to attend those meetings, and look forward to hearing your questions and comments. For now, thank you again for all you have done to create the great positive momentum that Case Western Reserve University experiences today.
Barbara R. Snyder
W. A. “Bud” Baeslack III