<p>My favorite quote from the article is,“LBO’s from the top of the boom cycle are more vulnerable to default, and the mega-deals, well they just look like crap.”</p>
<p>Eric, you are right I probably assumed too low a number.</p>
<p>A word of caution from somebody who has looked at cost-cutting announcements from a number of schools:</p>
<p>When they say they need to cut “x” percent or “z” dollars from the budget, you have no idea if they are talking about cuts relative to last year’s actual spending or cuts to some projected out-year budget five years down the road. So, take those pronouncements with a grain of salt.</p>
<p>Kim, and his staff, did provide some very detailed financial projections in one of their video presentations to the community that I watched. I just can’t remember the details. All I know is that Dartmouth was among the schools that had to borrow taxable debt to pay the light bill. That, by itself, tells me that Darthmouth has some serious issues to deal with.</p>
<p>Dartmouth’s shortfall is $54 million in their 2011 budget and $96 million in their 2012 budget. Adding last year’s employee reductions to voluntary retirements and 70 layoffs this spring, they will have reduced their non-faculty workforce by 370 or so. That’s more than ten percent of the workforce, so it’s a significant number.</p>
<br>
<br>
<p>I’d like to point out that Dartmouth’s D-plan schedule that requires students to be in residence during their sophomore summer was established in the 1970s and has nothing to do with the current financial crisis. I know you didn’t say that it did, but a casual reader my not understand its history, since it was brought up in the context of the current problems.</p>
<p>Thanks, Coureur. It occured to me that I probably should have made that clear. I believe it was actually move made, in part, to go coed and expand enrollment without having to build additional facilities.</p>
<p>I’ve never really seen any analysis of the financial implications. I suspect the savings are minimal because the big cost item (faculty salaries) doesn’t go down. It may be a way of having a larger faculty for research at a smaller university. I don’t know.</p>
<p>I’m surprised that we don’t see some schools talking about the D-Plan as a way to signficantly increase enrollment (and tuition revenue) despite a lack of excess housing.</p>
<p>Dartmouth used $216 million from the endowment…plus $54 million in gifts for revenues…in fiscal 2009. That’s out of revenues of $700 million. </p>
<p>That’s quite a bit if the school has an endowment of $2.9 billion.</p>
<p>Page 5…</p>
<p><a href=“Dartmouth Finance”>Dartmouth Finance;
<p>Actually, it was $227 million from the endowment. The $216 million was from unrestricted endowment. There was another $10.8 million from restricted endowment. That would be over 8% of the new, lower endowment level which is why the budget has to be rapidly trimmed. </p>
<p>There are a lot of schools looking at endowment spending rates in the 7% to 8% range and making rapid cuts to bring that down.</p>
<p>Another thing that stands out to me is that Dartmouth receives $170 million in grants. How much is government money?</p>
<p>Almost all of it is government money, I think. There’s proabably some foundation money, like Hioward Hughes Medical Institute funding, Canegie Endowment, and so forth. I think most of the big research dollars come from Uncle Sam, NIH and so forth. Government money has, of course, been flowing as fast as it can be printed. A big chunk of the “stimulus” pork went to prop up higher ed bugets for one year.</p>
<p>I wonder if people realize how much the government supports these private institutions.</p>
<p>page 16…Dartmouth needs returns of 8 to 10% to operate as it does and protect itself from inflation.</p>
<p>With interest rates this low…I don’t think these returns are a slam dunk. I would take them. :)</p>
<p>"A big chunk of the “stimulus” pork went to prop up higher ed budgets for one year. "</p>
<p>So what do you think happens in a year or two?</p>
<p>^^Great…my taxes are going for something that hurts more than it helps</p>
<br>
<br>
<p>True, that was one of the reasons that drove the establishment of the D-plan. However, over the ensuing decades they went ahead and built a lot of new dorms anyway. Dartmouth’s housing is much expanded from where it stood back in the 70s, so I’m not sure how much it saved them in the long run. I guess what it allowed them to do was expand the enrollment quicker - ahead of the housing rather than waiting for the new housing to be built.</p>
<p>[?Layoffs</a> Are Not the New Crimson? - HUCTW and Supporters Rally Against Mass Layoffs at Harvard | Open Media Boston](<a href=“http://www.openmediaboston.org/node/1229]?Layoffs”>http://www.openmediaboston.org/node/1229)</p>
<p>Can’t imagine how ugly things might get when (I guess should say if but I don’t think if applies) they have to do some real cuts.</p>
<p>Recovery Act helps schools…</p>
<p>Some schools received quite a bit of money…I wish there were more details.</p>
<p>[News</a> Headlines](<a href=“http://www.cnbc.com/id/15840232?video=1456456138&play=1]News”>http://www.cnbc.com/id/15840232?video=1456456138&play=1)</p>
<p>Coureur:</p>
<p>Yes. That’s why I was pondering the impact of the D-plan summer term now, thirty years later. Is it a cost savings? Or, does it actually increase Dartmouth’s costs. I wouldn’t be shocked to find that it actually increases costs to have summer term – maybe more at a liberal arts college than a research university with year round activities. I don’t know.</p>
<p>I thought Williams should consider ditching the January Winter Study term as cost savings measure. That was an experiment from the 60s and 70s that very few schools jumped on. Although not universally, the academics during Winter Study are largely viewed as a joke and the main purpose of Winter Study for the students is party time. It impacts costs because profs are required to teach a January term course every other year, which changes the coarse load requirements. Of course, those kinds of distinctive programs are often viewed as sancrosanct, whether they make any sense or not.</p>
<p>sm74:</p>
<p>For the most part, college students are completely obvious to the realities of the economic situation and its impact on college budgets. Laying off workers is “bad”. Paying them hourly wage increases is “good”. All without regard to the fiscal underpinnings.</p>
<p>In some ways, I think higher education has probably done a disservice by not engaging the students in more of a teaching moment about the budget realities.</p>
<p>"Anyway…since you responded sm74…Dartmouth’s situation doesn’t look too good to me.</p>
<p>Some major alumni donations would be nice."</p>
<p>That’s something the BOD can get pretty much with one press release. They have a significant number of alums who have stopped donating including some of their major donors. They know why. They know how to fix it.</p>
<p>Interest-you wouldn’t think it would be too hard for these Ivy league kids to understand how endowments work, but about all you hear from these kids is hey how can you be cutting people when you’re sitting on $26Billion. Fact is many ivies are already spending far more from their endowment than they should-you accelerate the spending and all you do is wipe out the endowment faster than they already are.</p>
<p>“They have a significant number of alums who have stopped donating including some of their major donors. They know why. They know how to fix it.”</p>
<p>Ok …why? and how can they fix it?</p>
<p>Fire the financial managers?</p>
<p>My guess–the change in emphasis outlawing Greeks and putting more money into research. Trying to make D more liberal.</p>
<p>Restore parity to the board which they removed by fiat after being unable to do it by vote and protect that parity going forward.</p>