This page was created in Spring 2016 as part of institutional budget planning deliberations.

Reaching Budget Equilibrium: Key Points

Haverford’s academic excellence is at the heart of our mission and economic model. Sustaining that excellence is our highest priority.

As detailed below, Haverford (like virtually every other college and university in America today) faces fiscal challenges. To help ensure that we on the Board of Managers make wise and well-informed choices in response to these pressures, College leadership has modeled dozens of possible financial scenarios which have been presented to, and discussed with, students, faculty, and staff. These meetings have been an opportunity for the campus community to examine the possibilities and ramifications of myriad paths forward.

We are happy to share with you details of those conversations, and our thinking about next steps. There is a comment field for your thoughts at the conclusion of this document; many thanks for taking the time to first familiarize yourself with the underlying issues and options as we determine how best to ensure that Haverford continues to deliver academic excellence in perpetuity, in ways consistent with community values.

  • Background
    • In order to ensure Haverford's mission of academic excellence in perpetuity, which is the fiduciary duty of the Board of Managers, the College is developing a multi-year plan to achieve operating equilibrium on a full-accrual basis. The Board will make final determinations about the best path forward for Haverford.
    • What we face is not an existential issue; Haverford's overall financial condition is reliably sound, and our standing as one of the nation’s finest liberal arts colleges continues to attract record numbers of applicants as we enroll the most qualified students in College history. Addressing the continuing budget deficit will safeguard all levels of the operation, for generations to come.
    • Many of the current financial pressures can be traced back to the Great Recession; notably, in 2009 and for the first time ever, the cost of a year at Haverford (or any of our peers) exceeded median U.S. family income. As we will note below, Financial Aid costs have dramatically increased for this and other reasons, and economic predictors suggest that these two trend lines will not re-cross on their own in the future, so we must recalibrate our budgeting.
    • The external environment is likely to remain challenging for higher education; Haverford should not expect changing external circumstances to relieve us of the burden of difficult choices.
  • Possible Paths Forward
    • Over the 2015-16 academic year the College, through a consultative process and using our existing shared governance structures, modeled a wide range of representative scenarios that would provide the long-term financial equilibrium required to support Haverford’s mission for future generations. The Board is now considering these scenarios.
    • Only a handful of budget ‘levers’ are large enough to re-center the budget into balance unilaterally:
      • Tuition
      • Number of students
      • Amount of Financial Aid awarded
      • Number of faculty and staff
      • Compensation
    • Thus far, there has been no support for imposing a radical enough change to any single lever that would alone make a sufficient budgetary impact. That magnitude of change to any core attribute of the College would jeopardize our ability to uphold Haverford’s mission of academic excellence, which is our central imperative. This leaves us with a likely blended approach, adjusting several levers incrementally and simultaneously.
  • Enrollment and Tuition
    • The Board is considering the possibility of a modest increase in enrollment (~7 students per year). Insofar as it plays a role in moving the College to financial equilibrium, such enrollment growth would be only one element among many in a “blended” approach, and it would likely be accompanied by commensurate investments in faculty, staff, and facilities needed to support a slightly larger student body (see below).
    • Increasing the number of students beyond a marginal number without simultaneously increasing faculty, staff, and facilities resources would undermine the academic and community experience.
    • Balancing the budget through tuition increases alone risks adding further burdens to students and families, pricing Haverford out of the market, and could ultimately increase Financial Aid expenses.
  • Compensation & Number of Employees
    • The Board is considering minimal increases in staffing as dictated by potential modest increases in student enrollment, and compensation policies that are driven by broad economic conditions.
    • What defines the Haverford experience more than anything is the people who make up our community. The educational experience we offer relies on attracting, supporting, and retaining the highest quality faculty and staff.
    • Maintaining optimal staffing levels—achieving our goals within our means—is an ongoing part of disciplined institutional management at Haverford.
    • Balancing the budget through little or no increases in compensation (let alone cuts) will not help us achieve sustained excellence; indeed, underinvesting in our faculty and staff would ultimately degrade the quality of education.
  • Financial Aid
    • In every financial scenario being considered by the Board, the College projects continued growth of Haverford’s Financial Aid expenditures.
    • First, some definitions:
      • ‘Need blind’ as it is practiced at Haverford and most peer institutions means that admission decisions for U.S. citizens and permanent residents are made without taking into account one’s ability to pay tuition. Haverford is, and has always been, need-aware for students who are not U.S. citizens or permanent residents. Haverford has also on occasion been need aware for students admitted off the wait list or as transfers. Only five institutions in the country are need-blind for all applicants, regardless of category, and meet all students’ demonstrated need.
      • ‘Meeting full demonstrated need’ means that we apply a consistent formula to all financial aid applicants to determine how much each can reasonably be expected to contribute toward the cost of a Haverford education; the College will then cover any remaining amount through the provision of financial aid, i.e. grants, work study, and (in some cases) loans.  We believe that the commitment to meeting full demonstrated need is the most important element of student access and support.
      • ‘Need aware’ means that an institution has an overall ceiling to its financial aid budget, and so at some point in the admission process some applicants’ ability to contribute will likely be taken into account.
    • Financial Aid is at its highest levels in the College’s history. It is the second-largest component of Haverford’s budget (behind only compensation) and accounts for roughly 20% of our gross annual expenditures. It has grown by roughly 50% over the past decade.
    • Under current policies, we cannot fully know how large that second-largest component of our budget is going to be until our first-year class is enrolled. In order to preserve our huge and growing commitment to ensuring that everyone admitted to Haverford can afford to enroll, we need to be able to plan for this budget line within the normal budgetary process.
    • We fully expect that Haverford's commitment to Financial Aid will continue to grow; the question is whether its growth should be managed and, if so, how to do that in a manner that is consistent with our values and long-term goals.
    • In part, we are at these crossroads because Haverford is extraordinarily generous. An already-significant commitment to access and affordability was expanded in 2007.  Despite the subsequent financial pressures of the Great Recession, most of the more generous aid policies still remain in place today in order to maintain our commitment to robustly meeting every student’s need–including a ‘no loan’ policy for more than half of our aid recipients and a low home equity variable for all.
    • While these policy changes did add significantly to the financial aid expense, they nonetheless represent only a portion (just under 20%) of the overall increase in Financial Aid the College has experienced over the past 10 years. Even if we restored loans to their pre-2007 levels, the savings would not recoup enough to allow us to preserve a need-blind admission policy.
    • The Board is considering whether, as one budget adjustment among many, our admission process should be open to the possibility of increasing, by a small number, the number of students already admitted on a need-aware basis. As detailed below, such a change might not impact any students at all; however, we are planning on the assumption that an additional 10-15 enrolled students (of a caliber consistent with the rest of the class and which would involve the last ~4% of those whom we admit) would now be admitted need-aware.
    • Haverford is committed to meeting the full demonstrated need of every student we admit. To do anything less could prevent many of the students we admit from being able to join the Haverford community, or might force them to take on excessive debt in order to attend Haverford.
    • Current students and their families would not be affected by any changes we adopt.
    • To be clear, the amount we spend on Financial Aid is projected to increase. There has never been a serious proposal to reduce the amount of Financial Aid provided.  Rather, the College is considering managing the rate of its growth.
    • As President Kim Benston has pointed out at our open campus meetings, maximum access and affordability is one expression of our values, but so is academic excellence for generations to come. Accessibility cannot be sustained to the exclusion of every other aspect and attribute of the Haverford experience.
  • Admission Process: How would things change?
    • The review and evaluation of all applications would be conducted in a unified, holistic process as it is now, without regard to a student’s ability to pay.
    • It’s important to bear in mind that Haverford is currently need-blind in the first-year admission process for U.S. citizens and permanent residents only. As is the case at all but five institutions that are need blind and meet 100% of demonstrated need, Haverford has a need-aware admission process for foreign nationals and undocumented students, and we do not guarantee that we are need-blind for the waiting list or transfers.  As some have noted, it would be possible to address our budget concerns invisibly, by quietly shifting the admission process toward the waiting list; however, in our view, such a scheme would be inconsistent with our values of openness and transparency.
    • The proposed adjustment to our Financial Aid policy, then, would not represent a wholesale change to the admission process; the overall impact on the decision-making process and on the incoming class would be small.
    • What, then, would ‘need-aware’ mean at Haverford?
      • To be clear, all applications would be evaluated on their merits; ability to pay would not be a factor in our assessment of a student’s qualifications.
      • The admission process would be conducted in a need-blind fashion until we have exhausted what we expect will be an ever-increasing budget for Financial Aid.
      • At that point—and we estimate it will affect ~4% of an incoming class, around 10-15 students—we would need to know how much of our aid budget remains, and would make admission decisions with an eye toward managing to that specific Financial Aid budget.
      • We may be able to remain need-blind through the entirety of the admission process; need is unpredictable and dependent on each year’s applicant pool. The difference lies in being mindful of a budget that ensures excellence and institutional integrity in perpetuity, while enabling all admitted students to afford to enroll.
    • The racial and ethnic diversity of the incoming class is—and will continue to be—a top consideration in the admission process; we do not anticipate that a change in our Financial Aid policy will substantially alter the composition of the community along these lines.
  • Benefits of a Balanced Budget
    • Fiscal equilibrium is a necessary precondition to preserving the College and its standard of excellence for future generations.
    • A balanced budget on a full-accrual (GAAP) basis should enable us to begin a conversation about a profound and emerging need:  what we call ‘post-turnstile’ expenses that Financial Aid does not address, and which a growing number of students from low-income backgrounds cannot meet (such as student travel costs for internships and breaks). As a recent article in the Washington Post points out, access to a college education without resources to ensure that all students will thrive there is meaningless, and we look forward to inviting our alumni to join us in support of these students by giving generously in support of a new fund chartered for this purpose.  (If you are interested in learning more about this, please provide contact information in the comment box.)
    • Ultimately, Haverford is competing for exceptional students, faculty, and staff who have many fine choices in the educational marketplace.  Balancing our annual operating budget will enable us to offer a compelling and competitive educational experience and ensure that Haverford remains relevant and robust in perpetuity.
  • How Does The 'Lives That Speak' Campaign Figure Into These Changes?
    • Current fundraising will continue to strengthen financial aid and other key institutional priorities, but it will not be sufficient on its own to provide ongoing fiscal equilibrium.
    • We have reached our ambitious, top-line goal ($225 million), but several campaign priorities (including Financial Aid) have not yet reached their campaign targets.
    • We will spend the next year focusing on these areas in order to surpass the goal with vigor and fund all of the campaign priorities.
    • Even without campaign projects such as the renovation of Magill Library and retrofitting of the Old Gym as a place for the study of arts and visual culture, our budget imbalance would remain.  Indeed, diverting funds from our physical plant would only forestall the inevitable by a few years as we retreated from our commitment to academic excellence.  As donor choices make clear, those who are inspired to give to Haverford fund myriad priorities in order to sustain excellence.
    • Haverford alumni, on a per capita basis, are giving at levels that meet or exceed our peer colleges. New gifts for financial aid will enhance student access, but unless they are of a size unprecedented for Haverford by orders of magnitude, they will not—given the extent of recent and projected financial aid growth—obviate the budget and policy questions the College is confronting.

We know from recent market research that the best students are seeking a balanced experience across all dimensions of their undergraduate journey.  To privilege one aspect of that experience at the expense of others does not position Haverford to deliver what we know the most talented students seek.  And make no mistake, these top-tier students have great choices, with academically successful, underrepresented students having the best choices of all.  The most effective way to attract high-caliber students is to provide a full and balanced experience marked by exceptional academic opportunities.

Without question, the most intense campus conversation thus far has centered around values and how these proposed changes align with community standards and expectations.  If we are truly committed to what we think of as ‘Quaker values’, the commitment to excellence in perpetuity needs to be sustained.  Indeed, in our view, ‘values’ only have meaning when they are evidenced by actions.  We are not being truthful if we say we can sustain something that we cannot.  An editorial published in the student news outlet opposing changes to Financial Aid policy no doubt spoke for many.

President Benston’s response is equally engaging.  If that constellation of issues is of interest, we encourage you to read them.

Thank you for supporting Haverford.

Rick White '81
Chair, Board of Managers

Garry Jenkins '92
Vice Chair, Board of Managers