Dear Haverford College Students, Parents, Faculty, Staff, Alumni and Friends,

The Haverford College Board of Managers has just approved our budget for FY 2009-10, and I'm writing to update you on these plans.

Earlier this year, I wrote to describe the impact of the evolving economic downturn, and I underscored the need to reduce operating expenses across all divisions of the College. I'm extremely pleased to report that faculty, staff, students and administrators have responded to that challenge with imagination and determination such that our current fiscal year-to-date actual expenses are running 3.5% below budget. While this has meant the elimination and/or deferral of a variety of activities and initiatives, such reductions have been made with an eye toward minimizing direct impact on our academic and student service programs.

We have applied these same principles, that is preserving our most vital programs, in a year-long process of budget planning. This process has incorporated suggestions, input and critique from every corner of the Haverford community as well as detailed debate at the Administrative Advisory Committee of the College.

That said, we have had to prepare the FY 2009-10 budget with the knowledge that our available endowment drawdown will be approximately 30% less than in FY 2008-09, resulting in an 8.4% reduction in our expense budgets.

As part of our need to reach a balanced budget incorporating this level of expense reduction, earlier this year we decided to increase tuition and fees for next year by 4.1%. We are very sensitive to the reality that this increase comes at a difficult time for our students and their families, and thus we are also increasing our commitment to Financial Aid, up 12% from last year and 40% over the past three years. We remain fully committed to retaining our policy of need-blind admissions, and we also will continue the program endorsed by our Board last year to reduce family and student contribution requirements in financial aid packages. These programs include both reduction in home equity valuations in calculating family contributions and substitution of direct grants for required student loans.

Given our need to limit tuition increases, we must significantly reduce real expenses if we are to balance our budget. To achieve this goal, the major components of our plan are:

• Operating expenses (travel, supplies, duplicating, telephone) will be cut more than $900,000 (8.4%). Program Cuts made in various functional areas of the College in the proposed operating budget include: -2.4% for Instructional Programs, -3.1% for Academic Support, -9.6% for Student Services, -7.0% for Institutional (general administrative) Support, -10.3% for Facilities Management, -9.2% for Auxiliaries, with the overall reduction at -8.5%.
• The base medical insurance plan that the College provides for each eligible employees will be changed to the IBC Keystone POS (point of service) plan, a quality product with which virtually all major healthcare providers in our region participate. This, coupled with other incremental changes in healthcare financing, will realize savings approaching $1.2 million.
• The contribution made by the College for employee pensions (TIAA-CREF and Fidelity) will be temporarily reduced from 12% to 10%, saving some $570,000. Employees wishing to do so can offset this cut with personal before-tax contributions to a Supplemental Retirement Annuity. It is our intention to restore this contribution rate to 12% as soon as financial conditions permit.

Through attrition, a retirement incentive program, and if necessary reductions in force, 28 staff positions will be eliminated from the College's employment base. To minimize the need to reduce staff positions, College Senior Staff is directly contributing. I will be giving 10% of my salary back to the Annual Fund next year and other members of Senior Staff are making contributions in salary reductions or new Annual Fund contributions of up to 10% of their salaries.

While these reductions are serious, we believe they are necessary given the likelihood that this downturn may continue for some time. While it is always tempting to forego reductions such as these, we believe that it is important not to risk the future of the College and its future students, faculty and staff by failing to make the cuts that are now required.

In closing, I'd like to pass along some remarkable – or, given this community, perhaps not so remarkable– financial news. As you know, our expenses are principally covered by three revenue sources: tuition, endowment spending and gifts from people like you. With families strapped like never before and endowment down significantly from its 2007 peak, the first two sources of funding are under severe pressure and many of our peer institutions are reporting declines in gifts to their Annual Funds -- in some cases, dramatic declines.

That is not the case at Haverford, where the Annual Fund thus far is up nearly 15% from this time last year, and close to a record. I think it speaks volumes about the College when those who have most benefited from a Haverford experience – its alumni – are the first to step up and do all they can to enable others to have the same opportunities. It is precisely this generosity which has mitigated the impact of the cuts we must make on the quality our students' educations. If you have already given, I thank you; if you are considering a gift, on behalf of students here now and in the future, I also thank you and encourage you to go to www.haverford.edu/giving or call 1-866-GIFT-4HC (1-866-443-8442).

These are unprecedented times that require us to do all we can to safeguard the College. I am grateful to every member of our campus community and the Board of Managers for working so hard to ensure that we will be able to stand by our principles as we stand up to the challenges that confront us.

All the best,

Steve