|David E. Van Zandt, President and Tim Marshall, Provost|
January 21, 2012
With the start of the semester, we want to share an update on The New School's financial outlook. For several years, we avoided the kinds of financial crises faced by universities more dependent on endowments or government support. But because we are tuition-driven, we are not immune to economic challenges. We also wish to slow tuition increases and stay sensitive to economic pressures faced by our students and their families. Finally, we do not want to overburden our facilities or add related stress to our academic programs.
The New School has been on an aggressive growth path for quite some time. When David took over last January, he indicated his concern about this on a number of fronts. At the time, we began to consider what could be done to reduce the growth imperative consistent with our strategic goals. We have been working with the deans and vice presidents to examine all our activities and their cost structures in order to adjust to economic realities.
As we communicated this fall, enrollment growth came to a halt because of external market conditions. Prospective students and their parents are balking at the price of higher education and looking more closely at the benefits of incurring substantial debt. As a largely tuition-funded school, we have accelerated efforts to adjust our plans for future growth.
Even with conservative spending all year, we have used almost our entire $12 million annual contingency. Going into the next fiscal year, we face a $17 million deficit out of a $330 million total budget. We did not want to make across-the-board cuts this time; instead, we decided to use the strategic financial planning process already underway to adjust expenses in a more deliberate manner. Over the next several years, we have an opportunity to use the current challenges to shape The New School's future by:
To attract and retain students, we must keep tuition increases as small as possible. Earlier budget projections were based on a tuition increase as high as 4.6 percent. Next year, we anticipate a significantly lower increase, in line with inflation, to help minimize students' financial burdens. An alternative approach taken by a handful of colleges recently is to lower tuition from 10 to 20 percent by reducing financial aid. We decided against this to preserve our capacity to assist students with the greatest need. In fact, we will continue to guarantee that financial aid for continuing students will be increased in proportion to any increase in tuition.
For years, robust growth served The New School well. Taking the economy into account, however, next year's budget assumes no revenue from an increase in enrollment. At the same time, we know that some programs will grow and others will shrink. This is important as we begin to articulate an academic vision for The New School and be more intentional in the school's design. Without the pressures from an expectation of aggressive growth, we can manage important changes with an eye towards maintaining and improving academic quality.
Over the last several years, we have invested heavily in building the full-time faculty. In the current economic climate, however, we will proceed with far fewer full-time faculty searches. We have worked with the deans to identify and approve only the most critical
All areas of the university will realize cost savings. Strategies may include reducing expenses in some categories, restructuring operations to be more efficient, reassessing staff vacancies, or devising other alternatives. Your deans and vice presidents are speaking with us about their divisions and operations and will be in communication with you over the next several months about changes and cost-saving strategies for your division or area. We all welcome your suggestions as well.
We understand that all of these decisions come with consequences. Although we would prefer to begin the semester with a brighter forecast, this financial picture accompanies an evolving strategy for The New School that preserves fundamental values of cutting-edge creativity and public engagement while protecting academic assets and keeping students at the center of all of our decisionmaking.
David and Tim
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