March 8, 2012

We are writing with an update on The New School's financial landscape. At the start of the semester, we wrote about the need to take a measured approach to planning now and for the next several years. The New School faces many of the same economic challenges as other colleges and universities, making access to higher education more difficult for students than ever before. This past fall, our enrollment did not grow despite projections for 400 additional students. That meant that revenue for the current fiscal year is approximately $9 million lower than planned. We want to explain the implications and opportunities of this shortfall.

The New School remains financially sound. But the challenges to higher education posed by this economy are here to stay. The New School must adjust its financial structure in order to remain strong for the foreseeable future.

Our strategic financial planning is based on the following principles:

• Given this economy, we must keep tuition increases as low as possible. Next year, tuition will increase 2%— less than half of the planned increase from previous budget models and well below the national average of 4.6 percent. The 2012–13 tuition will be posted on the website on March 26.

• We should not plan for overall enrollment growth for several years, which means expense must be consistent with expected revenue. Instead, we must be more deliberate about growth. This is part of a broader effort to strengthen, shape, and balance the size of The New School. In the coming years, we will create new degree programs that meet market needs and grow existing programs that have the capacity to accommodate more students without compromising quality. We will maintain some programs at current enrollments and intentionally reduce the size of others to improve quality and better support our students. The current economic environment has accelerated implementation of such changes.

We have rejected the idea of simply addressing financial shortfalls with an across-the-board cut. That approach is arbitrary and would harm students and academic programs. Instead, we will be more intentional about allocating resources and may even increase funding in priority areas such as student assistantships and financial aid. In addition, many of these structural adjustments to expenses will be put in place over several years. Central to all of these decisions is a desire to maintain academic excellence and core student services and to keep tuition increases as low as possible.

Over the last several months, the deans and vice presidents have worked with us to develop strategies to operate with more limited financial resources. They have thought creatively, made difficult decisions, and have been guided by a commitment to good service and operational effectiveness. As a team, we arrived at a set of measures that align expenses with projected revenue over the next few years. Here are the core elements of this plan:

• The majority of budget cuts will come from operational areas, not from academic divisions.

• The President's and Provost's offices have been reorganized generating approximately $2.5 million in savings.

• Continuing students who receive financial aid will receive award increases proportionate to the tuition increase.

• No reductions will be made in the areas of housing, health services, or other core student services.

• We have reduced costs by restructuring several departments, including Communications and External Affairs and Enrollment Management, and are finding less expensive ways to outsource certain services.

• Additional efficiencies will help The New School meet other goals. For example, reducing our reliance on print materials allows us to spend less and be more sustainable.

Given that more than 64% of operating expenses are attributable to personnel costs, we cannot address a fiscal imbalance without looking at staffing. We were able to fund only a limited number of faculty hires for next year. We have made decisions not to fill many staff vacancies and to eliminate some positions. Until we can assess fall '12 enrollment, we cannot determine whether we will be able to increase compensation for fulltime faculty and staff next year.

This community has demonstrated keen interest in understanding the financial picture. Please join us for two upcoming opportunities to learn more about higher education financing at The New School and elsewhere.

• The budget will be among the issues addressed at the Town Hall, Tuesday, March 20 from noon to 1:30 p.m. in Wollman Hall.

• For a more in-depth understanding and discussion, Dean Neil Grabois of the Milano School, and Frank Barletta, Chief Financial Officer, will host a series of information sessions in late March or early April.

Certainly we would prefer to avoid financial cuts of any kind, but The New School is not immune to an economy affecting universities nationwide. We are grateful for your understanding of the imperative to examine costs more strategically, to sustain our commitment to educational innovation, and to invest in programs that ensure The New School's healthy future.

With thanks,

David and Tim