Comprehensive fee increases, part 2

By Benjamin Engle

Union College has three sources of revenue that support the budget: the comprehensive fee, endowment income, and gifts to the Annual Fund. The comprehensive fee is 74% of the budget while the endowment income is 14% and the Annual Fund, which is made up of gifts from alumni, contributes 3%. Bookstore, Dining Services, and other miscellaneous sources make up the remaining 9% of the budget.

At its peak, the endowment contributed 15% to the budget. However, the economic recession has played a major role in the increase in the comprehensive fee because the endowment and Annual Fund cannot contribute as much to the budget as it once did. The endowment dropped approximately $100 million from its high of $400 million in 2008 and the number of gifts to the Annual Fund has also decreased.

Like many other liberal arts schools, Union is currently attempting to determine if there is a fourth source of revenue available to the institution. Recently, Middlebury College in Vermont announced that it is investing $4 million for a 40% share in "Middlebury Interactive Languages," an online language program for students Kindergarten through 12th grade. Middlebury is hoping that the computer software will provide a fourth revenue stream to support the College's liberal arts-style of teaching.

"We wanted to do something about the fact that not enough American students are learning other languages, and it's harder for students if they don't learn language until college," Middlebury President Ronald D. Liebowitz said in an interview with a writer from the New York Times on April 13, 2010. "It is also my belief, and I think our board's belief, that finding potential new sources of revenue is not a bad thing. By doing what we're doing with this venture, we hope to take some stress off our three traditional sources of revenue- fees, endowment and donations."

While Union's administration and Planning and Priorities Committee are planning to determine if there is another way to bring in revenue, they do not want to compromise the reputation of the college.

"We don't want to do something for the sake of money," Blake said. "It has to relate to the school. We have to do things that make sense for Union."

Even though Union is looking outside of the box for new sources of revenue, the college is continuing to keep a close eye on the budget to determine whether cuts can be made.

This process has been ongoing since the 2008-2009 academic year, when each Vice President was asked to determine where they could make a 5% cost reduction to see how the cut would affect the College. While the Vice Presidents didn't make 5% cuts across the board, some departments made more cuts than others.

Moreover, even though the college is not instituting a hiring freeze, departments are undergoing a review process to determine how each can deliver services more efficiently. However, the college would like to undergo "growth by substitution," meaning that when a position opens, the college can opt not to fill every position and use the additional money for new creative projects and initiatives.

However, as Union prepares for future budgets, the institution is mindful of its competitors.

"Union is in an academic arms race," Blake said. "We are a very elite school and have a high ranking and an impressive peer list. We are keeping an eye on what other [schools] are offering since we don't want to be at a competitive disadvantage."

While Union is navigating itself through increasing costs of goods and labor as well as an economic recession, Blake believes that the situation is improving.

"The situation is not dire since we are constantly looking ahead," Blake said. "We are taking actions so problems aren't exacerbated."

Originally published in Union's Concordy on May 13, 2010.

Comprehensive fee increases for 35th consecutive year

By Benjamin Engle

This two-part article was written in response to an email from alum Geoff Pietsch '59. He paid 900 dollars for tuition during his four years at Union and questioned the justification behind consistently rising rates of the college's tuition.

The Union College comprehensive fee will increase in the 2010-2011 fiscal year for the thirty-fifth consecutive year.

Up 3.75% from the current 2009-2010 fiscal year, the comprehensive fee, which includes the cost of tuition, room, board, student activity fee, and Minerva House fee, is scheduled to be $53,329 in 2010-2011. The 3.75% increase is the lowest increase in the comprehensive fee since the 2001-2002 fiscal year.

According to the National Center on Public Policy and Higher Education, college tuition and fees across the country from 1982 to 2007 increased 439% while the median income only rose by 147%. From 1982 to 2007, Union's comprehensive fee increased $17,219, almost a five-fold increase.

While the cost of college is increasing at a greater rate than the rate of inflation, Diane Blake, Vice President for Finance and Administration, believes that college tuition cannot be based on the Consumer Price Index (CPI) since institutions of higher education have their market baskets of goods are different. Instead, colleges are held to the Higher Education Price Index (HEPI).

According to Commonfund, the group that calculates the HEPI, "HEPI measures the average relative level in the prices of a fixed market basket of goods and services purchased by colleges and universities through current-fund educational and general expenditures." The HEPI is comprised of faculty, administrative, clerical, and service employees' salaries and benefits as well as miscellaneous services, supplies and materials, and utilities.

Meanwhile, the CPI, which is compiled by the U.S. Labor Department's Bureau of Labor Statistics, is a measure of the average change in prices over time in fixed basket of goods and services that people buy for day-to-day living. The CPI is made up of food, clothing, shelter, fuel, and transportation fees, among other services.

According to Blake, Union's comprehensive fee increases yearly despite departmental and administrative cuts since the various costs of labor make up almost half of Union's budget.

"We are a labor-intensive institution," Blake said. "We pride ourselves on our 10:1 faculty ratio. If we didn't maintain that ratio, Union wouldn't be the education you applied for."

Union takes pride in the quality of faculty that it hires. This goal, however, is an expensive one, since most of the faculty hold Ph.Ds or the highest academic certification in their field. Also, Graduate Assistants and Teaching Assistants do not teach classes at Union.

"[Students] come [to Union] because of the small class size, close interaction with professors, and classes taught solely by those with PhDs," Blake said. "We don't want to lay off faculty because we want to maintain our current ratio."

Despite the fact that faculty and staff salaries and benefits make up the greatest percentage of the annual budget, Blake admits that those emoployed by the college are underpaid.

"On average, the faculty [at Union] is not paid as well as those at our peer institutions," Blake said, "but it is part of the Strategic Plan to improve the situation."

The comprehensive fee that students pay continues to increase annually because traditional revenue sources for the college have decreased over the years.

"The full price is not the cost of a Union education," Blake added.

Benjamin Engle's coverage of rising tuition at Union will be continued next week in our 5/13 edition.

Originally published in Union's Concordy on May 6, 2010.

Analysis Reveals Effects of Economic Downturn

By Benjamin Engle

Union College officials are closely monitoring the news of the economic crisis after the results of its internal financial stress analysis.

At the September meeting of the Executive Committee of the Board of Trustees, the Trustees decided to have the Finance and Administration staff conduct an analysis of the college’s financial weaknesses.

The stress analysis considered factors such as unemployment rates, stock market and credit market performance, and how Union families are being affected into consideration. In addition, the Finance and Administration department took into account the declining amount of wealth of its families and the potential for increases in financial aid need.

During the winter break, President Stephen Ainlay issued a message to the Union community regarding the state of the economy and its effect on Union. In his letter, Ainlay stated, “…Union College is by no means isolated from the effects of the economic downturn, and this has commanded a great deal of our time and attention in recent months.”

According to Diane Blake, Vice President for Finance and Administration, Union’s endowment, like most colleges and universities, has taken a hit. The value of Union’s endowment has declined by 25%, a drop of $100 million since June 30, 2008. At the end of the 2007-2008 fiscal year, the endowment was $400 million, however, because of the economic events, as of December 31, 2008, the endowment stood at $300 million.
Nevertheless, “Our endowment has performed better than most,” Ainlay wrote. “While we too have realized losses, we have consistently outperformed the S&P and composite index in 2008 year-to-date.”

Even though 15% of Union’s $130 million budget is comprised of income from the value of the endowment, Blake is optimistic, “The downturn wont hit us today, but it can hit us later. Our best hope is for the market to go up for the year ending June 30th.”
Because of the uncertainty of the market and the future value of the endowment, the President and Board of Trustees have delayed the budget presentation and approval process. In past years, the Board of Trustees has usually approved the next year’s budget at their February meeting. In order to ensure that they don’t make any rash or sudden moves, the 2010 budget will tentatively be approved at the May meeting of the Board of Trustees.

In preparation for next year’s budget, Blake and her staff are investigating various strategies that won’t affect Union’s day-to-day operations, however, they are being cautious. In preparation for next year’s budget, the college has set a hiring freeze and is not filling many open positions.

The Board of Trustees will analyze these different strategies at their February meeting, as well as make difficult decisions, including the fate of the new 35,000 square foot Peter Irving Wold Science and Engineering building to be built in the area between Olin, Science and Engineering, Schaffer Library, and Social Sciences
“We at Union are hesitant to act irrationally,” Blake stated. “We already maximize our resources and stretch the budget pretty far. We make sure we have the facts before we make decisions.”

Recently, college layoffs have spiked across the country. According to a December survey of over 200 public and private colleges and universities by the Chronicle of Higher Education and Moody's Investors, 11% of schools had laid off employees and an additional 26% of schools were considering layoffs. Locally, RPI has come under much criticism for laying off 98 employees in an effort to handle their economic problems. The Albany Times Union reported that RPI was the only capital region college to conduct layoffs so far.

According to Blake, Union is not considering following RPI by laying anyone off at this point.

“We value community and commitment. Layoffs [are] not on the table,” Blake said.
While Blake believes that any money lost in the endowment is a loss and is hard to recover, she is looking ahead relatively positive, “Budget 2010 will be a tight year but we do not expect a shortfall.”

Even though the 2010 budget is not expected to have a short fall, the Department of College Relations is working hard to ensure that Alumni giving stay stable. According to Nick Famulare ’92, Director of Alumni Relations, in 2008, there were approximately 8,300 donors to Union with a 41% alumni participation rate. During the course of 2008, Union took in approximately $27 million.

However, the economic problems have not spared Alumni giving.

“No question about it, like our peer colleges, the downturn has affected donor participation and gifts to the institution,” Famulare said.

According to Famulare, Union is behind in both donor participation and general gifts to the institution. Alumni are being more cautious because of the uncertainty of the economy and of their jobs. While Alumni are being more conservative in their giving, Famulare believes that donors will come back in a few months and may still donate when the economy improves.

Famulare is optimistic that Alumni and community donations will return to pre-downturn level, “Union has been around for over 200 years, with an annual fund that is one of the oldest in the country. Alumni have rallied before to support Union during troubled times and I am confident they will do so again.”

As President Ainlay stated in both his fall letter to the community and in December, he believes that Union is in a good position in the educational market place.

“…We will not jeopardize the quality of the Union experience or compromise in any way the health and safety of our community,” Ainlay wrote. “The bottom line is that, despite the economic downturn, Union remains strong.”

Originally published in Union's Concordy on January 22, 2009.