By Mira Lerner || Copy Editor
If you would like a short summary of Franklin & Marshall’s financial situation, here it is: “The endowment is just too small.” Paul Mutone repeated the statement so often at the budget forum held on Tuesday, November 12 that it took on a comical intonation. Nevertheless, in light of recent events on campus and calls for action that will require significant investment from the College, the budget forum was an interesting window into F&M’s financial situation. My main takeaway from the hour long session? Current student unhappiness has dire implications for F&M’s future.
Each fiscal year, the Budget Priorities Committee (BPC), creates a recommended operating budget. To do so, they examine past budgets and spending patterns and talk to senior management and leaders about the spending they oversee. For example, the provost is allotted around $49 million dollars each year under the heading “academic affairs.” After the BPC has compiled a budget recommendation, they give it to the president, who has the prerogative to make changes. The president then gives the budget plan to the board of trustees, who ultimately must pass or reject the budget. If the board passes the budget, no more changes can be made and each department/office receives their suggestion.
Suggestion. I asked Paul Mutone, Vice President for Finance & Administration, Treasurer, and Ex Officio for the BPC, what happens if people/departments go over budget? He acknowledged that such a problem does exist- “They can go over, but in the past there have not been punishments or repercussions for doing so.” Overspending is where the operating budget deficit begins and why the College must draw from its endowment.
The operating budget for the 2020 fiscal year was a little over $133 million. To keep up with our peer institutions, the BPC said, that number needs to be more like $150 million. Seventy seven percent of that money came from the revenue made off of students and 15% from the endowment—the inverse of how we should be pulling money. For operating costs, the BPC explained, more money should be available in the endowment and the percentage coming from students should be much lower. “We have a $133 million operating budget and not a dime for the unexpected,” said Mr. Mutone.
F&M’s financial situation is definitely hurting current students; there is a lack of funding for student-programming and we are the 10th most expensive college in the country. Most organizations and departments are fighting for a piece of the budget and the lack of resources is having an effect on community satisfaction. As exemplified by the recent protests, news interviews, letters to The College Reporter, signs on the protest tree, and forums, many students at F&M are unhappy at the moment. They are not happy with the administration, their fellow students, and the campus culture that both bodies create together.
As many challenges as current members of the F&M community face, future students may have larger problems and a smaller endowment if the administration does not address student demands. Unhappy students turn into unhappy and disconnected alumni. A large part of why F&M already has a small endowment is alumni disengagement. At the forum the BPC said, “Many alumni are largely disconnected from the school and therefore don’t donate, which is really hurting the endowment.” If the current student population walks away from F&M without the intention of giving back, as has happened in the past, the endowment will most likely get smaller, and future students will feel the effects.
“I’m optimistic—and that’s saying something,” the BPC president, Seth Kopchak, inserted at the end of the forum. The joke earned him a few chuckles. The 2021 fiscal year is projected to end with a $2.3 million deficit. However, that number does not include several factors, such as slowing the rate of tuition increase and reducing the rate of endowment draw. That could send the deficit up to $9 million.
Going forward, the BPC explained their rationale as trying to find places to save in order to avoid “cutting into the meat, which is the educational experience of the students.” Major cuts may be coming, but F&M needs to find the money to financially support multicultural programming and resources, or it’s looking like our problems will only get worse.
Senior Mira Lerner is a Copy Editor. Her email is mlerner@ fandm.edu.