April 3, 2020

April 3, 2020

Dartmouth's early response to the COVID-19 outbreak has been guided by the urgent need to protect the safety and health of our community, while doing all that we could to ensure the continuation of our students' education, our faculty's research, and the support of our staff that enables both. This remains our priority and the basis for every decision we have made. Informed by guidance from public health experts, our actions over the past eight weeks have allowed us to maintain education and business continuity during this evolving pandemic.

The immediate and visible consequence of these actions has been the sudden quiet of the campus and, for most, the transition of work, including teaching, to our homes. As President Hanlon noted in his letter last week, less visible, but equally abrupt, has been the change in global economic conditions, which have hit all sectors of the economy, from small business to industry and higher education. The magnitude of economic change is enormous, and the speed with which it's happened is even greater. The U.S. Labor Department reports that a record 10 million Americans applied for unemployment benefits over the past two weeks, whereas in the first four months of the Great Recession, beginning in September 2008, approximately 1.9 million jobs were lost.

Our revenue stabilization fund, established by President Hanlon after his arrival in 2013, will help buffer the economic effect on Dartmouth, but we cannot escape the impacts of an economic downturn of this historic speed and depth. For Dartmouth, this has meant a sizable and understandable increase in the number of requests for financial aid, loss of room and board revenue for spring term, the expectation of a decline in charitable income as our extended community adjusts to a new financial reality, and a decline in the value of our institutional investments as a result of the sudden and sharp decline in financial markets.

The reductions in revenue and increase in expenses mean we need to take immediate steps to face the financial challenges ahead. As a result, today we are announcing:

  • A freeze on staff hiring through the end of December, with a decision on an extension to be made by November. Requests for exceptions can be made for positions that are essential to the operation of the institution and based on critical need.
  • Subject to the approval of the relevant dean, faculty hiring associated with ongoing searches may continue, provided that funds earmarked for salary and startup costs are available. Likewise, staff hires that are fully funded by research grants or start-up funds may proceed. Decisions regarding next year's faculty searches will be made in consultation with the academic deans in July.
  • No annual wage or stipend increases for the 2021 fiscal year, which begins on July 1, other than those required by union collective bargaining agreements or those related to staff promotions and faculty tenure and promotions. The provost and executive vice president must approve any staff promotion and related change.
  • Targeted reductions in budgeted non-compensation expenses in the fourth quarter (beginning April 1), with details presented to divisional fiscal officers in the coming days. This includes spending on services, supplies, food, events, and other expenditures that are not critical to Dartmouth's spring quarter operation.

The pandemic's financial impact on Dartmouth at this point leaves us with an operating budget deficit substantially greater than our loss of room and board income for spring term. The steps we've outlined above will help decrease the deficit, but we will likely need to take further action to close the gap. It is important to note that the projected deficit can and will likely change depending on changes in the larger economy and higher education's ability to resume normal residential operations in the months ahead.

We appreciate that many of you will have questions and are anxious about possible additional steps, including changes to employment that could mean a shift to part-time work, temporary furloughs, or permanent layoffs. We remain committed to paying all regular non-temporary staff through June 30, as we have previously announced. Other than the freeze on wages, hiring, and spending, we have not made decisions for the next fiscal year in order to allow time to adjust to our remote operations and to assess revenue and expenses over the next several months. We understand that these are stressful times and although we cannot promise to deliver good news, we will stay in touch on questions about budget and employment that will affect the community, and to remain transparent about actions that may become necessary if economic conditions do not improve.

Some have asked why we don't simply withdraw funds from our endowment to cover anticipated shortfalls. The purpose of the endowment is to provide a steady, reliable income stream in support of specified activities, and to provide sustainable financial support to serve Dartmouth's mission in perpetuity. Its purpose is not to serve as a reserve fund. While the trustees may choose to draw some additional funds from the endowment to help alleviate the extraordinary economic challenges created by the pandemic, an institution that loses revenue cannot take from its endowment without limitation, since spending for today must be balanced against the needs of tomorrow.

And as we plan for tomorrow, our Call to Lead fundraising campaign is vitally important. We will continue to engage alumni, parents, and others who prize our distinctive education model and are able to invest in our people and our work. Much of our near-term focus will be on financial aid and scholarship support for students and families.

We know that these measures will create challenges for people across our institution, and we ask for your patience and understanding as we work through difficult decisions. We find ourselves in extraordinary times, the likes of which most of us have not experienced. Our parents and grandparents lived through wartime scarcities; many were laid low by widespread unemployment during the global Great Depression; others experienced the 1918 influenza epidemic that infected as much as one-third of the world's population. Through each of these traumas, the Dartmouth community came together in support of our students, our community, and our world. This pandemic is unique, but the challenge to Dartmouth is not. With your help, we will continue to forge ahead as a resilient, compassionate community, doing our best to take care of one another, and to remain true to our mission of educating, supporting, and inspiring the next generation.

Sincerely,

Joseph Helble, Provost
Rick Mills, Executive Vice President