3/27/2020: EMAIL UPDATE
To the Dartmouth community,
Yesterday, I received an e-mail from one of our students with a heartfelt and urgent plea for financial support. The student's parent, the only breadwinner in the family, had just been laid off as a result of the economic slowdown caused by the COVID-19 pandemic. The Office of Financial Aid will work with this student in the light of changes in their family's financial circumstances. But this moving appeal was a poignant reminder that we are facing in this nation a coupled public health and economic crisis.
And so today, I'm writing to address the economic realities of this moment and explain how they are impacting Dartmouth's finances. The U.S. is experiencing an economic downturn of nearly unprecedented proportions. Earlier this week, "Fortune" magazine reported that Morgan Stanley and Goldman Sachs were predicting a 30% annualized decline in GDP in the second quarter while "The Economist" projected that unemployment will rocket to 12.8% from 3.5% in February. And the sheer magnitude of the federal stimulus package reflects the severity of the economic situation.
Within our community, the consequences of this downturn will be felt in many ways. While our teaching and research mission continues, we have made adjustments by transitioning to virtual instruction and significantly reducing on-campus scholarly work. The financial circumstances of many of our students and colleagues will be impacted. Friends and neighbors and local businesses will suffer. At this time, we must all look out for the most vulnerable among us.
Dartmouth's institution-wide finances will face immediate and long-term consequences as well. We anticipate that demand for financial aid will increase significantly over the next few months. We will see declines in some of our key revenue streams. Of particular note is more than $15 million in lost undergraduate room and board revenue for the spring term. Philanthropy will be affected as well, especially the annual fund, as our alumni face financial challenges of their own. And our institutional investments have seen sudden and sharp declines in value with financial markets currently having dropped on the order of 25% from the start of the fiscal year. The subsequent loss of endowment value will impact an important revenue stream for Dartmouth now and into the future.
Fortunately, we have taken steps to prepare for an economic downturn. Our liquidity is strong, we have built up reserve funds to cushion the immediate impacts of a recession, and we have introduced greater rigor and discipline in our budgeting practices. However, the magnitude of the financial shock will require us to take additional steps to meet the immediate financial challenges we are facing.
In the coming days, you will hear about some of these steps from Provost Joe Helble, Executive Vice President Rick Mills and Chief Financial Officer Mike Wagner. They will be leading an effort to communicate and consult with the campus in the coming weeks.
I am ever more impressed by the resilience and determination of the Dartmouth community. We have swiftly adjusted the ways in which we work to meet the urgent public health challenges we face. Likewise, I'm confident that we will overcome the extraordinary financial challenges of the moment and do so in ways that preserve the excellence of our teaching and research and the core commitments we have made to our community. We will continue to meet the full demonstrated need of our undergraduate students. Tenure and promotion procedures will continue, as will the other ways that we recognize the outstanding work of our faculty, staff and students. And we will maintain the familiar rhythms of the academic year, as just yesterday we offered admission to the Class of '24 to a stellar group of applicants.
Let me conclude by saying thank you for all that you're doing. These are difficult, uncertain times. But we are a strong community and I am confident that we will succeed as long as we work together to face the challenges ahead with wisdom and resolve.
Philip J. Hanlon '77 President