Coyote Don: Where Does the Money Go?

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Last week, we covered where Sarah Lawrence gets its money. This week, we’ll see where it goes.

As with last week’s feature, the source information is publicly available in the College’s Annual Report, the IPEDS data center, and Form 990’s.

2010-2011 Expenses by Source

Using the IPEDS, I’ve created the pie chart labeled  “2010-2011 Expenses by Category Version 1.” The total is about 94 million dollars, so you can calculate the dollar totals if you want.


But as we discussed last week, some people prefer not to count financial aid as an expense–it can be thought of as a discount off of the tuition we collect instead, meaning that it reduces revenues rather than increases expenses. Similarly, the expenses for auxiliary enterprises (dorms and meal plans, mainly) can be thought of as connected to their own particular revenue streams, and thus as reducing the revenue we get from our side business of providing food and lodging. If we remove those two categories, we get the second pie chart labeled “2010-2011 Expenses by Category Version 2.” For that pie chart, the total is about 64 million dollars.


Line by Line

Let’s take the expenses line by line and see what they refer to. Unless otherwise specified, the percentages will be excluding financial aid and auxiliary enterprises.

Financial Aid: We all know what this one it is. If it is considered an expense, it accounts for about a quarter of all of the expenses of the College. This means that small changes in the amount of financial aid can have a big impact on the budget. It’s also important to note that the College has made an iron-clad promise never to change the financial aid formula for students already in attendance. Those students may have their aid changed because their family situation changes, but changes aimed at adjusting the “mix” of students will only ever apply to new students (first-years and transfers), and never to current ones.

Depreciation: The amount that things like buildings decrease in value if they are not maintained. Unless you’ve really studied it, most college-aged people tend to think of depreciation as not being a “real” expense. For example, some people will drive 20 miles to avoid a toll, knowing that the extra cost of the gas is less than that of the toll. But that 20 miles also means their car will reach the end of its life sooner, and have to be replaced sooner–that’s an expense too. You don’t notice it until you need to buy that next car, but it was real all along.

Interest: The College takes out loans for a variety of purposes. Some are long-term loans, meant to cover the cost of things like new buildings. Some are short-term loans that keep things running while we’re waiting for the next set of tuition checks to come in. You can tell that Sarah Lawrence has some debt but not a ton, because its interest payments are fairly low.

Faculty Salaries and Benefits: This is what allows Coyote Don to take a trip to Bermuda, if he so chooses (but not often!). And buy peanut butter. And have health care. I’ve broken out benefits separately, because benefits college wide are being cut right now. You can see that faculty salaries and benefits, taken together, are the largest chunk aside from financial aid.

Instruction Other: All the other direct costs of instruction. Art and science supplies, photocopies for both students and faculty, and equipment for smart classrooms all fall under this heading.

Institutional Support: Administration, public relations, fundraising, human resources, etc.. Everything that runs the College but doesn’t directly do things for students or faculty are in these categories. All together, it totals 18.2% of the expenses.

Operations: Maintenance, utilities, insurance, cleaning, security, etc.. This totals to 11.8%.

Student Services: Health Services, student activities, and the like. This totals to 10.7%.

Academic Support: Primarily the Library, but also the Dean of the College and her office, Audio/Visual, and similar functions. This category adds up to only 6.7%.

Public Service: Coyote Don is not sure what falls under this category for Sarah Lawrence, but the expenses are quite small compared to the entire budget.

So What?

As we’ll see next week, Sarah Lawrence is trying to close a long running deficit that is on the order of 5% of the Version 2 pie. That is certainly not big enough to be an existential threat to our pedagogy, culture, or continued existence, but it’s big enough to mean there’s going to be a lot of pain somewhere, or a modest amount of pain in a lot of places. It’s also small enough that it’s just barely possible to imagine throwing it all in to one category. For example, the College could try to recruit much less needy classes, at the expense of diversity, class quality, etc.–not an inspiring prospect, and not one we’ve been pursuing so far. Or it could whack salaries and benefits pretty hard–hard enough so that some people leave, and it gets harder to recruit new employees. Or just defer maintenance as things slowly fall apart. Or maintain academics, but savage all the things that go with it.

You get the idea. It should be possible, given the relatively modest size of the deficits, to address them by relatively modest efforts to raise revenues and to cut expenses that strike a wide variety of categories. But that very possibility is what introduces strain: what gets hit harder, and what gets relatively spared?

These questions aren’t easy, but in Coyote Don’s experience, we have a lot of reasonable, thoughtful people in our community, and that includes the majority of students, the majority of faculty, and the majority of staff. Give us the full picture, and we can understand why there might (for example) be a cut to the retirement benefit for faculty and staff, and an effort to recruit a mix of students that needs a little less aid overall, and a cut to library acquisitions, and a bit of deferred maintenance. But we have to be able to talk these things out, and to see how much each one saves. Students, for example, might be more interested in protecting (and even expanding) Health Services than internet speeds–or the reverse. We won’t know until they can see the numbers and provide feedback–heck, the students themselves won’t know until they see just how much bang for the buck there is in each area. Likewise, faculty and staff might prefer a modest cut to their retirement benefit to cutting the benefit that allows us to send our children here for free–or not. And all of us might have ideas for efficiencies and ways to raise revenue that obviate the need for some of the cuts altogether!

This, then, is a plea for transparency, and for treating all of us as the adults we are. (Yes, you too, students. If you’re over 18, you’re an adult.) That doesn’t mean everyone gets a veto, as we all know that means decisions might never get made. In the end, top-level financial decisions rest with the President and the Board of Trustees. But if we are at least given the opportunity to understand the plans and to suggest alternatives, then we will feel that no stone was left unturned in finding the best way forward for our great institution.

Coyote Don will return in the fall!

 

Correction to last week’s piece: The percentages in the charts come primarily from the IPEDS data, not the Annual Report.

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