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Campus Message: President Bill Robinson's Report on the Economy's Impact on Whitworth

March 26, 2009

Dear Whitworth community and friends of Whitworth,

My purpose in writing this letter is to report on the impact the current economic crisis is having at Whitworth. I will comment on some of the ways in which Whitworth's financial health and its students, faculty, staff and facilities are being affected.

As a Christian, it is hard for me not to wonder first how God is being affected. My guess is that God is really sad: sad that people have lost their jobs, sad that so many people are scared, sad that the impoverished people of the world could be driven deeper into economic despair, and sad about all the sins that contributed to this mess. But God's promise is that his faithfulness endures from generation to generation. God's vast mercy and grace are not indexed to the financial markets. With St. Paul, we can be confident that "God will supply all of our needs according to his riches in glory." So even amidst our pain, we have that going for us, and it doesn't get any better than that.

Whitworth's general financial health. We find ourselves in both a strong position and a tenuous position. Our strength in this bear market comes from Whitworth's relatively modest reliance on endowment income in its operating budget, compared to what you would find in the "big endowment" institutions. We are a tuition-driven university, and for the last decade we have seen far more applications than we can accommodate. We have been in a very strong enrollment situation. But being so dependent on enrollment is also our greatest point of vulnerability. Currently, we are up in applications and up in the number of students admitted, but we're down in enrollment deposits compared to last year's admissions numbers. With this in mind, we are keeping "retain and recruit" at the forefront of our institutional consciousness.

Even though we are not an endowment-dependent university, we do benefit greatly from our endowment's revenue impact. During this downturn, our endowment has dropped some $30 million in value from its high of nearly $100 million; however, we are anticipating next year's $55 million budget will suffer less than $350,000 of lost endowment income. That's still a lot of money. We also expect to experience a decline in gifts to The Whitworth (annual) Fund. I would love to be wrong about that, but we want to plan conservatively. With these challenges in mind, there are three sources from which additional funds can flow into our revenue stream.

  • More students: Our plan is to increase the size of the student body by two percent per year for the next five years, as we did for the past five years. The most important statistic in our entire financial profile is enrollment. If we don't perform superbly in retaining and recruiting students, we will have a budget problem.
  • Higher tuition: We regret deeply that we have to raise tuition at all. Our 4.5 percent increase looks to be very close to the midpoint among our comparison group of private universities. This increase will be offset some by financial aid, which represents the biggest increase in our expense budget.
  • Cutting/controlling costs: We just completed a painful budget process during which we cut, limited or delayed every expense possible. We're reducing the number of new positions to those essential to maintaining the quality of our students' education and experience. The nine members of the president's cabinet have declined salary increases for the coming year. And we are deferring decisions about salary increases for our excellent faculty and staff until September, when we will know more about our enrollment and financial condition. If we do decide on zero increases, I'm confident the faculty and staff of Whitworth will understand, but we want it to be a last resort. Our people are Whitworth's most valuable resources. 

Students. Our hope is that students feel no effects of this crisis on the quality of their education. We are assuming, however, that many students and their families will be drawing on diminished resources (savings, home equity loans, private lending, etc.) to pay for that education. When we combine these two factors, it means we have to divert a higher than usual percentage of new dollars to financial aid, while working harder to make sure our educational quality doesn't suffer. Further, as faculty and staff members, we need to watch and listen carefully for student reports of financial hardship. Our financial aid office cannot always come to the rescue, but they will always welcome students to explore with them what can be done. We want our current students to find the Whitworth experience too rich to leave, and we want prospective students to find Whitworth's minds and hearts too attractive to resist.

Faculty and Staff. Our first workforce priority is to avoid layoffs triggered by the economy. In every budget season we look for positions that have become unnecessary, and that practice will continue. But we would rather hold down salary increases and reduce or eliminate the addition of new positions than start issuing pink slips. Two nights ago I spoke with a university president who had just trudged through a fairly significant round of position cuts. If that becomes a necessary measure, we'll do it, but it is very hard on a campus community. At this point, our lean budgets should prevent us from having to take this step.

Our people are being hit in ways that parallel the rest of the U.S. workforce. Retirement accounts have plummeted, spouses have lost jobs, home equity has evaporated, and all of us are connected to struggling people whom we want to help. But these challenges pale in comparison to the immense blessing we enjoy as employed people carrying forward a mission we feel called to uphold.

Facilities. Construction is on schedule for our new residence hall. Unless enrollment drops, its building and operating costs will be covered by the additional revenues it creates. The first phase of the new science building is in a holding pattern. Our "catch 22" is that the economy has made fund-raising much more difficult and the cost of tax-exempt bond financing more expensive, but it has also lowered our projected construction costs. So we're working harder than ever in presenting our case for gift support, we're watching the bond markets daily, and we're exploring other funding options. I am convinced that this building is critical to our financial security, but we will wait until we have our fall enrollment numbers before deciding if we should proceed with our construction and financing plans for the biology/chemistry building. We must be prudent, but we must also accept some level of risk. Our prosperity over the past two decades has resulted far more from investing in quality than from saving money by doing things cheaply. Visitors to our campus comment frequently on the quality of our facilities and the pride of the people who maintain them.

Thank you. The people of Whitworth are to thank for the strength of our position. We have operated efficiently and conservatively. We are already doing much of what we see other universities implementing to cut costs. Generous donors have recognized our stewardship and have invested generously in Whitworth.

I am extremely confident in a bright Whitworth future. I believe that even the most formidable external challenges pose less of a threat than internal weakness or decay. And at the core of this institution, we find immense strength. We find a great mind-and-heart mission, we find talented and committed workers, we find bright and energetic students, we find loyal and generous supporters, and we find a faithful God whose promises never fail. For all of these blessings, we are most grateful.