President : St. Mary's College of Maryland

To the St. Mary's Community

A Budget Update from Thomas J. Botzman, Ph.D.
Vice President for Business and Finance
May 14, 2009

I write to update you regarding St. Mary's College of Maryland's fiscal condition and the additional steps being taken to address the challenges to our current and future budgets given the continued uncertainty in the economy. The College's financial position remains relatively solid as a result of prudent planning, early actions involving difficult choices, continued support of alumni and friends, and a bit of good luck. We are presently projecting a razor thin operating surplus for the current year, and I will present the Board of Trustees with a balanced budget for the upcoming fiscal year. The budget for the 2009-2010 academic year supports our core mission of providing a quality liberal arts education for a diverse student body.

The elements of the 2009/10 fiscal plan

At its May 15, 2009 meeting, the Board of Trustees will be asked to approve a $64 million operating budget which includes the following key aspects:

Projected strong enrollments and retention of students. Admissions deposits to date are running at the same level as in past years. We expect to again enroll approximately 450 new first-year students in August. Tuition and fees will increase by 5%, as was announced in December 2008.

Commitment to the aims of the St. Mary's College of Maryland Foundation. While outperforming the average returns on higher education endowments by 10% over the latest national survey period, our endowment portfolio has nonetheless experienced a cumulative loss of 15% during that same period. The sustained downturn has eliminated past accumulated earnings in the endowment. Thus the Foundation is currently unable to provide the College its typical annual support of approximately $1 million. We will replace approximately $700,000 in Foundation scholarships for the upcoming academic year from the College operating budget, with the expectation that the Foundation will resume its commitments as overall economic conditions improve. The College will also provide $157,000 for other initiatives that are typically funded by the Foundation's endowment, such as support for endowed chairs and professorships and the library. The Foundation will continue to provide support to the College from its non-endowed restricted and unrestricted accounts.

Continue the College's annual increase to the financial aid budget, which matches the percentage increase in tuition. The increase for the 2009-2010 academic year will be 5% as previously announced, or $265,000 above this year's allocation. Additional funds have also been budgeted to increase student work opportunities on campus.

Continued stable support from the State of Maryland. The College's operating grant, 1.8% inflator, and capital budget have been fully funded by the governor and the legislature.

Elimination of salary increases for FY10. The state budget prohibits salary increases during the upcoming fiscal year, including all increases negotiated under the collective bargaining agreement. Consequently, there will be a delay in staff and faculty salary increases until at least July 2010.

Elimination of the College's "match savings" plan for FY10. The state budget also prohibits contributions to deferred compensation plans during the upcoming fiscal year. The College's $600 per year "match plan" for employees will not be available until at least July 2010, representing a saving of $150,000. However, college-funded contributions to retirement plans, either with the state pension plan or through TIAA-CREF or similar vendors, will continue to be made.

Change in vacation accrual for non-bargaining unit employees. As announced in December 2008, vacation carryover will be permanently reduced to 160 hours by July 2010.

Staff reorganization and reductions. We will address the void left by vacancies through reorganization or reassignment of staff. For next year, fiscal year 2010, twelve vacant staff positions have already been removed, and we do not presently anticipate the need for additional cuts.

Non-personnel expense budgets have been moderately reduced. Recruitment and equipment budgets have been reduced in some areas that do not impact the academic program. Budget managers have already been informed of the planned reductions. Selected publications, including the River Gazette, will be reduced in both number produced and range of distribution.

Delay of approximately 10% of planned facility renewal projects. The plant budget contains all projects that impact campus safety; however, several desired programmatic changes will not be funded. Priority will be given to projects that promote safety and normal use of facilities.

As these budget saving steps have impacted all members of the community, I thank you again for your understanding as we continue to do more with less. We remain firmly committed to our core mission as we continue to provide the best possible academic experience for every St. Mary's student.

Best regards,

Thomas J Botzman, Ph.D.

Vice President for Business and Finance