The Colgate Scene
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Planning Committee Report
|Planning Committee Report Contents:||
V. Financing the goals of planning|
Colgate's priorities for the next decade are ambitious, and the resources required for success will be significant. Success in implementing the plan will depend upon our ability to keep the planning priorities foremost in resource allocation and resource development efforts in the years ahead. This is not to preclude other plans for improvement and fundraising objectives related to them. There is no single financial strategy that will ensure achievement of the goals. Fundraising, pricing, allocation of available resources in the normal budget process, endowment spending policy, debt management and capital budget decisions must be coordinated, and all of these efforts must be adjusted over time to fit the economic and competitive environment that Colgate will face.
Innovation and smaller classes. We estimate the annualized cost of increasing the faculty by nineteen full-time positions over several years in order to achieve a 10:1 student-faculty ratio and permit curricular innovation is approximately $1.5 million in compensation, once all positions have been added. The college has received a generous commitment from an anonymous donor to assist in implementing the plans, providing as much as $5 million in temporary funding while permanent endowment is sought.
We should recognize that the addition of faculty and the emphasis placed on maintaining and enhancing Colgate's leadership in the wise application of emerging technology imply other costs as well. Colgate must continue to support faculty innovations in the use of technology with appropriate additions to the Information Technology Services group in the next ten years, funds for faculty training in the use of technology, and regular investment in the campus network and peripheral equipment.
The planning initiatives also reinforce the importance of investing approximately $20 million in an expanded and renovated Case Library. In addition, the expansion and renovation of science facilities for approximately $35 million will provide space for the growth of faculty. (See Appendix for details.)
The plan mentions an enhanced sabbatical leave program that would support faculty scholarship as Colgate moves forward with the proposed initiatives in teaching and learning, and two rotating replacements would be required to bring this about. However, the abovementioned pedagogical initiatives are not expected to be resource intensive beyond the addition of faculty and corresponding growth in faculty development funds. Existing resources, such as the president's discretionary funds, are being used to create incentives for innovation and to finance pilot projects.
Aid. The most costly of the initiatives would be need-blind admission. We attempted to determine the cost of implementing need-blind admission within the regular admissions category for the classes of 2002, 2003 and 2004. The results showed a very large, indeed somewhat puzzling, variation in cost for the three classes, with an average of about $1 million per class per year. Actual costs could vary significantly in either direction, depending on variations in the quality and income levels of applicant pools in future years. Fully implemented, need-blind admissions for the regular admissions category would have required the college to forego as much as $4 million in tuition revenue, given the current admissions pool, though that pool might change in the longer term on account of the policy itself, as discussed above. The plain fact is that the power of econometric analysis to confidently predict the cost of need-blind admission at Colgate is limited, and a demonstration project would add considerably to our knowledge. If Colgate did have to forego as much as $4 million in tuition revenue, financial equilibrium and balanced operating budgets could only be maintained by major reallocations in budgeting or substituting gifts and endowment income for the foregone tuition revenue.
We know that Colgate alumni and friends have provided generous support in the past to aid -- deserving students, and we are optimistic that an ambitious goal for need-blind admission will generate even greater support in the future. Using an increase in endowment support or spendable gifts from alumni and friends, Colgate should begin by seeking to admit the class of 2006 on a need-blind basis. An increase in endowment on the order of $80 million would ultimately be necessary to perpetuate need-blind admission, on the above assumptions.
Environment. The initiatives in the village require a one-time infusion of capital, such as the $4 million currently being sought for the Hamilton Initiative Fund. Some projects may have an effect on the college's operating budget, such as the proposal to relocate the bookstore to an appropriate retail space in the village center, which may result in lower sales of certain convenience items now purchased on the hill. The impact on operating finances (lower revenue or higher operating costs) must be afforded some priority in the development of future budget plans, if the benefits of relocation are judged to outweigh the costs.
Overall financial strategy. While the plans are ambitious, we believe they can be achieved, depending upon the competitive environment and the economic conditions Colgate will face in the years ahead. Colgate has long adhered to the principles of financial equilibrium -- with balanced operating and capital budgets, preservation of the endowment's purchasing power and maintenance of an outstanding physical plant -- all as a matter of course. The financial and physical assets of the university have never been stronger. After a decade of exceptional growth in endowment and significant investment in physical plant, we are poised to undertake new initiatives focused primarily on the college's human resources that will enhance the academic reputation of the college. Under favorable economic and competitive conditions, the initiatives outlined in this plan appear attainable. Continued low inflation, a strong domestic economy, high levels of employment, a strong stock market and growth in gifts to Colgate comparable to that experienced in the last decade would be important conditions for the realization of most of these objectives. The cumulative gift cash flow in the ten years ending in May of 1999 was $159.4 million, two times higher than the gift cash flow for the previous decade. Continuing efforts to improve Colgate's fundraising program in the next decade, coupled with favorable economic conditions, might permit a similar doubling of gift cash flow, to $350 million or more over the next ten years. Additional goals will undoubtedly become part of Colgate's plans for improvement in the next decade, and thus fundraising targets will need to be revised upward to accommodate all of the priorities to be adopted by the college in the years ahead.
We can set ambitious goals for the college on this basis, provided we know our priorities and have well-constructed contingency plans. Given the overriding objective of enhancing Colgate's academic reputation in the next decade, we place primary emphasis on the plan to increase the size of the faculty and undertake curricular initiatives. Some level of expenditure in maintaining the quality of the physical plant will be necessary, but it is likely that discretionary renovation and construction projects will be reassessed if conditions are less than ideal. Achieving need-blind admissions is another goal that may require reassessment if resources are not forthcoming. Colgate already attracts a very strong student body, and while we aspire to improve the quality further, we know the strategies that have been most effective when resources are limited. Thus Colgate is well positioned to manage its financial aid program under both the best-case and alternative scenarios.
In summary, the purpose of the planning effort has been to set an ambitious, overarching goal that will energize the Colgate community. We believe that enhancing the academic reputation of the college is just such a goal, creating value for past, current and future generations of Colgate students. A number of strategies have been identified, and we are well along in estimating the cost of implementation. With the support of the faculty, the board, and Colgate's larger family of alumni and friends, we look forward to the next step: implementation.
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