Although DePauw University's $3 million operating deficit has not yet led to firings, the administration has chosen not to renew the contracts of most term faculty members -- professors who are hired to teach full time for between one and six years.
"This means we will have 12 fewer faculty members next year," said Ken Owen, executive director of media relations for the university. "We want as little disruption as possible for students and staff."
In a DePauw news story written by Andrew Maddocks, Vice President of Academic Affairs Neal Abraham said the contracts would expire anyway. Now, the university will have to use the money to balance the overall budget rather than rehire the faculty members.
Some departments will start to feel the effects next year, Abraham said. As the 30 term faculty members start to leave, the number of classes will go down. Next year DePauw will offer 60 to 70 fewer courses than the 650 to 680 taught in an average year, Abraham said.
At the same time, the average class size will go up.
The university's faculty-student ratio will change as well. According to university President Brian Casey, the faculty-student ratio will move closer to 11 to one. It had been 10 to one.
He sees this as a short-term solution to help deal with extraordinarily difficult economic times.
"The severe downturn in the economy has challenged every source of the university's revenue, most particularly the value of our endowment which currently supports 22 percent of our annual operating budget," Casey said in a recent letter to the university community. "DePauw also faces some long-standing operating budget issues that make our current situation more acute."
Some steps have already been taken that will influence next year's budget. In January, the Board of Trustees passed a resolution to set the tuition increase for next year at 4.5 percent, reduced from a planned tuition increase of 7 percent. Additional funding has also been set aside for the anticipated increase in financial aid needs of students.
Casey's letter outlined steps he felt had to be taken to meet the current financial challenges.
It is likely there will be no salary increases this year for either faculty members or staff members. The employee healthcare contract is being renegotiated.
"We do not yet know if increases will be needed in co-pays, deductibles, or premiums," Casey said. "All options are being explored to keep any increases for this year minimal."
The university is continuing all current tenure track faculty searches. However, they do not expect to conduct any searches in 2009-10 to fill tenure-track faculty positions slated to begin in fall 2010.
A number of faculty in temporary (term) faculty positions will not be replaced when their appointments come to an end.
"This is a difficult step to take as these positions contribute greatly to academic programs and departmental life, but it is a necessary one, given DePauw's financial challenges," said Casey.
Similar significant reductions in the number of staff through attrition, rearrangement of assignments in the face of vacancies and turnover are expected. Since July 2008, the university has elected not to fill eight open staff positions.
Casey continued saying that "Every effort was being made to avoid employee layoffs or compensation reductions. However, only after determining the size and net tuition revenue from next year's entering class and the effect of economic conditions on gift revenue and on DePauw's endowment market value (which affects endowment revenue in future years), will the administration be able to decide if either of these options is necessary."
Every division has seen operating budget cuts, for a total reduction in the university's operating budget of $2 million.
In March, following a detailed budget review by senior administrators, Casey hopes to be able to share a variety of possible solutions for a balanced budget for the 2009-10 fiscal year.
"These are extraordinary times and we face extraordinarily difficult decisions," he said. "Every effort must be made to keep the university's core mission of teaching and learning strong and the total student experience vital and compelling. All of us will share in the stresses that this situation has placed on DePauw. There will be no part of the university untouched by these challenges, or these decisions. It is our strong hope, however, that through prudent planning we can successfully navigate this difficult period and emerge as a stronger university."