Since my last post, I've gotten some questions and heard about some confusion over what constitutes a layoff. So, I'll use the first part of this post to talk about position reductions in more detail. There are several ways that positions get reduced:
- A position becomes vacant (because the incumbent retires, resigns or takes another job at the College) and all or part of the position doesn't get filled. This is typically what we mean when we talk about "attrition".
- A contract position (these are largely visiting faculty positions, although we occasionally have staff in contract positions) expires and is not renewed. While this is not technically a layoff (and isn't included in my count, which focuses on College staff only), it can certainly feel like a layoff to individuals who have seen these contracts renewed in the past.
- A filled position is eliminated, but we are able to find the incumbent another position on campus. This also does not count as a layoff (because the person still has a job at the College), but is clearly disruptive for the person involved.
- A filled position's hours are reduced. Again, not a layoff, since the person is still employed, but a negative impact all the same.
- A filled position is eliminated and the person leaves the College. This is a layoff and when I said in my last post that there have been three layoffs in the past few months, this is what I mean.
Now a word on timing. I do not include a position layoff in my count until the affected person has left the College. At any point in time there may be discussions underway, and individuals who are affected may even have been notified, but while they remain at the College, I do not include them in my numbers. I do this for two reasons. First and most important, the person involved deserves to complete his or her time at the institution in the manner that seems best to him or her, with as much attention or privacy as desired. Second, I may well not be aware of conversations taking place in areas other than my own and need to establish a method for reporting layoffs that is internally consistent.
I hope this has been more helpful than tedious and I will continue to update you all on changes as we proceed.
Questions and Rumors
If financial aid costs are going up, why don't we reduce tuition levels so we could give less financial aid?
This sounds like it should work, but when we've analyzed it, the result is not positive. It would reduce the amount of financial aid we give to aided students. But about 35% of our students pay full tuition. If we reduced the tuition level, those students would pay us less. Unless reduced tuition resulted in a larger group of full-pay students, our net tuition revenue would be less, not more. And while it's possible that lower tuition would attract more full-pay students, this has not historically been the case at schools like Mount Holyoke. It's been called the "Chivas Regal" effect--higher prices indicate higher quality. Maybe the current economic climate has changed that perception, but it would be a very risky approach. The only schools that have successfully accomplished this (reducing tuition and increasing revenue) have had a population of aided students in the 85-90% range.
If we're paying too much in financial aid, why don't we reduce the number of students?
Every student pays at least part of her tuition, room and board costs--through family contributions, federal and state financial aid (like Pell Grants), loans and student jobs. So even if a student receives significant financial aid, she provides the College with some additional revenue. Reducing the number of students would eliminate that additional revenue and make us worse off. Because of this, any meaningful reduction in the number of students would require reductions in other parts of the budget.
Then why not keep adding students?
To some extent, we have been doing this over the past decade and it has helped the College balance its budget. However, there are limits to growth. We can only continue to grow if we can absorb the larger numbers of students. Once we begin to need more faculty, more classrooms, more residence halls, etc., we would quickly find ourselves spending more than the additional income. We are currently close to having as large a student body as we can support without significant new costs.
Please continue to share ideas, questions, comments and rumors. Within the next few weeks, I'll transition from my focus on the FY2010 budget (except for periodic updates) and spend more time talking about the budget planning for FY2011.