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reed magazine logoSpring 2009

Tightening the Belt

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In the face of the steepest economic downturn since World War II, President Colin Diver announced several steps the college is taking to meet the challenges ahead.

The backdrop is all-too familiar: as of March 31, Reed’s endowment stood at $322 million, a decline of 30% from its peak in December 2007. Although Reed’s endowment has performed better than that of many of its peers, the drop translates into substantially less support for ongoing college operations.

In addition, the shrinking economy also means that Reed’s loyal donors—many of them readers of this magazine—are feeling the pinch. The result? Donations to Reed this year are lagging by roughly 20%.

Finally, the recession is putting enormous pressure on students and their families, sharpening the urgency for financial aid.

In a letter to the Reed community dated March 3, President Diver announced four major steps to protect Reed and its mission from the economic turmoil.

Tuition hike. The college will increase tuition by 3.9% to $39,440; room and board will grow by 3.3% to $10,250. Taken together, tuition, room and board for the 2009-10 academic year will rise 3.8% to $49,690. This represents the smallest percentage increase in many years, but occurs at an extremely difficult time for many families; hence the following step, namely:

More financial aid. To help current and future students cope with deteriorating financial circumstances, Reed will increase its budget for financial aid by 7.8%, roughly twice the rate of the tuition increase, to $19.2 million. It will also carry a sizeable reserve for financial aid over and above this increase to meet unforeseen family emergencies. Approximately 51% of students currently receive financial aid; the average package is $34,873 per student per year.

Fewer visiting professors. The college will fill fewer positions for visiting faculty, which will produce a slight uptick in the student-faculty ratio from 10.4:1 to 10.6:1. Nonetheless, in keeping with its commitment to excellence, Reed will go ahead with five tenure-track searches this year, including the first two positions in chemistry and history that are part of the new environmental studies program.

Trim the non-instructional budget. Reed will cut all non-personnel expenditures by approximately 5%; substantially reduce planned increases in employee compensation and benefits; halt all major construction projects; and impose a “soft freeze” on new hires.

“In setting the annual budget in any year, we seek to achieve three goals,” Diver wrote. “To preserve the essential quality of our educational program, to meet the full financial needs of our students, and to ensure the long-term financial stability of the college. Needless to say, under current conditions, simultaneously achieving all three goals will require a very finely calibrated balance, and probably a generous dose of good luck.”

reed magazine logoSpring 2009