Given the questions raised about the College’s financial situation in my recent posts on the staff salary increase program, Patrick Norton provided the following commentary on what the pool for staff raises might look like.
While the financial markets have recovered somewhat, the college is still $300 million short of what it planned to have at this time in the form of one of its major funding sources: the endowment. The reduction in endowment value, caused by the large drop in the value of the endowment in 2008 and 2009, translates into a shortfall of $15 million in annual funding to the operating budget. We addressed the loss of $15 million in annual funding through a combination of efforts—mainly through voluntary staffing reductions and cost controls in several areas—but we continue to face increased pressure on fundraising, financial aid, and various other expenses. The financial environment for higher education is much different now than it was before the recession.
With all that said, as part of the annual 2012 budget process, we are currently planning for a 3% staff pool increase, which would be 2 times the change in the consumer price index for the 12 months ending December 31, 2010 (1.5%). The change in the consumer price index is a basic measure of the increase in the cost of living. We will have a clearer sense of what the salary increase pool will be later this spring, once the 2012 budget is finalized.