CMC's Financial Woes
“I have never experienced anything like this.” On March 11, 2009, CMC President Pamela Gann addressed members of the student body (Or the four in attendance, to be exact) regarding the college’s budget forecast and planning. She shared Claremont McKenna’s financial woes, illustrating the source and size of the issue, as well as the areas that would be affected.
The source of the issue is the drop in the market value of CMC’s endowment. The endowment, which accounts for 29% of our operation spending, has decreased by 32.5% since January 2009. The current loss for CMC is currently speculated to be $10-14 million, with different forecasts regarding the extent of spending losses. Given that the school withdraws from the endowment on a 12-quarter system, the ramifications of these problems will not be seen for a year or so. However, Ms. Gann stated that the future growth of the endowment was between “Pessimistic” and “Very Pessimistic.”
The immediate changes will be visible in the near future in changes spanning from faculty to financial aid to food. The school must reduce its spending by at least $5.5 million, as the board does not allow the school to run deficits.
In terms of faculty, Claremont McKenna is still hiring 10 new people, but blocked hiring in Spanish, Economics, Religious Studies, and others. In addition, there will be no salary increases for the next year, which saves roughly $1.5 million. Given the increasing severity of the situation, these pay freezes may last longer. The school will not be making any staff cuts, but will not increase hiring. Each department has also been asked to cut 2-3% of their operating costs, which should also save $1.5 million. The reduction of faculty will most likely cause larger class sizes (especially in general education requirements) and fewer options for students. The ratio of students to faculty is anticipated to change from 8:1 to 9:1.
Given the success of the school’s scholarship funds in the Campaign for Claremont McKenna, the financial aid program has taken minimal cuts. Admissions for domestic students are still need-blind and there is still no packaged-loan policy. However, financial aid for students is now adjusted to consider outside scholarships. In addition, CMC admitted more international students early decision this year than in previous years, which means a reduction in financial aid necessity, as foreign students do not apply for this policy. The cuts in financial aid are roughly $600,000, but with the influx of new money, the savings on financial aid are around $2.8 million.
Ms. Gann also stated that the school wants to cut $500,000 from travel expenses, water, grounds, cleaning, and phones, as well as changes in Collins Dining Hall. The extent of these changes remains unclear.
Claremont McKenna may try to increase its revenue by establishing new programs, including a summer school program for high school students and reversing CMC’s policy to allow visiting students, given that financial aid would not be necessary for these students.
The Board of Trustees met this week to discuss these financial issues and impending changes.
(Clarification: Picture from past CMC event.)