To: Skidmore Community
From: Jim Kennelly
Chair, FPPC
Re: Annual Report, 2002-2003
Date: June 17, 2003
This report summarizes some of the more noteworthy activities of the FPPC
during the past academic (and fiscal) year. The committee met a total
of 29 times (including two meetings with President's Staff and 2 meetings
with our actuaries from PricewaterhouseCoopers). The activities of FPPC
are not confidential, and detailed minutes of all meetings are available
for review by interested members of the Skidmore community in the Dean
of the Faculty’s office, where they are retained.
1. Current Status of FPPC
Even by the standards of FPPC, this has been an extraordinarily challenging
year. Our present financial challenges have provided the context within
which persistent questions as to the role, capabilities, usefulness, and
indeed general viability of FPPC have been made all the more conspicuous.
Rather than continuing "business as usual", the elected faculty
members of FPPC (in April) requested that CFG, as a matter of some urgency,
review the role and structure of the FPPC. We look forward to CFG’s
response.
2. The 2002-03 (Last Year) Operating Budget
Various measures were undertaken to cover an estimated shortfall (combination
of lower revenue and higher expenses) of $3.1 million in Skidmore's $84
million approved operating budget. Most community members are already
aware of the significant reductions in capital expenditures, the effects
of a hiring freeze and reductions in overtime, various reductions in services,
supplies, minor equipment, non-essential travel and on-campus entertainment,
and other belt-tightening measures. At this date, it appears that the
measures taken will be sufficient to "balance" the budget; we
will not be certain of this, however, until the "books" are
finally closed this summer.
3. The 2003-2004 (Current Year) Operating Budget
The FPPC reviewed various iterations of a proposed budget for FY 2003-04,
and offered its own proposals at various times. In January, FPPC recommended
to President's Staff a balanced budget that utilized the following key
budget parameters for FY 04: Net fiscal enrollment of 2,140 students,
a comprehensive fee increase of 5.95%, an increase of $1,560,000 in Financial
Aid (to a total of $16.8 million), and a GSA of 3%. Subsequently, and
with the President's announcement of a planned 0% GSA for next year, FPPC
proposed to President's Staff the provision of a $750 one-time payment
to lower compensated employees. Finally, in April, when it appeared as
though the 03-04 budget was indeed still negotiable, FPPC recommended
provision of an average 2% GSA for next year.
These, of course, were only FPPC’s recommendations; as the community
already knows, the actual budget proposed by President's Staff, and approved
by the Board of Trustees, provides no general salary increase for employees
next year (except for a one-time payment of $700 to lower-compensated
employees).
4. Endowment
Skidmore's endowment totaled approximately $149 million at the end of
April. This reflects a slight increase from $147 million at December 31,
2003, but still a $9 million decrease from $158 million at May 31, 2002.
It bears repeating that, although this represents a decline over the past
11 months, the investment performance of our endowment in this down market
has been better than most of our peers and indeed most educational institutions.
As a reminder, the endowment balance is important since we typically "take
out" approximately 5% of the endowment fund balance every year to
fund some portion of our operating budget. Also, the endowment is also
funding the ramp-up of our planned capital campaign (itself intended to
grow the endowment).
5. Compensation and Benefits Review
Benefits Review - The Skidmore Community has already been informed of
the preliminary (or "short term") recommendations of the Benefits
Committee, which the FPPC has endorsed. The salient recommendation calls
for an average contribution from employees of 6.25% of the cost of their
health insurance premium, along with the elimination of various "cash-backs".
As noted in earlier communications, the FPPC had charged the Benefits
Committee to conduct a comprehensive review of employee benefits plans
at Skidmore, with the aim of generating recommendations to control increases
in benefits costs in the future. The Benefits Committee, along with the
Human Resources Department, retained Segal Sibson Consulting to assist
with this effort. We understand that Benefits Committee, along with HR
and Segal Sibson, is continuing its review of our benefits over the summer,
and will offer further recommendations in September.
Salary and Wages Review - The FPPC, as one of its goals for 2002-2003,
determined to conduct a comprehensive review of employee salaries and
wages, and retained consultants (Segal Sibson) to conduct the study. The
consultants presented a draft report to FPPC in late March about which
committee members had many questions, comments, and concerns, coupled
with requests for changes, details, and elaboration. FPPC will review
the revised report when it is available.
6. Multi-Year Financial Planning
The FPPC engaged actively in discussions surrounding the development of
an estimated budget deficit figure projected for the years 2005-2008.
An initial estimate that was widely circulated projected a $6.0 million
deficit in the operating budget by FY 2008, while FPPC endorsed an estimated
deficit figure that would build to $3.5 million. The estimated FY 08 deficit
presented to the Board of Trustees in May was $3.9 million (excluding
funds for ‘strategic initiatives’). We understand that the administration
is engaged in a series of program reviews intended to identify ways to
reduce this projected deficit.
7. Capital Budgets
The FPPC reviewed, frankly in a very cursory fashion, the proposed capital
budget for 2003-04. Spending on capital projects will total approximately
$3.5 million on facilities and equipment, and $1.5 million on information
technology.
8. Communications
The FPPC is charged to “ensure there is a timely flow of information
on financial matters available to all college constituencies”. To
that end, the FPPC issued “out reports” on October 21, 2002and
January 31, 2003, in order to update the community on financial matters
of interest. FPPC also sponsored an open meeting for the community on
January 28, 2003, and provided regular reports at faculty meetings.
9. Open Items
There are many issues that remain in “open” status. Among them
are:
* FPPC requested IPC (and ultimately CEPP) to review the viability and
desirability of adding 100 additional students to our targeted student
enrollment (specifically, adding 25 students per year for 4 years). While
the financial attraction of such an initiative is relatively clear, potential
impacts on academic quality, etc. needed to be explored. FPPC also requested
that IPC (and CEPP) study the possibility of not counting employee dependents
(who attend Skidmore on tuition waiver) in the targeted (or ‘budgeted’)
enrollment targets.
* FPPC remains very interested in better understanding the total staffing
(or ‘headcount’) at Skidmore College, and the ways in which
this number (and its constituent parts) have changed in recent years.
As the prime driver of our compensation and benefit costs (which are the
largest element of our budget), it seems critical to develop a proper
understanding of our total staffing, and the allocation of our staff,
across the institution.
* FPPC members are also most interested in finding benchmarks by which
the performance of Skidmore College in various financial and operational
categories can be compared to other comparable institutions. Identification
of suitable financial ratios could be a useful addition to our understanding
of the financial and operational performance of this institution.
* FPPC understands that program reviews will be conducted over the summer,
with the goal of reducing or eliminating the projected operating budget
deficits for FY 2005-2008. FPPC has requested that IPC indicate the process
by which these reviews will be carried out, and the manner by which deficit
reduction “targets” will be determined (and allocated across
functions).
10. Thank You
I would like to thank the members of FPPC for their efforts this past
year. Of course, not all the contributors to FPPC are voting members of
the committee. I would also like to acknowledge the contributions of Mike
Hall, Director of Financial Planning and Budgeting, and Margaret Adang,
secretary to the FPPC (and taker of the minutes) during a very trying
year.
11. Committee Membership
Although the FPPC is defined, and structured, as a faculty committee,
it also includes representation from support staff, and administrative/professional
staff. I am more pleased than you can know to announce that Mehmet Odekon
has agreed to chair the FPPC for 2003-2004.
2002-03 Membership
Jim Kennelly Faculty (Chair) jkennell
Dan Hurwitz Faculty dhurwitz
Mehmet Odekon Faculty modekon
Denise Smith Faculty dsmith
Patrick McEvoy’03 Student p_mcevoy
Justin Matijcio’05 Student j_matijc
Cheryl Towers Support Staff ctowers
Bob Shorb Admin/Prof Staff rshorb
Chuck Joseph VPAA cjoseph
Karl Broekhuizen VP Business Affairs karlb
2003-04 Membership
Mehmet Odekon Faculty (Chair) modekon
Jim Kennelly Faculty jkennell
Denise Smith Faculty dsmith
Mark Youndt Faculty myoundt
Justin Matijcio’05 Student j_matijc
To be determined Student
Cheryl Towers Support Staff ctowers
To be determined Admin/Prof Staff
Chuck Joseph VPAA cjoseph
Karl Broekhuizen VP Business Affairs karlb
|