Panel cautions against layoffs
Panelists at a Monday event criticized the College for considering layoffs in its attempts to cut $100 million from its budget over the next two years.
By Tatiana Cooke, The Dartmouth Staff
Published on Tuesday, February 2, 2010
Updated on Feb 24 | 1:18 pm
Correction Appended
Students, faculty and union employees banded together on Monday for a panel discussion that overwhelmingly focused on potential layoffs at Dartmouth. As the College prepares to address a two-year, $100 million budget deficit, the panelists of “Get Informed: Staff Representation in the Budget Cuts” said they hope the Board of Trustees will take suggestions from the Service Employees International Union and Students Stand with Staff into account during the their meeting this weekend to discuss the budget plan and potential layoffs.
“If everything is on the table, which is what [College President] Jim [Yong] Kim and [Dean of the Faculty and acting Provost] Carol Folt have said, why is a position of no layoffs not on the table?” panelist and history professor Annelise Orleck said.
Eric Schildge ’10, the co-founder of Students Stand with Staff, outlined his organization’s demands of the College administration, which included a delay in all layoffs until union discussions have concluded, a ban on subcontracting staff positions, a definition of the “Dartmouth Experience” and an explanation of how budget cuts will affect the “Experience.”
The panel attributed some of the current financial difficulty to endowment mismanagement by the College’s Investment Office and Board of Trustees. Students Stand with Staff demanded that the administration make its investment process more transparent and that the Advisory Committee on Investor Responsibility — an organization that currently makes recommendations about the College’s shareholder involvement — receive power to influence investment priorities, Schildge said.
“There needs to be a much larger conversation going on about how the College manages its investments,” Schildge said.
Schildge called for the release of the raw budget data behind the $100-million reduction goal. The Tuck School of Business, the economics department and other academic resources should be employed to formulate an analysis of the College’s financial situation independent of the College administration, he said.
Students Stand with Staff also asked for improvements in how the administration processes budget reduction suggestions submitted online by students, staff and community members, calling on the College to release more information about how the suggestions will be incorporated into the larger financial plan, Schildge said.
Unclear communication from administrators has left many students confused about the way that the $100-million reduction goal will be reached, Schildge said.
“It’s really tough to get from administrators exactly how we got to this point and exactly where we go from here,” he said.
Schildge also said that the timing of the announcement of the budget goals — which occurred during finals period of Fall term — meant that many students only recently became aware of the Board’s impending meeting to approve of Kim’s plan. The long-term enactment of the plan that is ultimately approved will likely lead to at least 200 staff layoffs, according to Schildge.
“We already know that they have a plan for us,” Schildge said. “We’re trying to figure out what the numbers are.”
The Service Employees International Union met with the College administration on Friday to discuss what they can do together to avoid layoffs, SEIU Local 560 Vice President and panelist Chris Peck said during the discussion. There is another meeting between the administration and SEIU scheduled for Tuesday, he said.
Union layoffs will not occur until after negotiations with the SEIU have taken place, Peck said. Non-union staff, however, may lose their jobs starting this month.
Students who believe that the current layoffs will help reduce “glut” in the current staff do not realize that the number of College staff members has actually decreased since 2002, Schildge said. According to Peck, Facilities Operations and Management has been reduced by 30 positions since last year, and more than 30 union members have recently retired, 16 of which worked for FO&M.
Peck said he was concerned about the potential use of seasonal employees to fill the staffing shortage. The workers will not have the same concern for student well-being and are unlikely to receive benefits like health care, Peck said.
“It’s not just the union area, there are different areas where they are thinking of subcontracting – the administrative assistants are terrified,” he said.
Many non-union employees are afraid of speaking out about their situation, Peck said. He explained that the posters around Dartmouth put up by Students Stand with Staff only have photos of union members.
“Not a single non-union staff member felt comfortable standing in that picture because they felt it would threaten their job,” he said.
Orleck told anecdotes that she had heard during meetings with former College employees about the way that layoffs were conducted last year.
“People who had worked at this institution for 30 years were escorted off campus by security, were told that they couldn’t come back to their office to claim things without setting up an appointment,” she said.
The discussion needs to be driven by values, not by numbers, Schildge said. Audience members expressed support for this statement, one of which said that the “Dartmouth Experience” is tied to “putting people over property”.
“This is, at some level, a conversation about social justice for the members of our own community,” biology and Dartmouth Medical School professor Lee Witters said. “This is very, very close to home. It’s not on some distant shore.”
Possible student action proposed at the meeting ranged from participation in the candlelight vigil in support of the staff, scheduled for Thursday, to one community member’s suggestion that students boycott classes until jobs are protected.
In response to a student’s question about why there was not a wider variety of academic departments represented on the open faculty letter sent to Kim on Jan. 22, Orleck said that many members of the biology and arts departments abstained from signing because they do not want to delay the construction of the new Visual Arts Center and Class of 1978 Life Sciences Center. She said that she is reaching out to other departments including the economics department.
The open letter from faculty included the proposition that pay cuts across the pay scale take place, a suggestion that requires further discussion among faculty and staff, she said.
“One of the things that Dean Folt said that we took to heart is that we really need to work with our own colleagues now,” Orleck said.
Orleck also discussed the possibility of adding a surcharge to the tuition payments of students who do not receive financial aid while leaving financial aid untouched. Some audience members expressed concern that such a charge would push high-quality students to other schools.
The Student Assembly is unlikely to take action until the College has released more information, Assembly policy chair David Imamura ’10 said at the meeting.
“[The Assembly] doesn’t want to hurt its relations with the College,” he said. “They don’t want to take a position until they know what is going out.”
If a large enough group of students bring up a " campus-wide" concern, the Assembly will "become more involved," Student Body President Frances Vernon '10 said in an e-mail to The Dartmouth. The Assembly encourages all students to bring their concerns to General Assembly meetings, Vernon said in the e-mail.
Acting Dean of the College Sylvia Spears attended the first few minutes of the meeting, which was attended by roughly 75 students, faculty and community members. Senior Vice President Steven Kadish arrived as the session drew to a close.
- incorrectly attributed the idea that the Advisory Committee on Investor Responsibility is student-run and ought to receive power to influence investment priorities to Eric Schildge '10, co-founder of Students Stand with Staff. In fact, the ACIR is overseen by a faculty advisor.*
Obviously, no one wants layoffs. However, statements that Dartmouth should put “people before profits” ignore the reality that Dartmouth has finite financial resources, and that those resources are substantially lower than they have been in previous years. Money simply must be cut from the budget if Dartmouth is to remain in a long term competitive position. If outsourcing can lead to substantial cost reductions without substantial loss of quality, then it should be pursued.
In my time at Dartmouth, I saw students who were on financial aid making around $6/hr at Dining Services while union employees doing the exact same job made many multiples of this amount. I believe in equal pay for equal work, and exploiting the most economically needy students at the expense of unions is not just and does not improve the Dartmouth experience. This implies that at least some union employees are being overpaid. Perhaps across the board cuts in their pay and/or furloughs could reduce layoffs.
The bottom line is that there is no choice. Cuts must be made. Layoffs are not the only source of potential cuts, but I highly doubt it is possible to cut enough out of the budget to meet the new constraints placed on Dartmouth by the dramatic reduction in the endowment.
Ultimately, this is a problem of financial mismanagement at the highest levels. Dartmouth should not be drawing so much money from the endowment each year that when there is a market decline, cutbacks become necessary. Instead, the ongoing draw should be reduced to allow the endowment to grow more quickly, and so that Dartmouth can continue to draw a relatively constant level of funding from the endowment from year to year. While it is an issue of budgeting and financial mismanagement at the highest level, it doesn’t change the fact that the money is now gone and cuts must be made.
Dipping into principal in the endowment at this time, a low in the market, would cause permanent damage to the competitive and financial position of Dartmouth going forward, which is unacceptable. We owe more to the future students of Dartmouth College.
By Anonymous on Feb 2 | 6:30 am
The article states: “The panel attributed some of the current financial difficulty to endowment mismanagement by the College’s Investment Office and Board of Trustees. Students Stand with Staff demanded that the administration make its investment process more transparent and that the student-run Advisory Committee on Investor Responsibility — an organization that currently makes recommendations about the College’s shareholder involvement — receive power to influence investment priorities, Schildge said.”
Financial mis-management by the Board is a serious charge. I will not go that far, but I do believe there should be more transparency to the relationship between trustees on the endowment investment committee and investments with money management firms they have a material interest in.
This said, my guess is that having more power in the student-led investment “responsibility” group would have resulted in even worse financials, whereby social responsibility had been given a higher priority than financial responsibility. I do not suggest social irresponsibility, but merely observe the implications.
By Timothy A. Dreisbach 71 on Feb 2 | 10:55 am
Publish all administration, faculty and staff salaries and you will know where cuts deserve to be made. Public institutions do this.
By Longview on Feb 2 | 11:31 am
Complete transparency in the investing process is a very poor idea. The college does not only invest in highly liquid investments such as publicly traded large cap equities and US Treasuries. Most endowments (I have no inside knowledge of the Dartmouth endowment) invest in private equity deals, structured investments, and other private placements that are not traded on exchanges. Building or unwinding a position when you are managing several billion dollars is not the same as the average person entering an order on his broker’s website, and if it became known how the endowment was restructuring or reallocating, for example which investments or types of investments it was buying or selling, this would allow competitors to frontrun the college, reducing the quality of execution and ultimately returns.
I think that the real mismanagement here is not so much the fault of the asset management team. Dartmouth’s endowment declined less than the S&P 500 (based on the data I last saw). There was a massive crisis from which Dartmouth was not immune.
The mismanagement really comes from the board assuming that Dartmouth would continue to make huge returns on its investments every year, without any real contingency plan in effect for years, or even decades, where returns are substandard. The current model forces either massive cuts or selling into weakness during down times in the markets (especially difficult if you are holding illiquid investments where you can’t even find a bid, or at least a decent one). This virtually guarantees reduced long term returns.
Dartmouth’s endowment has grown a great deal, making the college increasingly reliant on the returns drawn from it. Markets cannot be counted on to go any particular direction. This is not an asset allocation issue as much as it is a budgeting issue.
I also agree that students should not have any real control over how the money is invested. They lack the requisite experience in how the financial world works in reality (not just in theory). Also, too much focus on social causes can severely handicap the growth of the endowment. You can do just fine by excluding a few types of investments, such as equity or debt of tobacco companies, but if you remove the ability to invest in companies like China due to human rights violations, you will only hurt the return and diversification of the endowment. Further, not investing in China would quite possibly isolate it further, giving it less incentive to move toward the Western view of human rights.
I strongly support President Kim’s willingness to explore budget cuts, including layoffs, as part of a broad package to cut costs at Dartmouth. These are neither easy nor popular decisions, but they are necessary.
By Anonymous on Feb 2 | 3:27 pm
Orleck’s suggestion of charging non-financial aid students a “surcharge” is frankly absurd. What possible rationale is there for levying a fine on such families? How did their actions lead to the current budget shortage at the college? How do you expect to charge for tuition, then add on a bullshit surcharge, and then have GreenCorps call every year looking for donations? Ask anyone with a critical eye, and they’ll offer lots of examples of fat that can be cut from the College’s operations. Are we asking the families of non-financial aid students to foot the bill of these inefficiencies? Who would sign up for that?
By Sam Fisher ‘08 on Feb 2 | 3:59 pm
If everything is on the table, why is doing nothing not on the table?
Adding a “surcharge” is the same as raising tuition, where students on financial aid get more assistance.
By Anonymous 2 on Feb 2 | 7:52 pm
What real budget gains will be made by eliminating 200 jobs? Unless they all earn $100K per year, it won’t make a substantial cut in the budget, and I’m willing to bet that those who will be eliminated will be lower-level employees who aren’t fully involved in the budget process. The outflow of more experienced staff through early retirement and the reduction of other employees by layoffs will result in more pressure on the resulting staff. The “grunt work” on campus is done by these lower-paid staff members. Students may find that the hard work done by these employees, often in the background, will be sorely missed and hard to replace once it is gone from the budget.
By Former Staff on Feb 2 | 8:31 pm
Do Nothing: Are you really suggesting that the College stop paying its bills? How would that work? The money has to come from somewhere.
By Timothy A. Dreisbach 71 on Feb 2 | 10:45 pm
The notion of a surcharge for full tuition students is completely unfair. In the same way that the college should not be seen as a magical money tree, neither should the students who do not receive financial aid. Ideally, cuts can be made in other places where layoffs can be avoided entirely or severely reduced in number. The college does not, however, have an everlasting obligation to hold onto employees that are determined to be not needed. In response to the criticism in the video for a 100 Million dollar cut, I’d rather see a goal, and some idea of what has to be done. To work to reduce a budget without a number or goal is ridiculous. Go to the supermarket, get food, make sure there’s enough for dinner, but I’m not going to tell you how many guests we’re going to have over…how much sense does that make?
By anonymous 3 on Feb 2 | 11:54 pm
Plain and simple, the mission of Dartmouth College is to provide an education to the students. While I am sure the administration is concerned about the economic impact of the region, it should not be a priority as some seem to believe. Ask yourself, if Dartmouth does not reduce cost by whatever means are presently necessary to provide quality education to the students, how will it impact the community in the future if the college is a place that no one wants to attend. To those of you in fear of losing your jobs, try helping the situation by being more productive instead of complaining. As for the Administrative Assistants, the majority of the business world realized that these positions are not necessary and were eliminated long ago. Many employees at Dartmouth have simply been there too long, and have an unrealistic outlook as to the state of the economic situation. The idea that Dartmouth “owes you” is simply unrealistic. Maybe all employees should be required to take some business and economic classes to become more informed. It does not appear any of those involved in this protest group have any business aptitude at all.
By Phoenix on Feb 3 | 8:15 am
I think this discussion is great, but I’m worried about there not being a backup plan for the employees. If cuts are going to happen that involve staff, what provisions are being made for those staff members to prevent even more of an economic downward spiral in the community?
By Jeremiah Brophy on Feb 3 | 9:33 am