Original Article: http://dartreview.com/archives/2003/05/12/rising_tuition_getting_stiffer.php
Monday, May 12, 2003
While the frost of a particularly intemperate Upper Valley winter has finally receded, the bitter residue of the College's budget cuts remains. While the now-rescinded order to eliminate the swimming and diving teams and the piecemeal emasculation of the satellite library system were the focal points of campus-wide outrage, the steep tuition hike enacted for 2003-2004 went largely unnoticed. The total a cost of a year's education at the College on the Hill will increase to a total of $37,770, with tuition leaping 4.9% to $28,965—a full $1,782 higher than last year's figure. This jump follows on the heels of a 4.5% rise in 2002-2003, before which steady growth in the endowment had brought three years of modest 3.5% hikes.
However, despite its budget woes, Dartmouth's tuition increase is unremarkable when compared to that experienced by other members of the Ancient Eight. Princeton, Yale, and Penn have all announced that their total costs will be between 4.5 and 5 percent higher in 2003-2004. Fee hikes at Harvard and Cornell will be in excess of Dartmouth's, with a dramatic 9.8% spike for the latter's three state-funded "contract colleges." Brown's increase is comparable to that of the other Ivy League institutions, while figures for Columbia were unavailable.
Many other private institutions have been faced with similar raises. According to the February 21, 2003, edition of the Yale Daily Herald, tuition increases at private institutions averaged 5.8% in 2002. Williams College garnered significant media attention for its attention to freeze its 2000-2001 fees after a successful fundraising drive. That strategy, however, has long since been abandoned; Williams anticipates costs to jump nearly 6 percent in the upcoming school year. Nearby Middlebury College has dipped into its endowment to avoid deep cuts in response to its own budget crisis. Nonetheless, the college's costs are going to be an estimated 6.1% higher as of the fall.
Despite the uniformity of tuition raises among the nation's most prestigious institutions, the presence of systemic budget woes is much more asymmetric. Dartmouth and Middlebury are certainly not alone in its budget crises. Brown, which has already struggled to provide competitive financial aid, has decided to convert $1000 in grants to loans in each student's package. Each department has also been required to submit three separate budgets based upon anticipated cuts of three, five, and ten percent. Some student services have been slashed at Columbia and Penn, while the future of many programs at Cornell is the hand of the state of New York.
At the same time, however, the recent financial downturn has had a minimal impact on the budgets of Yale and Princeton. The puzzle is that during the boom years of the late 1990's, Dartmouth's steadily growing endowment and high alumni giving rate seemed to place on a similar trajectory as those institutions. Even the College's long-term budget plan anticipated a ten percent annual increase of the endowment's value. Such a model allows for a down year every once in a while, but as Provost Barry Scherr said, they just 'didn't figure on the back-to-back [down] years we've just had.' The endowment's value shrunk by 5.7% in fiscal year 2002 and by 3.1% in fiscal year 2001, numbers in line with the national averages of college endowments. All in all, the endowment has shrunk by about $200 million over the past two years. Dartmouth, like many colleges, determines the size of the endowment's contribution to operating budget by averaging the endowment's value over the previous three years, then taking a percentage of it.Under that system of accounting, sizeable budget cuts were necessary. Scherr, recognizing that an expectation of ten percent annual growth was overly optimistic, has since scaled that assumption back to an eight percent annual growth rate. While the College's resources are less in absolute value than those of Yale, Princeton, and Harvard, Dartmouth appeared healthier financially than smaller schools like Middlebury and the perpetually struggling Brown.
The message is clear: all schools in both the Ivy League and across the nation have experienced strains on their budget. However, at some of Dartmouth's schools, an average tuition increase was sufficient to meet the demands of the bear market. However, Dartmouth has suddenly been struck by the worst crisis in the Ivy League. With promises of budget cutbacks many times worse than those experienced this year on the horizon, it is in examining this rapid and unexpected transformation that questions of mismanagement arise.