“Last fall the whole world was delivered a shock, and we had to rethink a lot of things,” said Dean of Enrollment Management Brian McCauley. “Our endowment value being greatly reduced, we had to find financial cuts… and think creatively about how to do that across the board.”

Now McCauley and his staff believe they’ve found a way to alleviate some of Principia’s budget woes: a reallocation of financial aid resources that would provide international students from third world countries with packages more in line with the ones most domestic students currently receive. Currently, students from third world countries receive substantial financial aid because their families are less likely to be able to finance their education than the families of students from first world countries.

“Third world students get all grants” said McCauley. “The reality is that many of these students then stay in the United States [after graduation]. They’re well prepared [by their education], and they’re making the same paychecks, so why wouldn’t it be reasonable to have international students have the same loans as domestic students?” Loan forgiveness for students who return home to countries where work is scarce, he added, could be decided on a case-by-case basis. “If you go back to your third world countries, nobody is going to penalize you for that. We don’t have exact details yet, but it should be a very fair forgiveness program.”

McCauley acknowledged that it has already been a year of financial burden for Principia’s international student body. “Because of tax changes and budgeting here at the college,” he said, “there are fewer work hours available over the summer and potentially overall.” In addition, a correction made by the accounting department this fall to a long-misfiled income tax has resulted in an overnight increase of some 14% to each international student’s taxes.

With the proposal for new loans coming just a few weeks before the end of the academic year and, until the meeting two weeks ago, an unexplained delay in the arrival of their financial aid packages for next year, several international students are reporting serious concerns about the potential long term effects of such loans.

“I can understand that the administration is looking at the big picture, considering the financial situation Principia is in – but they have to have all their facts straight,” said Darline Ambugo, a sophomore Business and Mass Communication major from Kenya. “They’re saying that from what they know, international students do well once they graduate. But all of the information that they reported back to us is just from Bente [Morse] and not from any other sources, and most people don’t give her accurate feedback [after graduation]. I know many international students who graduated last year and still don’t have jobs at all. Their Optional Practical Training [OPT] visas expire and they’re not entering graduate school, which means they either have to go back home or stay here illegally. And no one will contact you if they are here illegally. Once people graduate they are just out there on their own.”

Benjamin Chernivsky / photo

Andres De Paz Nicol (SO)

Also, the same dismal economy making jobs difficult to come by for domestic students may, according to some international students currently mid-job hunt, mean even slimmer pickings for them. “I understand that it’s essential right now, with the way things are in the economy, for [the administration] to find something that works,” said junior Business and Economics major Emily Kabura, also from Kenya. “But as an international student, my OPT dictates that I have only a year to find work after I graduate. Looking at this optimistically, let’s say I do find a company that’s interested [in hiring me]. They don’t want someone who’s going to live here for a year. For them, sponsoring you as both an employee and a citizen applying for a more permanent visa is very difficult. So it’s very hard to get a good job. I interview even just for internships, and it’s always a question: are you a citizen? Will you expect the company to sponsor you?”

Returning home to work may not yield better results, Kabura said. “If I were to go home, and if I were to get a job, which is pretty optimistic in the first place, I would be able to contribute maybe $20 monthly to pay off the loans [based on entry level salaries in Kenya]… $20 a month for a $20,000 loan will take a very long time to pay off. I just don’t see how that is functional. And most people do go back home, or at least that’s the trend right now. And with the loan forgiveness option, I know Principia is very understanding and I know that they would make a payment plan, but just how many loan forgiveness plans will they do?”

Others are concerned about how the introduction of the loans may affect the diversity of the student body. “I really see it from the administration’s perspective, and I understand, because I love Prin. But honestly, if I was still in Uruguay and facing $20,000 in loans, there’s no way I would have come to Principia,” reported junior Esteban Xifre Villar. “It’s too bad, because I would hate for this to mean less international students [on campus].”

Originally, said McCauley, the administration had planned to begin the loan program as early as next fall, but later decided a delay would be wise. “The point that was brought up [by students] was that, because of the lateness in the year, it’s too late in the process for the international students to transfer, so because of that we decided to wait until next year. It’s highly likely we will do it then.” McCauley said dialogue will continue into fall quarter.

“I really appreciate that they changed their mind [regarding the start date for loans],” said Xifre. “There’s just been a lot [of financial adjustments] in a really short of amount of time. As it is, it’s already tough to make regular payments. Situations are different for every individual, but right now, it’s just hard.”

Yet Xifre also echoed the sentiments of every other international student who spoke with the Pilot when he stressed his gratitude for the generosity and welcome Principia has already extended and his hope that a solution can be found that will meet all parties’ needs. “Principia is unique, and it is very generous,” he said. “I think I understand what [the administration] is after, which is what’s equal for everyone, and I support that. I just hope we can find a way that is not hurting anyone and that is benefiting Principia.”

“It might be possible that after you graduate and get a job, then Principia could contact you and figure out what is logical and what could be paid back,” Xifre suggested. “Right now, you don’t know about the economy, your job, and so many variables at this point. I think we’ll find a solution that’s happy and everyone can agree upon.” Kabura shared similar optimism: “I love Prin. I love being here. I know that times are hard, and when times get hard you just can’t do things the simple way; you have to bend with the times and go with what will work. I’m so grateful and so very happy to be here, so I know that there’s a solution. We have it, we just need to realize it.”

As the process continues, McCauley said the administration is approaching the situation with a broader perspective. “We’re very aware that for the first time, we are really examining in-depth the complete cost of what Principia pays for an international student, and what international students pay for [Principia],” he said. “There are a lot of hidden costs: clothes, bedding, rooms, lights, transportation to and from their home country, even dental work occasionally. There’s a number of things when you look at the total cost, and then the tax law changed, so we’re really trying to get a handle on this.” He said he hopes the college will “continue to have a highly diverse campus. Our intention [with the loan program] is not to lose any students over it. We love our international students, just as we love our domestic students.” And, he added, “Our doors are open to anybody who wants to talk.”

Benjamin Chernivsky / photo

Moses Karanja (FR)

Barbara Palmer / photo

In light of budget cuts and potential faculty reductions, the reformative measure could be approved and forwarded to the next checkpoint, or it could be postponed indefinitely or denied.

Yet either way, its architects all agree that it will have to be redesigned in light of a shrunken budget, as the proposed overhaul cannot be implemented in its current condition.

The first problem with the proposal is that the gen-ed committee designed it “as if resources [weren't] going to be limiting,” said Assistant Dean of Academics Dr. Joe Ritter. But when the economy broke down and Principia’s endowment dropped, the original parameters no longer applied.

“We designed this with an addition of seven to ten faculty,” said Sociology professor Dr. Pamela Kaye. “At that time, our president urged us to create a curriculum that would require seven to ten more faculty, which is what we did.”

“Not only are we not going to get an increase of seven to ten, we’re now talking about a decrease of as much as six,” she added.

Dr. Greg Sandford, History professor and head of the Humanities unit, agreed, “It’s a resource issue…We have faculty who are really strapped to get everything done that they need to get done, and will be more so if we cut faculty members.”

The second issue facing the gen-ed overhaul is that it will land in the administrative offices along with other crucial measures, including the transition to semesters, a daily schedule transformation to fit semesters, and a project-centered committee to streamline the transition in line with the Academic Quality Improvement Program (AQIP). “I’m not sure that we have the administrative capacity to lead this many initiatives all at once,” said Kaye. “With budget cuts, that adds another layer of complication.”

English professor and Writing Center director Dr. Lynn Horth called the slimmer budget and the semester conversion “twin pressure points” moving in on the gen-ed discussion.
“The budget crisis that’s affecting all schools leads us to the conclusion that maybe we have to make some changes in the plan,” said Dr. Dave McFarland, Mass Communication professor and head of the Creative Arts and Communication unit. The committee would take “more drastic” actions than simply postponing the measure, he added. “[We'll] probably redesign it.”

Sandford said, “The gen-ed program cannot be implemented in full without additional resources. We are not going to do gen-ed the way we originally planned to do it, and we’d be foolish to try.”

The entire project will be reduced, and certain elements will have to shrink or be eradicated. Components of the original plan that now face postponement include a remastered freshman year experience (FYE), a new sophomore year experience (SYE), and integrated learning courses (ILCs) to teach rhetoric, critical thinking, and speech.

“It appears to most of us that that probably can’t all happen within the budget constraints that we’re facing,” said McFarland, “and certainly not within the time constraints they’re talking about. Even if [we] wait until 2011 to put semesters in, it’s pretty iffy whether we could get all this accomplished by [then].”

Sandford said he disagrees with cherrypicking parts of a proposal to reduce the cost, saying, “All those components were complementary. The package had to be considered as a package, and you can’t just take one or two pieces out of it and try to implement them.”

However, if rejected or split, the proposal would not be the first of its kind to meet its demise – “yet another terminal case,” according to McFarland.

“Every gen-ed reform we’ve attempted has had success at the level of the faculty,” said Kaye, “and has fallen at the level of the administration.”

This proposal follows a long line of gen-ed redesign plans which flourished in the 1990s but were all rejected after the faculty approved them. The gen-ed requirements in use today were first implemented in the 1960s, and have changed little if at all since then.

“There seems to be general agreement that the gen-ed program is in serious need of updating,” said Sandford. Members of the gen-ed committee all expressed the desire to move from a checklist to a more integrated and intellectually stimulating method of teaching skills, rather than just knowledge.

What happens next? The committee isn’t sure, said library coordinator Lisa Roberts. She explained that it depends upon Ritter’s approval to keep the proposal moving through the administration.

Yet Ritter said it “would be almost irresponsible to come up with a timeline right now,” as the next move will be predicated mainly on the rate of the semester conversion. The discussion is progressing, he said, especially with the visit this weekend of semester conversion consultant Dr. Coleen Pantalone, a professor of Finance at Northeastern university. Pantalone has already analyzed Principia’s process so far, and has offered suggestions for a streamlined transition.

Despite the stall, the professors involved in the proposal and eventual redesign said they are determined to craft a better set of general education requirements to improve current and future students’ time at Principia.

“[Gen-eds are] the heart and soul of the change that we want to be able to hand to incoming students,” said Horth. “At the core…it’s not just moving around the deck chairs of requirements.”

Palmer gave this explanation of the events leading up to the decision. In September of 2008, Principia’s plan for the fiscal year beginning July 1, 2009, included growing the budget by $1.1 million. As the economy faltered, however, it became clear that this plan was no longer feasible. Currently, Principia’s upper level administrators are looking to decrease the institution’s budget by 8.1% for next year in order to draw no more than 7% from the endowment.

Ideally, Principia would prefer not to draw from the endowment itself, but rather operate from returns on that endowment. However, the current economic crisis has made this impossible. Financial experts have identified 7% as the maximum an institution should draw from its endowment in order to remain fiscally responsible.

Significant reductions to the budget have already been made by suspending capital projects, such as the renovations on Sylvester House, and by reducing other operational—non-personnel—costs. The four unit heads, for example, were asked several weeks ago to submit plans to reduce their respective budgets by 10%.

Palmer stated that he “could have started the conversation [about reducing the amount spent on faculty salaries] with faculty in November,” but that he “was convinced [he] could get there [develop a sufficiently reduced budget] another way.” After being told last week by Principia’s finance team that “my math was wrong,” Palmer met with the deans to discuss where additional cuts to the budget could be made.

Palmer said that administrators considered the question, “If you have to reduce salary, where do you do it?” He explained that deferring new faculty hires for a year in order to come up with cuts worth $400,000 made more sense to the administration than reducing the salaries of current faculty or letting any faculty members go.

Currently, there are fifteen faculty openings at Principia. As the result of the decision to defer some new faculty hires, six or seven of these openings will not be filled in the coming year. Academic Dean Dr. Scott Schneberger explained that final decisions about which new hires to defer will be made by considering how to “have the lowest amount of impact” possible.

Faculty members became aware of the decision to defer new hires after Schneberger presented it to the four unit heads at their weekly Tuesday meeting last week. Schneberger said that he asked the unit heads to prioritize the open faculty positions and make their recommendations about which new hires to defer by the following morning at 9 a.m. “I wish in retrospect,” Schneberger said, “that there had been more time.”

Business professor Roz Hibbs, who is also the Social Sciences unit head, shared that the unit heads did ask for some additional time to talk with faculty about the decision. They were subsequently given until noon on Wednesday, and they spent Tuesday evening and Wednesday morning calling faculty in their units to organize meetings to discuss the decision and prioritize the open faculty positions.

Michael Booth, a Biology and Natural Resources professor and the Math and Natural Sciences unit head, said that the unit heads “were surprised not to have had more time to help the administration come up with this money,” adding that the decision was presented with no room for negotiation, and as though all other possible options had been thoroughly explored by the administration.

Schneberger said that “the unit heads did an extraordinary job of contacting departments, meeting with their people and coming up with recommendations.” He said that he has already made the final decision about which new hires to defer, but he could not share this decision with the Pilot until the Trustee meetings this weekend. He did say that “almost all of [the positions that will be deferred] were the ones that were offered up” by departments.

Booth said that “the cuts certainly will impact the ability of departments to deliver their programs.” History professor and Humanities unit head Greg Sandford agreed, and he gave the example that the Global Perspectives program, because it is currently supported by the History department, will not continue if the opening for a History faculty hire is not filled next year. He also explained that deferring even a limited number of hires still creates “ripple effects” across academic departments because of the number of interdisciplinary programs offered at Principia.

The Religion department will be deeply affected if its open position is not filled in the coming year. Professor Mike Hamilton explained that the department can currently cover courses that meet Principia’s general education Bible requirement along with only a couple of courses in other areas. He said, “With only two faculty, we’re really a biblical studies department,” and he indicated that the department has been asked to broaden its course offerings to include courses on comparative religions.

Hamilton shared that the Religion department acquired permission this fall to begin a search to fill the position in the department that has been open for three years. The department has since conducted a search, interviewed candidates on campus, and “we have a recommendation to the academic dean recommending someone to be hired.” Hamilton said that the ability of the department to fill the open position will determine the breadth of course offerings for next year.

Sandford suggested that the decision to defer new hires will make it difficult for Palmer to talk about Principia as a “vigorous, rigorous institution.” He said that the institution is being operated according to an “ambitious vision that’s inspiring” but that “you can’t do more with less unless you weren’t doing a good job in the first place.”

In addition, Hibbs said that dealing with the impact on programs of the decision to defer new hires, along with working on the switch from quarters to semesters and on changes to the daily schedule, will be particularly difficult.

Booth suggested that many students have already felt the effects of having so many open and transitioning faculty positions, but he also said he is sure that “Principia will continue to deliver excellence in education” and make progress as an institution despite the cuts. English professor Heidi Snow, while calling the decision a “heartbreaking idea,” asked, “What’s a better idea at this point?” She added that understanding the issues facing Principia “helps us to be more specific in our prayers.”

A common perception among the unit heads interviewed by the Pilot was that the original recommendation to reduce the amount of money for faculty salaries came from Principia’s Trustees, even though it was to be carried out in practical terms by Palmer and other administrators. This is the perception that was shared by the unit heads with the rest of the faculty. Given that the faculty are still emerging from a period of distrust in their relationship with the Trustees, said Snow, this made reactions to the cuts especially negative. Sandford added, “We need more dialogue with the Trustees…if they could just know where we sit, they’d be better informed and we’d feel heard.”

Contrary to this common perception, however, Palmer emphasized that the decision to reduce the funds designated for faculty salaries did not come from the Trustees. Instead, Palmer explained that the trustees tasked Principia’s administrators with working to develop the budget together. He added that the administration will present specific decisions regarding the budget–including the decision to defer new hires–to the Trustees for approval during meetings yesterday and over this weekend.

Looking forward, Booth said that Principia needs to consider the question, “How do we move from an endowment situation to more of a revenue-based situation?” He added, “I think that process will involve asking ourselves the question, what do we have to offer the educational market that it wants and that will best serve the Cause of Christian Science?”

Following the Trustee meetings over this weekend, the final decision about which new hires have been deferred for a year should become public. Faculty members and departments will then move forward developing their course offerings accordingly.

Lulu Mosman, a freshman Environmental Science major, said, “It’s very understandable. Everyone kind of needs to make budget cuts, whether it’s at home or school or [as part of a] company.” Because money-saving efforts have become a trend nation-wide, students tend not to be surprised that it’s happening here as well. Junior transfer and Business major Palmer Aguirre said, “[Budget cuts are] probably in my best interest.” Some students do have certain concerns about how the College goes about making changes. Senior Fine Arts major Guy Walker said, “I think the school just needs to be careful with what they cut and what they don’t cut. They need to keep their priorities straight.”

Benjamin Chernivsky / photo

Senior Guy Walker makes some sensible suggestions

A theme among some students’ responses to questions about budget cuts was that saving energy and investing in environmentally conscious ways to do so should be a part of the college’s budget decisions. Such decisions, some think, would mean saving money in the long run. Mosman said, “An email was sent around with a list of ways to save money, and saving energy was not on the list, but I think it should [have been].” Walker said that cutting funding for a wind turbine to provide alternative energy for the College “will be a huger cut than they realize, because in the long run, we’d have cut our budget so much more by using wind power.” He added, “The school is stubborn about funding composting for the whole campus. It would be incredibly cheap and fairly easy to do.” While students trust the administration to make the right decisions, statements like these could lead to more holistic thought about the budget and the future.

When asked about programs or items they would feel okay about cutting, students had less to say. Senior Math major Cecily Zdan wouldn’t mind getting rid of superfluous promotional packages for incoming freshman. She said, “I feel like if they’re already registered to come here, it’s not going to be a big mind changer if they get candy or not.” International freshman Heike Verleih, a Graphic Design major, felt that too much food is wasted at mealtimes and at events where food is provided. Going along with thoughts on saving energy, sophomore Business major Warren Curkendall said we should “cut back on heating.” Junior Biology major Bob Cleveland also mentioned that as long as students are participating in campus activities, they’re not going to want them to be cut. He said it’s “not to say that it’s cut, but that right now we don’t have the funds for it.”

Another trend came in programs that students felt should definitely remain a part of Prin life. Katie Duntley, a junior Religion major who went on a Principia abroad to Hawaii last winter said, “An abroad gives you a world experience. You learn about another culture and you learn about yourself. You’re immersed in what you would normally be studying out of a textbook.” She also pointed out that ours is one of the biggest abroad programs in the country, and that because of our small size as a school, a large percentage of students get to go on trips abroad. Duntley added, “I feel like a lot of people come here because of our abroad program.” Verleih agreed, “I wouldn’t cut the abroad [program].” She said she felt that experiencing time abroad increases students’ awareness of other parts of the world, which she feels is very important.

Speaking to the potential downside of budget cuts, Verleih said, “It’s okay to cut the budget until somebody is [negatively] affected. Money shouldn’t be an obstacle.” She also spoke to a symbiosis between student jobs and student spending. “The students work here to earn money and then they give it back to Prin [by buying things at the Bookstore and at the Pub].” In other words, Principia’s fiscal system works cyclically, because students are both earning and spending money on campus, and this should lend itself to a certain financial stability.

Cleveland concluded that we can and should also approach the situation metaphysically. He said that, in addition to making practical steps, we should “invest in ideas that will reverse the [thought] that there’s a need for budget cuts.” After all is said and done, Principia is the perfect place to rise above any financial pessimism and to understand that what is good is everlasting.

The administration seeks to rein in costs by postponing many capital projects, examining and reducing department budgets, and reassessing finances.

Planned Life Safety renovations in Sylvester, Rackham, and Anderson are postponed, as well as water main, boiler, and chiller replacements in buildings across campus. In addition to the construction hiatus, College President Dr. Jonathan Palmer has called for interdepartmental analyses to reduce spending and examine practices.

Kelsey Otsuka / photo

Sylvester House has been mothballed until renovation work can be continued.

“A very common approach [to budget reduction] is to slow down capital construction and work,” Chief Financial Officer Howard Berner said. “The primary attraction to that is that it’s one of those things that doesn’t have a dramatic impact on the immediate program.”

In a December 10 email to the Principia community, Palmer wrote, “I have asked all departments to submit proposals for reductions of 10% and received that input just before Thanksgiving…This will allow us to modify existing budget approaches to more closely align our plans for growth with positive budgetary impacts.”

“That’s not new,” said Education professor Brian Johnson. “I’ve been here 17 years and that’s been done at least once before…Similar measures have been taken when the economy’s having problems.” 

However, proposed changes are moving more slowly than expected. Berner commented on the ten percent plan, describing it as a thought-provoking exercise as well as a budget-slimming initiative.

“We haven’t gotten all the responses [to the proposal request] yet,” said Berner in a phone interview Friday. “I wouldn’t attach too much significance to ten percent. I mean, you have to start somewhere to prompt somebody to think, ‘Well gee, what are we trying to look at?’ It’s a way of coming up with a list of ideas to think about and talk about.”

“I continue to suspect that most of the reductions that we’ll take at least for the next year are in the capital spending area,” Berner added. “Project delays, rather than operational kinds of things.”

Schools across the nation are suffering from economic strain. Berner described schools that have closed due to debt, and said Principia was not facing that threat. Though the institution did acquire $20 million in debt when a wave of construction projects including Crafton Center began, Berner maintained that in terms of debt, Principia rests in a good place.

“It was apparent that [the 3.61% interest rate on the $20 million] was a lower-cost way to do that construction work than to take money out of the endowment,” said Berner.

Principia watched 25% of its endowment, or $200 million, disappear when the markets dropped late last year. In contrast, Harvard University lost close to 30% of its legendary endowment, estimated Berner.

As Principia funds over half of its expenses from endowment earnings, he explained, “A decline in the value of Principia’s endowment is much more serious to Principia than it would be to a school that only was paying 10 or 20% of its bills from that.”

“Yes, we’re down $200 million from the peak we were at, but not all of that is investment loss,” said Berner. “We’ve gone 18 months now with no investment gains, and at the same time we haven’t shut down the school.”

Other College administrators have instigated their own reduction efforts. In an email response to an anonymous letter expressing concern about Principia’s finances, Chief Executive Officer David Anable wrote, “In light of the economic downturn, both of the campus heads and I have volunteered, and will take, 5 percent salary cuts. I am deeply touched that, following that announcement in my memo yesterday, other members of the community have quietly offered to do the same.”

The budget for next year will be smaller, reflecting a more conservative financial plan. Some information on Principia’s market status is not yet available, so the administration is planning and researching in the meantime.

“I won’t know [the size of next year's budget] until probably another month or two,” Berner said. “It takes a while. Remember, the kind of assets we have in our endowment — and every school has in its endowment — don’t get priced on a daily basis.”

Assistant CFO Doug Gibbs agreed, saying, “We don’t have anything confirmed about where we’re going with the budget or what the effect on everybody is going to be at this point.”

A considerable portion of Principia’s endowment lies in real estate, energy, private equity, and other private investments. Pricing information consequently arrives with a one- to three-month delay.

College departments are aware of the situation, but approach it differently. Professor Tom Davidson, chair of the joint Business Administration/Economics department, said he supports the moves the administration has taken so far, but that Principia would need to find an alternative funding source and not draw as much from the endowment.

“It’s a good short-term solution, rather than raising tuition costs,” Davidson said. “It’s a responsible reaction in the short term.”

Dr. Charles Heck, a History professor and chair of the Global Perspectives program, said he was not worried about the future of either department.

“It’s a balancing act on things like this,” Heck said. “I think we all recognize that economic circumstances have changed. Hopefully this won’t go on for too long, so one has to do one’s part and try to spend less. I’m not up in arms about it.”

In response to Dr. Palmer’s ten percent plan, Heck said, “[Global Perspectives is] not going to have a hard time spending less than our full budget.”

Some departments must reconcile a smaller budget with the need to fill vacancies. Both the Education and Philosophy departments have been conducting searches to fill faculty positions, while the Writing Center is in the process of searching for an ESL/Reading Specialist. 

Though recent economic turbulence has caused many academic institutions to institute hiring freezes, Principia has not adopted this practice. Berner said Principia’s hiring policy as of now is prudent, but not drastically reduced. “Every time somebody leaves, the Chief Executive is looking to determine whether or not that is something that’s going to affect the students, whether it’s a position that we need to refill right away, or whether we can wait to refill it.”

“I think [the financial crisis is] concerning Americans in all of their activities no matter what they’re about to do. Principia remains committed to meeting 100% of families’ demonstrated financial needs to make a Principia College education affordable,” Berner said.