Criterion Two: Preparing for the Future

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Working Paper #4

Criterion Two: Preparing for the Future

"Kenyon remains a small college and exemplifies deliberate limitation. What is included here is special, what is excluded is not necessary to our purposes."
-Kenyon College MissionStatement
This working paper demonstrates Kenyon College's capacity to fulfill its mission through an investigation of the ways in which it allocates resources and plans for its future development. We will show that the college'sprocesses for evaluation and planning demonstrate its capacity to marshal its resources to fulfill its mission, improve the quality of its education, and respond to future challenges and opportunities. Kenyon’snational ranking among liberal arts colleges, 32nd in the U.S. News listing in 1999 and again in 2009, testifies to the college's focus on providing students with a sound liberal arts education and its extraordinary fiscal discipline. Kenyonmanages to maintain academic excellence in its programs, as subsequent working papers will show, despite its relatively modest endowment and heavy tuition dependency. Lacking the financial aid resources of many of its peers, Kenyon has still managed to attract capable and motivated students ( and in fact to increase its selectivity from 38.4% admitted in 2004 to 31.3% in 2008--source "Admissions Dashboard 2008") and to offer them an academic program that compares well with those of the nation's other leading liberal arts colleges. As the "Budget Philosophy" notes "Kenyon is financially sound because it is academically sound."

Core Component 2a. Kenyon College realistically prepares for a future shaped by multiple societal and economic trends.

The 2000 Reaccreditation Self-Study report noted that "a comprehensive, collegiate, long-range planis impractical and unnecessary," arguing that "the environment in which Kenyon operates is so dynamic that the College must retain the maximum flexibility to alter budgetary priorities from year to year" (2000 Self-Study, p. 20). Instead, at Kenyon, strategic planning is always financial planning. It is our belief that planning without the funds to realize those plans is worse than no planning at all. Our budget functions as a strategic planning and management tool that provides annually updated five-year projections that extrapolate the future implications of new decisions and commitments. Our determination to maintain fiscal discipline, resulting in 39 consecutive years of balanced budgets, means that our evaluative and planning processes create an extremely tight feedback loop in which innovation is rigorously measured against realistic measurements of feasibility.From year to year, our budget offers little excess, little room for new expenditures, so that new ideas, programs, and projects have to be carefully vetted. And yet, despite this fact of life, Kenyon is coming off of a decade of growth--in the size of the faculty, in academic programs, in student enrollment, in new building project, in fund-raising, and in the size of the budget. Figure 1 below offers a snapshot of Kenyon's growth over the last twenty years. We refer back to this table as we discuss the ways in which Kenyon has planned for its growth and is currently thinking strategically about the future.

Planning at Kenyon takes into account developments in technology, demographic shifts, diversity, globalization, and concerns about the cost of higher education. There are three components that make up the college's regular fiscal planning: the budget, the endowment, and giving. The Finance Division works closely with three standing committees of the Board of Trustees: the Budget and Finance Committee, the Investment Committee, and the Buildings and Grounds Committee. As we noted in Working Paper #3, the two major planning exercises that have regularly informed decision-making at Kenyon for decades are the budget process, which occurs annually, and campaign planning, which occurs roughly once every decade. In addition, the Investment Committee of the Boardplays an active role in setting investment policy and in manager selection.

Budget Process

As noted above, Kenyon pays careful attention to the future consequences of current budgetary decisions and commitments by use of a model that provides annually updated five-year projections. These five-year projections extrapolate the future implications of those decisions and commitments. Annual budgets and five-year projections are prepared by the Senior Staff; ultimate authority for the budget rests with the Board of Trustees, which approves the budget annually.
The mission of the Budget and Finance Committee of the Board is to assure long term financial stability of the College’s operation and to maintain the integrity of the financial planning and budget process to provide the highest quality education possible to Kenyon students within our limitations.
In the pursuit of this mission, the Budget and Finance Committee oversees the resource allocation process of the College, most notably:
1. The long-range strategic planning process in conjunction with the Executive Committee of the Board;
2. The five-year financial model;
3. Special allocation of surplus operating funds, when available;
4. Periodic review of the financial structure of the College; and
5. The annual operating budget process.
In their oversight of the above processes, the Committee has established the following policies:
1. The budget must balance annually;
2. Adequate reserves are established for emergency expenditures; and
3. The five-year financial model reflects the long range strategic plan of the College.1
With the careful oversight of the Budget and Finance Committee, the Board of Trustees, Kenyon has balanced its operating budget for thirty-nine consecutive years. Kenyon also benefits enormously from the dedication and experience of senior staff members in the finance and accounting division, who are the longest serving senior administrators in the college. Over the past decade several initiatives were successfully integrated into the operating budget. These include funding the transition of the faculty teaching load from six courses each year to five courses (from 3-3 to 3-2), continuing to grow reserves for equipment replacement from $850,000 in 1999-00 to $1,688,000 in 2009-10, improving the financial aid program, including our focus on admitting a diverse student body, and bringing on line operating expenses related to facilities built in the last decade. The College’s image and reputation have benefited from its ability to manage the resource allocation process in rapidly changing and challenging economic environments. The focus on the 2009-10 operating budget and for the foreseeable future will be on maintaining the flexibility to deal with uncertain economic conditions. The 2009-10 Operating Budget contingency reserve is $1,962,000 up from $500,000 the year before.

The annual budget process is a collaborative planning process that looks at the needs of the whole College, attempting to represent democratically the interests of every division of the College. Each division head, after consultation with colleagues, recommends the items needed by the division in priority order. Allitems recommended by division heads receive due consideration by the entire Senior Staff and choices are made which best support the mission of the College within the limitations of the resources available. This means that not all good or even necessary recommendations can be funded. However, items judged to be important but not currently feasible frequently carry over from year to year and may ultimately get funded.
The schedule for developing the annual operating budget and the updated five year financial projection follows:

During the summer members of the Finance Division begin to gather estimates of variables for the next year's budget. In August members ofSenior Staff, with the Faculty Executive Committee and representatives of PACT, meets to discuss the major components of the budget and to discuss emerging issues. By October, Senior Staff meets in joint session with the Executive and the Budget & Finance Committees of the Board of Trustees which give guidance and advice on the College’s priorities; Senior Staff then meets with Budget & Finance alone for more in-depth conversations. From November to January,Senior Staff seeks input from across the divisions of the College through conversations and written correspondence with budget managers.

Reviews of this process tend to be mixed. While there are ample opportunities for various groups across the campus (faculty, students, staff) to keep informed about budget discussions, input is unevenly distributed. The academic division is well represented on senior staff. The Provost, both Associate Provosts, and the chair of the faculty all sit on this committee and represent the interests of the academic division. In addition, the Resource Allocation and Assessment Subcommittee of the Executive Committee(or one of its predecessors) has for decades participated in an advisory capacity in budgeting. However,the committee's role has generally been sporadic and peripheral, a frequent source of frustration to its membership. Turnover on this committee, which currently also oversees academic assessment, is frequent and the learning curve is steep. Because it is the only opportunity junior faculty have to sit on Executive Committee, it is frequently staffed by junior faculty members with only a couple of yearsprior service at the college. Members do not have the kind of time to devote to learning everything about the budget but feel that they are being asked to give advice without sufficient knowledge or understanding of the whole budget. It might be useful for the faculty, in consultation with administration, to specify more fully and regularize RAAS's role in advising Senior Staff on the budget to make the faculty voice more effective and less sporadic or to transfer that responsibility to the Executive Committee (with members of RAAS continuing to hold seats on that committee).

Other constituencies find participation inbudget discussionsat times frustrating. Inhis annual report for 20087-09,theAthletic Director expressed the frustration of members of Athletics, PhysicalEducation, andRecreation in the budgeting process, arguing that "cuts have left the Department of Athletics, Physical Education and Recreation incapable of offsetting budget overages internally in the future. As we finish off this year, it is readily apparent that we will have a difficult time meeting budget in 2009-10 based on the simple cost of NCAC and NCAA Division III membership expectations that translate into program operation." They argued that "The highest priority for 2009-10 academic year is to devise and adopt a budgeting method that takes into account the ‘predictability’ of expenditures in areas which the college has committed by contract to provide programs" (2009 Athletics, Physical Education, Recreation Annual Report, document on file).
During January and February, the proposed budget is presented to the Budget and Finance Committee of the Board of Trustees for its review, amendment and ultimate endorsement. The Budget and Finance Committee presents the proposed budget to the Board of Trustees for its review, amendment and final approval at its February meeting. In March, fees and charges are announced for the next fiscal year and advance registration bills are mailed to students. The current year’s budget meanwhile is constantly being monitored.

Annual Reports
Budget planning is not only about making revenue and expenses balance out. Decisions must be made about the allocation of resource, often with little wiggle room. To this end, annual reports collected across the campus function as planning documents. Annual reports are filed routinely with the president's officeby the heads of all seven of the college divisions. All academic departments and programs, academic support programs, and standing committees of the faculty file annual reports with the provosts' office. Departmental and program reports are read and collated by the provosts; committee reports are forwarded to new committee chairs to help them set the next year's agenda. Each department in Student Affairs also completes an annual report, summaries of which are used to write the division's annual report. Annual reports provide information enabling senior staff to make budgetary,programmatic, and personnel decisions based on the best information available.

Campaign Planning and Goals
As we noted in an earlier working paper, while budget planning focuses primarily on day to day operations and the fixed costs of the college, capital campaigns allow us to plan on a larger scale for long range goals-- endowment, scholarships and chairs, new facilities and programs. As PresidentNugent noted in the current campaign prospectus “When a college sets forth on a comprehensive campaign, it is also setting forth an agenda for the next decade" and arguably beyond. "Claiming our Place: The Campaign for Kenyon" sought $100 million for capital and operating purposes over a five-year period. It ended on June 30, 2001, with more than $116 million in gifts. The campaign substantially increased the college's endowment, raising $22 million for financial aid and $13 million for professorships which resulted inthe creation of nine new faculty chairs. $32 million was raised for facilities; buildings constructed or renovated as part of the campaign include Tomsich Hall (chemistry), Hayes Hall (mathematics and physics), Fischman Wing (molecular biology), Storer Hall (music), the Eaton Center (finance division), and BFEC (the Brown Family Environmental Center) (source Kenyon Profile, 2006-07; document on file).
In October of 2005, the Board of Trustees announced the creation of anew campaign, "We are Kenyon: The Drive for Excellence." The priorities of the campaign--access to a Kenyon education, teaching and learning, and enhancing residential life-- were intentionally aligned with the college's defining values as articulated in its mission statement through a planning process that involved all constituencies of the college. Planning research completed for the "We Are Kenyon" campaignthat defined its goals and priorities included:

• A direct mail and web survey of 200 elected leaders of the Kenyon community seeking their views on the College’s mission and resources
• Six “Presidential Conversation” focus groups involving faculty and administrators surrounding key mission issues.
• The completion of reports by five working groups of 60 faculty members, administrators, and students who made recommendations about campaign priorities. The five groups included Admissions and FinancialAid, Arts Policy, Curricular andFaculty, Student Citizenship and International Programming, and Residential and Student Life. Recommendations from these working groups were supplemented by the submission of campaign proposals by The Kenyon Review and The Philander Chase Corporation (documents on file)
• Creation of the Trustee Campaign Steering Committee to advise about campaign priorities and campaign goal-setting. (Cited from "Campaign Operating Plan"; document on file)

The campaign launched in May of 2007 with the ambitious goal of raising $230,000,000. The choices made in the campaign planning process will guide the institution's priorities for years to come and so it is important to highlight the ways in which the campaign's priorities not only reflect the mission of the college, but also attend to wider social and economic concerns such as the affordability and accessibility of a Kenyon education, to expanding our students' global perspectives, and to defining ourplace in a multicultural society.
The campaign's primary goal is to double the college's endowment, raising $126 million toward endowment. This new endowment would ensure greater access to the college through $70 million to the endowment for financial aid. Building support for faculty development in general ways (through the addition of five new endowed chairs, an expansion of the Yarbrough Dissertation Fellowships, and endowment of faculty development and teaching grant funds) is an important part of the campaign, as are initiatives in specific areas. These include strengthening of international programs by endowing the chair and faculty positions in International Studies, addition of a new faculty position in film, and endowing student research programs in the sciences and humanities. A $10 million endowment would support programming in two new visual arts facilities envisioned as part of the campaign. The Kenyon Review is building its endowment through a $5 million goal to endow the editorship of this literary journal and raise endowed funds for its scholarships for summer writing programs.
In addition to the endowment goal, new plans for improving and expanding campus facilities were articulated in an $80 capital projects goal. Two new visual arts facilities – a 30,000 square-foot gallery/art history building and a 40,000 square-foot studio art building – are planned to replace aging facilities, a $34 million goal. In keeping with Kenyon’s commitment to creating intimate teaching environments, several small academic houses for interdisciplinary programs and English will replace former residences that were remodeled long ago as classroom buildings. New 84 bed residence halls, including apartment-style housing for upper class students, were proposed to alleviate overcrowding in residence halls. Finally, the College invested in one of its most-used and beloved historical building – Peirce Hall, Kenyon’s dining commons – with a comprehensive expansion and restoration to bring this 80-year-old facility up to modern standards of accessibility, service and safety.
The campaign is a comprehensive one, and includes annual funds in its goal. This includes the Kenyon Fund, which is supported by over 6,000 alumni, and the Kenyon Parents Fund, one of the most financially successful parents’ funds among liberal arts colleges nationally. A total of $24 million is anticipated from these sources.
Campaign Goals at a Glance