Dartmouth to Cut 60 Jobs After 18% Endowment Decline (Update4)

By Oliver Staley

Feb. 9 (Bloomberg) -- Dartmouth College, the smallest school in the Ivy League, will fire 60 of its 3,300 non-faculty employees after its endowment value fell 18 percent because of the global recession.

An additional 70 employees have accepted buyouts and 28 others will have their hours reduced, the college said today in a statement. The school, in Hanover, New Hampshire, will increase undergraduate tuition 4.8 percent, raising the total cost of attendance to $49,974 a year, starting in September.

Dartmouth joins Harvard University and Yale University among Ivy League schools in the northeastern U.S. that are slashing budgets after fund losses. Harvard, in Cambridge, Massachusetts, lost 22 percent, not including investments in private equity and real estate, in the four months ended Oct. 31, and said its losses for the fiscal year may be 30 percent. Yale in New Haven, Connecticut, said its endowment fell 25 percent in five months. Outlays from Dartmouth’s fund contribute 35 percent of the budget, excluding professional schools.

“This is not a normal day at work when you have layoffs,” Dartmouth President James Wright said today in a telephone interview. “Dartmouth tries to be a good employer. None of us likes that this is what we’re doing.”

Cutting $72 Million

Dartmouth plans to cut $72 million, or 10 percent, from its $700 million budget by 2011. The undergraduate college will eliminate $47 million of its $450 million budget during that time. The cuts include reducing compensation by $28 million through a salary freeze, and lowering construction costs by $10 million.

Wright said occasional budget cuts are the result of the school’s dependence on its endowment, which rises and falls with financial markets, for operating income. The alternative would be steep increases in tuition, he said.

“I don’t think any of us imagines that this will be the last time Dartmouth will cut,” he said.

Dartmouth’s endowment decline may be greater than $700 million, or 18 percent, because it doesn’t include losses from investments in private equity, Wright said.

While Dartmouth won’t eliminate any tenure or tenure-track faculty positions, it will drop 30 to 35 classes, or less than 2 percent of its courses. The school also will postpone about a third of its job searches to fill open faculty positions, Barry Scherr, the provost, and Adam Keller, an executive vice president for finance and administration, said in a letter on the school’s Web site.

Tuition Increases

Dartmouth’s tuition increase is larger than the 2.9 percent boost announced by Princeton University in New Jersey on Jan. 26. Cornell University, in Ithaca, New York, said its tuition will climb 4 percent at endowed units within the university and 7.2 percent at its other schools.

Dartmouth will increase its annual financial aid budget by $8 million, or 13 percent, to an estimated $72 million.

Tuition will also rise 4.9 percent to $47,835 at Dartmouth’s Tuck School of Business and 6 percent to $42,525 at Dartmouth Medical School, the university said.

Dartmouth, founded in 1769, has 5,700 undergraduate and graduate students. Princeton, the second-smallest Ivy League school, has 7,145 students.

To contact the reporter on this story: Oliver Staley in New York at ostaley@bloomberg.net .

Last Updated: February 9, 2009 17:14 EST

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