Light on the Hill, Volume II
Miller, Russell
1986
FINANCIAL TROUBLES. Within a matter of weeks after he had delivered his inaugural message, the new president was confronted with a grim financial picture which jolted not only Hallowell but the trustees as well. A deficit of $578,000 was projected for the very first year of his administration (1967-68), with indications that the situation would become worse rather than better. The actual deficit that year was almost twice what had been forecast; the gloomy actuality was red ink to the extent of $1,284,000. For whatever comfort might have been derived from that unhappy fact, Tufts was not alone. Most private colleges and universities in the nation were facing increasingly serious financial problems induced by a period of unparalleled academic prosperity which had resulted in many cases in overexpansion. The deficit situation at Tufts lasted for the first three years of the Hallowell administration and cast a shadow over the presidency for which he was not directly responsible. | |
In the first year of his administration Hallowell had predicted that by 1969-70, unless the institution sought new sources of income or improved markedly those it already had, an even more substantial deficit would occur. He went even farther in 1971 by predicting that if no significant change took place in the size, composition, or programs of the institution, major operating deficits would continue at such a rate that five years later the total would about equal the entire university endowment. That would be an intolerable and ruinous situation. | |
He admitted in 1967 that the timing was especially unfortunate, for a tuition increase of the magnitude of $400 would probably be necessary, but at the same time would be neither "competitively possible nor socially acceptable." Given the certitude of deficits, the president told the trustee Development (Resources) Committee in 1967 that the best public relations strategy was to emphasize the positive (educational) aspects of the institution - one which was | |
262 | "trying new things, responding to social needs and to the requirements of individuals in their education. Thus we must move on to a better faculty, a more appropriate student body and more relevant academic programs at the same time that we attempt to find solutions to our financial dilemma." Much of the difficulty at Tufts was the result of faulty accounting and budget overruns in virtually all divisions and departments. One major reason was that wages and salaries, the largest single item in the budget, had been steadily rising at a much more rapid rate than the resources of the university were able to match. Meeting the 1967-68 deficit required use of endowment funds, which in turn reduced future income. The borrowing that was necessary added interest charges to future expense. The cost of living, which meant the cost of operating the university, had also begun to rise noticeably and by 1973 the annual inflation rate nationally had reached 10 percent. |
The deficit had been reduced to about $300,000 in 1968-69, primarily because of a tuition increase. In order to stem the tide of rising deficits, annual tuition was raised, effective September 1969, by $175. This brought the total to $2,475 in the undergraduate colleges, the graduate school, and the School of Dental Medicine; to $2,300 in the Fletcher School; and to $2,275 in the School of Medicine and the Boston School of Occupational Therapy. Room and board charges on the Medford campus were also increased, and enrollment in the undergraduate colleges was increased by sixty in order to bring in additional revenue. The Resources Division was reorganized in order to make possible an increase in contributions. | |
But in spite of these efforts there was another deficit for 1969-70. This meant a three-year total deficit approaching $2 million. Such a situation could not continue, and unless drastic measures were taken the institution might even face bankruptcy. It is obvious that Hallowell, as a professional economist, was painfully aware of the plight of the university and that whatever austerity measures he proposed would be unpopular. It was not a very auspicious start for a new administration. In the spring of 1969 he detailed for the campus community the situation as it stood, as frankly and as honestly as he could. It was his unvarying policy to keep the Tufts community as fully informed as possible. | |
The financial tide turned after 1970 and as a result of stringent economies, including a freeze on expenditures in compliance with President Richard Nixon's order of 1971, careful management, and new financial controls the institution ended the 1970-71 fiscal year with a surplus of $13,420 and was able to operate in the black for | |
263 | the next several years. By the end of the fiscal year in 1975 the accumulated deficit had been reduced to under $1.1 million. However, some sobering decisions had to be made to achieve this result, and some unforeseen events had to be taken into account which heightened economic pressure. An across-the-board cut of 7.5 percent in non-academic personnel was made in 1971. Tuition was raised by $200 a year, and room and board charges had to be increased. A freeze on spending applied in 1970-71 was not relaxed until the spring of 1972. |
The destruction of North Hall by fire in February 1972 brought immediate extra expenses. The state placed nonprofit institutions within the provisions of the Workmen's Compensation Act, which added more than $100,000 to expenses. The Winter Study Period had inflicted heavy financial losses, particularly in dining services. The end of Tufts' involvement in the Mound Bayou and Columbia Point health projects represented a loss in overhead money. The estimated budgeted income of $38 million fell short by $1 million. In an attempt to reverse the trend, the dining room in Hodgdon Hall was closed and compulsory meal contracts for upperclassmen were restored. Although there was a $1.3 million increase in tuition income (nearly one-half of all income by 1972), a $2.4 million decrease in government support more than counterbalanced it. A sharp increase in unrestricted private giving became more of a necessity than ever. | |
The financial policy of the institution enunciated in the 1970s was based on the philosophy that each school and division had to be self-supporting - "each tub on its own bottom" - and at the same time had to be responsible for its share of central administrative expenses. There were occasions, because they were all part of a single university complex, when one division such as the medical school, which in the recent past had not only paid its own way but had accumulated a modest surplus, would help support others. In this way a general balance within the institution could be maintained. The dental school, on the other hand, was in financial distress for some years and surpluses from other parts of the institution were used to even out total financial obligations. This "in-family" bookkeeping might have served a worthy purpose in terms of the credit standing and public image of the university as a whole but did nothing to assuage the resentment felt by those schools and colleges which felt that they had no obligation to dredge out some other part of the institution when they could easily have used the surpluses for their own purposes. | |
264 | The president in the late 1960s and early 1970s faced yet another set of headaches, some of which involved considerable additional financial expenditure as well as an unprecedented deluge of paperwork which threatened to engulf both administrative and academic departmental offices. Tufts, like other educational institutions over the land, both public and private, was caught up in a tangled web of federal executive orders and administrative and personnel requirements, many of which were duplicated at the state level. The institution had gotten a taste of it during the Wessell administration when graduate students funded through the National Defense Education Act of 1958 were required to sign an affadavit disclaiming any connection or sympathy with the Communist Party and affirming their loyalty to the United States. The local AAUP chapter urged the trustees not to accept any further funds until that provision was repealed. Instead, the trustee Executive Committee voted to continue to accept such funds while meanwhile protesting the inclusion of the affadavit in the applications. |
The requirements of the various federal and state civil rights acts all had some applicability to educational institutions, including the federal legislation of 1965. Among the numerous administrative agencies were the federal Equal Economic Opportunity Commission, the Education Amendments of 1972 regarding sex discrimination, the Family Educational Rights and Privacy Act of 1974, the federal Occupational Safety and Health Act, and the Employment Retirement Income Security Act of 1974. At the state level by 1975 there were unemployment compensation laws, not to mention all of the paperwork connected with Social Security deductions and contributions, and both federal and state income taxes. In compliance with federal legislation, Equal Opportunity offices had to be set up on both the Medford and Boston campuses in 1969-70, with Directors of Minority Affairs and two special training programs. Much of this additional bureaucracy cost money, with the salaries of new administrative personnel, provision of office space, and augmented job counseling and on-the-job training programs. All of this coincided with the added costs to the university of the demonstrations associated with dormitory construction the same year which amounted to almost $80,000 for additional police protection. To compound the situation, charges of alleged sex and minority discrimination were filed with the Equal Employment Opportunity Commission in 1972-73 by two women faculty members, one woman staff member, and one minority male. The number had risen to six by the end of the Hallowell administration, four of which were still | |
265 | outstanding when he left office. Of the other two, one was settled out of court and the other was dismissed. A review by the Office of Civil Rights of the federal Department of Health, Education, and Welfare in 1970 found "major deficiencies" at Tufts in hiring and retaining women and minority workers. The federal office admitted that the situation at Tufts was no worse than at other educational institutions in the Boston area and conceded that its cooperative attitude in remedying deficiencies was better than most. The end-product was the publication by Tufts in 1971 of an aggressive Affirmative Action program which was approved by HEW. A second revised version was approved in 1974. A joint facultystudent Equal Employment Opportunities Committee was also created, and in 1974 an Advisory Council on Minority and Women's Affairs as well as an Equal Opportunity Council were formed. The president was so busy with on-campus affairs that he was not able to make his first visit on a national scale to alumni groups until 1971-72. |
Beginning in 1975 and lasting for only a few years, the Office of Civil Rights required periodic and detailed reporting to the federal government by way of the local Office of Equal Opportunity of every application for a faculty position by name, address, sex, ethnic classification where known, and disposition, with reasons for appointment or non-appointment for each. In view of the fact that 200 or more applications were often received for a single faculty position, the burden of paperwork on academic departments can well be imagined. This was one example of what President Hallowell called "the intrusion of society into the university." In 1972 Tufts employed the New York consulting firm of Marts & Lundy to study and evaluate the fund-raising program of the university. The immediate purpose was to find ways of increasing gift income from all sources to help overcome the constantly widening gap between income and expenditures. The estimated needs of the institution, divided into three categories, did not take into account that of an increased unrestricted endowment of up to $100 million in invested funds. These were calculated to provide up to $5 million in additional operating income alone over the next two or three decades. Aside from substantially increased endowment were the financing of six new buildings either contemplated or under construction: completion of the dental building ($5.9 million); a new drama center ($3 million); replacement of North Hall ($3 million), destroyed by fire in 1972; a large lecture hall ($500,000); a student center ($3 million); and additions to the medical school ($2.3 million), making | |
266 | a total of $17.6 million. The second category was maintenance and renovations of physical plant, with top priority to Cousens Gymnasium and the chemistry laboratories ($500,000 each); and a general fund of $2 million for upgrading and maintenance totalling $3 million. Current and program needs called for a $600,000 addition to the President's Fund for Innovative Programs - largely to finance the College Within opened in 1971; and unrestricted annual fund income for three years, amounting to $3 million. The grand total of all three categories was $24.2 million. |
The Resources Division, which was responsible for both direct fund-raising and supporting activities at the time the study was made, comprised forty-three staff positions headed by John W. Sheetz, one of four vice-presidents, who reported directly to the president. The annual budget was $790,000, of which $486,000 was assigned to salaries. Marts & Lundy found the division logically and coherently organized, the caliber and esprit de corps of the staff high, and communication excellent with various components of the institution. Inadequate service and poor performance on the part of the university computation (data processing) center was considered the most serious operational handicap in effective fund-raising, the maintenance of records, and good alumni relations. | |
As to specific sources of gift funds, both restricted and unrestricted, the analysis yielded both favorable and unfavorable results. Using a period of from three to five years as a measure, the Hill Annual (Alumni) Fund rose from $293,000 in 1969 to $440,000 of the goal of $500,000 for 1972 at the time the report was made. Trustee unrestricted giving, which had never been large, plummeted in 1970 from $103,000 to $19,300 in 1972. | |
The trend in foundation grants was generally upward in 1970 and 1971 and significantly higher in 1972 than in previcus years. However, most of these funds were restricted, intended to underwrite new programs on a short-term basis which had to be financed on a long-term basis by funds from other sources. A growth rate of 9 percent in unrestricted private funds from 1967 to 1971 was considered inadequate to finance long-term programs. Gifts from parents, providing the lowest total income source, remained generally stable or improved in a five-year period, increasing from 274 donors and $30,000 in 1971 to 488 donors and more than $62,500 in 1972. Between 1967 and 1971 fewer donors gave increased amounts to the Medical Annual Fund, with 2,500 donors giving $366,000. The Dental Annual Fund suffered because of their simultaneous capital fund campaign. | |
267 | All told, total donors, gifts, and pledge payments to Tufts increased steadily, rising in 1972 to 8,500 and a cash flow in excess of $3.5 million, excluding the dental school capital campaign. But even though these increases were substantial, the amounts received failed to meet various expectations, and tight budgetary controls and even reductions had to be used to prevent an operating deficit of several hundred thousand dollars. What was to be done? |
Trustees were needed who had both the affluence and influence to contribute substantially or encourage others to give on a large scale. Loyal and interested trustees there were, but only a handful were in a position to contribute significant financial resources. Those capable of enlarged giving had to be sought as trustees among not only alumni and parents but local businessmen and women who had no close association with Tufts. | |
The establishment (or reactivation) of Visiting Committees or Boards of Visitors was another recommendation thought worthy of consideration. Such agencies would not only provide periodic reviews and assessments of divisions, schools, and departments but would involve individuals whose interest and concern could be used to financial advantage. | |
