Administrators faculty and other members of the Pepperdine community participated in a town hall meeting this morning to discuss changes to the Pepperdine budget which is being reshaped to help it weather nationwide economic conditions.
President Andrew K. Benton scheduled two meetings today one in Smothers Theater and another at the West Los Angeles Graduate Campus. The question-and-answer sessions evaluated the university’s financial situation and proposals to minimize disruptions to student life and finances.
Students were allowed to participate but the meetings were not advertised to them because of the complexity of the issues Benton said.
Market troubles have reduced the size of the university’s endowment and will likely limit the amount prospective students can afford to pay for college prompting administrators to take the unusual step of modifying a budget in the middle of a fiscal year.
Administrators emphasize that the university’s finances are relatively secure and this year’s budget is balanced but they do not want to be caught unprepared. They have attempted to slow spending through a limit on non-essential hiring travel restrictions and other budget trimming but further cuts will likely be necessary.
As a leadership gesture Benton volunteered for a 10 percent reduction in his salary.
“I’m not asking that anyone do the same he said in a meeting with Graphic staff, although Provost Darryl Tippens and others have followed his lead. If I’m going to have to say to [a staff member] that I’m going to let you go it’s important that senior leaders demonstrate that they’re also willing to feel some pain. But I’m not a martyr.”
Workforce reductions may be necessary to cut costs but those decisions will be made after more information is available on March 1.
Money could be spent in better ways according to some students.
“There’s no reason to redo the fountain and I don’t really think we need a coffeehouse in addition to the library said sophomore Sadie Acquah-Asare, who added that renovations to the Keck Science Center are disruptive and misguided. However, she praised other decisions, such as likely increasing next year’s tuition by only 3 percent, instead of the usual increase of about 6 percent.
Maintaining a large freshman class at Pepperdine is more important to the budget than at many other schools. Tuition at the university accounts for 68 percent of its operating budget, while other schools get a larger portion of their funding from endowments, according to an e-mail Benton sent to faculty and staff Jan. 6.
Benton said he prefers not to increase class size, because smaller and more personal classes are better for learning and ranking.
Pepperdine extended its application deadline from Jan. 15 to Feb. 2, as it has several times in recent years, and is receiving the typical number of applicants, according to Kristy Paredes Collins, director of admission for Seaver. She said financial difficulties may still be a factor, however.
This year especially in light of the current economic climate I imagine the prospect of financing a private education can be daunting she wrote in an e-mail. [But] I do not anticipate there being any trouble in reaching our target number [of applicants].”
Since September Pepperdine officials have been addressing these budget challenges to minimize disruption.
“Generally speaking any adjustments we make are designed to have little or no impact to the student body University Controller Brian Thomason, who oversees the university’s day-to-day financial operations, wrote in an e-mail.
Thomason also responded to students who believe the university should reduce tuition rather than spend its money on beautification or other projects.
Projects that are perceived to be wasteful in some eyes are those specifically funded by donors or with one-time dollars that can not be used for any other purpose he wrote.
Senior Michael Deboard said he appreciates the financial decisions Pepperdine has made.
I really like that [Pepperdine] doesn’t rely heavily on endowments he said. It relies on [donations] from people that are passionate about it. So we’re in a much more fiscally secure state than other private schools like Harvard.”
Endowments are invested in diversified portfolios which lose money when the market suffers and their revenue helps fund university operations. Pepperdine’s endowment lost 26 percent in the 12 months ending Nov. 30 2008. It now stands at about $553.9 million which is about where it was in December of 2006. Endowment support provides 12 percent of the budget compared to 30 percent at many larger or older schools.
The overall message is that Pepperdine is taking the situation seriously and welcomes input but the university’s financial situation is strong Benton said.
“Knowledge sets aside fear he said. If anything we’ll overreact but we won’t panic.”
Visit www.pepperdine-graphic.com for up-to-date information about today’s meeting.