Q: How are other schools handling the economic crisis and their restructuring? Can we learn anything from best practices elsewhere, such as using benchmarks?
A: Benchmarking is the process of measuring the effectiveness of internal processes. This is typically used to compare results to others and identify performance gaps. This helps to set goals for improving operations.  Benchmarking is most effective when it is a part of on-going operations; providing a method of obtaining feedback, learning from the great performance of others and creating improvement goals.  When action must be taken quickly, there frequently is not enough time to complete a meaningful benchmarking effort in advance of making changes in an organization.  It’s true that measures for operational success must be agreed upon and measured and these measures need to be meaningful for our industry and compared to industry leaders.

Q: If core faculty are let go, what criteria will be used?
A: Department Chairs will be informed in mid-February whether any of the personnel (including Core Faculty) they might have included in their budget reduction scenarios are included in the budget proposal being submitted to the UBC on behalf of all of Academic Affairs.  No criteria have been established that specifically point to Core Faculty.  Should there be a need for a significant number of Core Faculty reductions, the VPAA and Chairs Council would establish appropriate criteria, and inform the faculty.

Q: I heard through the grapevine that the budget committee was looking for student participants. I would like to be involved; whom do I contact?
A: The process of selecting students to sit on the University Budget Committee has concluded. You should talk for your UN representative to find out when information about the budgets may be shared with students, and how you might be part of those meetings. 

Q: Are there any other choices besides reducing the expense side of the budget?
A: Of course we will continue to look at ways to increase revenue and endowments. However, the projected deficit is at the point where it is no longer feasible to come up with temporary fixes to address the issue. We need to right size the budget now so we can be prepared to reap the benefits of additional revenues as they come in.

Our expenses are larger than our expected revenues and these need to be in balance in order for us to achieve sustainability. If revenues and expenses don’t balance, then additional revenues go toward "closing the gap" instead of going toward achieving our strategic goals.

Q: What is the expected time line for making these changes to the budget?
A: Senior staff will be submitting their individual budget proposals to the University Budget Committee (UBC) between the end of January and mid February. Recommendations from the UBC will go back to senior staff within eight weeks after receiving budgets from senior staff. This will probably be the end of March or first week in April. Senior staff will then act as a unified team to finalize the overall budget for submission to the president by the end of April. The president will review recommendations and the deliverables produced throughout the budget process to create a presentation and budget proposal for the board of trustees in May. The fiscal year begins in July and will follow the approved budget.

Q: Can you please explain what level of transparency will be incorporated into this process?
A: Our intention is for this process to be as transparent as possible. At this time information and updates will be posted at www.naropa.edu/budget. Suggestions and questions can be submitted via this website and the responses will be published. There will be a number of community meetings and these meetings will be announced in advance on the web site and will provide an opportunity for face to face dialogue about how the process is going. The website will also include information about the process and the names of the individuals who are involved in and participating on different committees.

Q: Is there a chance some employees will be laid off?
A: Unfortunately, getting to a balanced budget will most likely result in some reduction in our work force, and may also mean the consolidation or elimination of some our academic programs.

Q: What exactly does it mean to be strategic in approach to reducing the budget?
A: It means we will remain dedicated to the Naropa mission and the strategic plan and the budget initiative will be conducted with both of these firmly in mind.

Q: Does this mean there will be no new positions hired?
A: No. There may be positions or areas of growth that increase overall efficiency of our operation or improve our ability to gain additional streams of revenue.

Q: How did we get here?
A: The deficit was not created overnight nor by one single event—it was a series of events compounded over time that have brought us to this point. Optimistic revenue projections didn’t materialize and short term reductions in expenses failed to generate sufficient savings. However, events happened on a year-by-year basis that detracted from our ability to not only reach the projected revenue increases, but also increased operating costs. Losing the “School as Lender” program, the impact of the lack of student retention, not fully implementing the hiring freeze, this year’s health insurance increase are all examples of unexpected events that kept our revenue from keeping up with our expenses.

Q: Wouldn’t a focus on increasing revenue also be strategic?
A: Yes. Increasing revenue is also a strategic goal, however, not one that can be realized soon enough for balancing our budget by July. When additional revenues are generated, the University doesn’t reap the full benefit; because instead of using these additional recourses for strategic purposes they are used to pay down its deficit. We need to right size the budget now so we can be prepared to reap the benefits of the revenues as they come in.

The deficit combined with the broad economic outlook tells us we must right size the budget for future years, aligning expenses with projected revenue that does not rely on temporary or short-term adjustments. We must act strategically, by taking a prudent and responsible approach to these economic realities. This will put us on a firm footing to be sustainable.

Q: How much do we need to reduce the budget?
A: In order to reduce expenditures to align with our current income, the total university budget must be reduced by at least $1.2 million for the fiscal year beginning July 1, 2010. The analysis is not complete and so the exact amount for budget reductions is not yet known.

Q: Will the budget initiative also have an impact on academic programs?
A: While we are exploring possibilities for reconfiguring the administrative structure of some academic departments, including the possibility of combining a number of small departments into a single larger one, this current budget initiative is not about eliminating academic programs.

Q: Why are senior staff being asked to submit budget proposals showing a 5, 10 and 15 percent reduction if decisions will be made in strategic manner?
A: Senior staff will evaluate their operating budget against the mission and strategic plan and identify expenses that have the least impact on the University mission and strategic plan. The 5, 10, and 15 percent is a way of prioritizing the proposals and also helps increase management readiness for implementing changes after the budget has been adopted. Everyone will have to think through how to operate with less—in some detail—in order to identify what expenses could be eliminated. Additionally, the University Budget Committee (UBC) will evaluate the strategic merit and risks of the proposals for reducing expenditures. Lastly, not all of the suggestions made by senior staff for reducing expenses will be accepted.

Q: Who makes the final decision about where the cuts are made?
A: Final approval of the budget takes place with the board of trustees. However, deciding where cuts are best made will require a great deal of team work and discussion between senior staff and members of the University Budget Committee. Add to that the suggestions coming from students, parents, faculty and staff and the work of the Budget Resource Group to evaluate establish the cost savings of different ideas, and you can see that—although the board of trustees approves the budget—many different people are involved in deciding which cuts or changes have the most merit.

Q: What is the Budget Resource Group?
A: The Budget Resource Group is a newly created committee which will operate as an analysis team, taking suggestions from the community and analyzing/modeling various budget reduction scenarios.

Q: What is the best way to remain informed of the process?
A: The best way to remain informed is by checking the Budget Initiative web site at www.naropa.edu/budget on a regular basis. There will be additional community meetings announced and we hope you will attend. If you have questions there is a place on the web site where you can ask questions and make suggestions. A response to the questions and suggestions is also posted on the website.

Q: I have been thinking how much it costs for me to go to school at Naropa University, and it is a lot of money! Our university is very small and very expensive. Why exactly do we need to budget cut? I want to know more directly where my money is going to and how it is being spent. How much do our teachers get paid, and what is making this school so expensive? Although I think Naropa is an amazing school, I just am unsure about where all of this cost is going to? If anyone can give me any information about why such an expensive school should have to budget cut so much when we have classes in small buildings and a small library, and not THAT many classrooms?
A: Universities typically meet their budget obligations through a combination of tuition and fees, income from investments, funding from tax dollars, and loans against assets, grants, alumni support, and other charitable gifts. Naropa is heavily dependent on tuition, largely because we are young and do not have the large alumni base to provide annual support or endowments. Our Advancement Office is working on improving that, but it’s a slow process.

The Budget Resource Group will be analyzing the relative percentage of the annual budget that goes to support instruction versus “overhead,” and will be looking at other institutions’ budgets as well. These comparisons will help us determine how to adjust the budget. Higher education is expensive today. This budget reduction initiative is designed to adjust our expenses so that tuition increases in the future are reasonable. That means reducing expenses.

Q: So we can get more of a feel for what $1.2 million spending/budget cut looks like, what was Naropa's budget for the 2009–10 fiscal year?
A: I found the following statement in the transcription of President Lord's December 7 presentation: “As we move forward we are committed as senior staff and the board of trustees to reduce our budget by $1.2 million out of a budget of roughly $21 million.”

Because we are taking a strategic approach to balancing the budget, individual proposals will need to be analyzed for impact to operation as well as cost savings. Because there has been a commitment for transparency you can expect to hear more about the proposals being considered in future community updates – and on the web site.

Q: I am curious about the percentages of revenue spent on staff salary & benefits. Specifically, the 60% was named as a norm in higher education. I was wondering if that is an average from across all colleges and universities. Do we have numbers for very small liberal arts colleges such as ours? I'm guessing that due to economy of scale and large expenditures from larger colleges on things like research (a category that doesn't even exist here) those very small colleges will have a different percentage than larger universities. I'm guessing that senior staff and the president have already thought along those lines but it would be helpful to see how we stand amongst our most similar peers.
A: The question you raise is exactly the sort of question we expect to be addressed by the Budget Resource Group. As we strive to improve the efficiency of our operation we must be able to set our sights on a realistic goal. For example, we will have to decide whether the 60% salary+benefits target is right for Naropa, and what it would take to realize that and when.

Q: Will there be severance packages for staff or faculty who get laid off?
A: Human Resources and the BRG will be examining industry standards for severance packages and will work to make reasonable accommodations in this regard. We’re in the early stages of modeling the impact of staff/faculty reductions, so feel free to ask for follow-ups on this issue.  

Q: Why do some chairs make more than others?
A: During the 2005–06 academic year, Cauldron and the VPAA developed a compensation structure (stipends and course releases) based on the number of students enrolled in a department, the tracks/programs and number of faculty. The goal was to regularize this compensation, by having it tied to department size rather than the individual serving as chair.\

Q: What does our average staff member cost per year?
A: The total cost for a staff includes salary and benefits, including social security, workers comp, unemployment, health, RTD pass, etc. It is a long list. The total cost also must include the cost of time off policies such as vacation, personal days and the annual holiday closure. With the help of James Robinson-Long, we'll get a dollar amount in January.

Q: Could we merge with other schools such as Boulder College of Massage Therapy?
A: A merger with any other institution would require much more time than we have available for this initial round of budget reductions. But it’s also not clear that a merger is necessary. The message we want to convey is that Naropa is not failing. If we can “right size” the budget, through a combination of immediate reductions and long-term revenue increases (through enrollment and fundraising), we can anticipate a bright future for the institution, its students and employees.

Q: Could finance management and admissions be merged together?
A: Examining our operational structure for places to improve efficiency is part of what we must do in the budgeting process. Look for future reports and communications to learn what changes in organizational structure might be made.

Q: Could master's applications be mailed directly to the academic departments? Why do they go through admissions?
A: We need a central repository to make sure that admission decisions across departments are made based on comparable materials. Most applications that are received are incomplete. Admission works with the applicant to be sure that all required materials have been received. The application is sent to the department only after it is complete. This saves work for the applicant’s department and ensures that all information is available to the department.  

Q: I am most concerned about the large proportion of employee compensation that goes to management. What are the best options available to bring this better in line with our central mission, which is providing contemplative education?
All levels of the university will be examined for their contributions both to the university’s contemplative mission and effective operations. This includes senior management.