Knox is expected to break a 10-year trend of balanced budgets.
Unlike other schools, Knox has a “dynamic budget process,” according to Tom Axtell, the Vice President for Finance and Administrative Services. In this process, the Board approves an unbalanced budget and everyone works to balance the budget by the end of the year.
Every department is given a budget and asked to save money wherever possible. Knox has gotten rid of disincentives to save money. In many other schools, departments which do not use all of their money find their budget reduced the next year. The opposite is true at Knox, where rewards are given to departments who save money.
Although this process is unique, Axtell said, “It works for us.” Knox has balanced their budget every year for the past ten years.
This year, however, the budget may not be balanced. Axtell said that at this time last year the projected deficit was $1.4 million, but this year it is $2.5 million.
For the first time this year higher enrollment did not reduce the deficit, due to increases in financial aid costs.
President Roger Taylor said the recession caused the projected deficit to be larger this year.
“Families have a harder time and rely more on financial aid,” he said.
Axtell said the recession had a “significant effect on many students.”
Both Taylor and Axtell said the college has resisted laying off or reducing the salaries of faculty and staff, as many other schools have done. In addition, Axtell said they have been “diligent to try and make progress on the compensation initiative…[and] gave modest raises while other institutions were cutting salaries.”
Knox is doing better than some other institutions, despite having “way less resources,” Axtell said.
“We’re not going to win the shiny new building award but we make up for that with our stunning educational program,” he said.
Part of this success is due to this budget process, which “allows us to keep functioning in bad times,” said Axtell.
He said it is likely that they will need to use unrestricted bequests, money given in wills for whatever the college needs, to make up the deficit.
According to Taylor, any remaining deficit will be made up with the budget contingency reserve, which is the part of the endowment set aside for unanticipated budget expenses.
“We try to keep our cushions there to protect us in case something goes wrong so we’ll be able to operate the college with minimum disruption,” Axtell said. “We’ll try our best [to balance the budget], but it will be very difficult.” The college will need to be “very diligent, very creative.”
Although the economy will dictate whether Knox’s projected deficit will continue to be this large, Axtell said, “I hope we get a break in the next few years.”