With 2,500 students and 1,324 employees, Middlebury College is an economic driver in Addison. Courtesy photo.
by Bruce Edwards, Vermont Business Magazine With declining enrollments coupled with ever increasing overhead, surviving as a small college these days is more of a challenge.
This year alone, three small, private Vermont colleges have closed their doors: Southern Vermont College, Green Mountain College and the College of St Joseph, and Marlboro College has a proposed merger on the table with the University of Bridgewater in Connecticut.
In Vermont, one of the country’s elite small colleges continues to not only weather the financial challenges but also thrive.
Considered an elite school, Middlebury College has no trouble attracting students. In fact, the college has to turn away prospective students.
And unlike smaller, lesser known schools, Middlebury with its roster of alumni has built up a $1 billion endowment.
Photo: David Provost is executive vice president of finance and administration at Middlebury College. Courtesy photo.
David Provost, executive vice president of finance and administration, said as a 220-year-old institution with a large endowment, “puts us in a unique position.”
That’s not to say that Middlebury hasn’t had to tighten its financial belt. The problem, however, isn’t a lack of students but expense management.
“Unlike the schools that closed in Vermont, Middlebury gets 10,000 applications a year fairly consistently,” he said. “There’s only 600 spots for the fall and we don’t have the enrollment pressures that other small institutions have just because the demand for Middlebury education remains very high.”
Provost said expenses had far exceeded revenues reaching an operating deficit that peaked at $16.7 million in 2016. He said to address the problem President Laurie Patton came up with a five-year strategy to return the school to an operating surplus without major disruptions.
“We’re coming to the close of that work,” Provost said. “Matter of fact the 2020 budget, which was just approved by our board, does achieve a modest operating surplus for next year and a true 5 percent withdrawal from the endowment.”
Provost said the majority of the endowment is earmarked for scholarships and for specific programs.
To accomplish its five-year expense goal ahead of time, Provost said the school offered early retirement with 23 faculty taking the offer.
He added the plan over a few years is to replace those faculty positions.
A similar voluntary offer was made to staff.
Provost said 100 staff positions were eliminated, most of which were open at the time. He said 40 employees took the voluntary separation offer.
“With that now in place, the long-term sustainability of Middlebury College is now very well protected,” he said.
He said the 2020 operating budget of $272.5 million is down slightly from the previous year.
Although Middlebury is in a unique position among small colleges, Provost said there are financial issues that face all colleges.
In 2013, Middlebury, Champlain College and Saint Michael’s College created the Green Mountain Higher Education Consortium.
As a result, the three colleges have realized significant savings using their combined purchasing power with the biggest savings on health care, Provost said.
“By next January we will have a private exchange for all employees at those three Vermont colleges plus Norwich University,” he said.
Taking it a step further, the three colleges are implementing a new collaborative that focuses on finance and human capital management. He said services around accounts payable and disbursements, procurement, payroll and benefits will be handled by the Green Mountain Higher Education Consortium.
Provost said the “long-term goal around GMHEC is to admit other small colleges throughout the state” to help address rising costs.
Middlebury has invested heavily over the years upgrading its infrastructure and facilities. The school recently completed a 22,000-square-foot “swing space” building.
The building will serve as temporary space while renovations are made to several historic buildings on campus.
The first of those buildings undergoing renovations is Munroe Hall, a $6 million project, Provost said.
“Those faculty in that building, in those classrooms, have been moved to the swing space for one year,” he said.
Provost said there will be three or four similar projects after the Munroe Hall academic building is completed.
He said the school is also evaluating the need to build a student center. “We don’t have a true student center,” he said. “So we’re going through the preliminary phases of that analysis.”
Also under consideration is a new teaching museum and a new freshman dorm.
He said the existing teaching museum, which is 27 years old, has some design flaws. “It wasn’t designed for a northern climate let’s say that,” Provost said.
When it comes to cost savings, the college has reaped the benefits from the natural gas pipeline that now serves Addison County.
Provost said the college shaved nearly $1 million on its fuel bill during the first year.
While the cost savings are significant, the college is moving toward a cleaner burning gas.
“We’re pursuing a bio-methane renewable gas source from the Goodrich farm,” he said.
He said the farm will use cow manure and food waste to create a renewable gas with a dedicated pipeline built from the farm to the college.
He said Vermont Gas Systems will serve as the middleman supplying the college with renewable gas from the Goodrich farm. It will replace the existing non-renewable gas from VGS, which imports its gas from Canada.
Provost said excess gas from the farm will be made available to other VGS customers.
He said the Goodrich farm will supply an estimated 40 percent of the college’s heating needs.
“We have set our energy 2028 goals which assumes we will have 100 percent renewable energy, thermal and electric for the campus by 2028,” Provost said.
Middlebury facts:
Enrollment: 2,500 students
Vt. employees: 1,324
Operating budget 2020: $272.5 million
Salaries & Wages 2020: $125.5 million
Benefits 2020: $42.5 million
Endowment: $1 billion
On the West Coast, the Middlebury Institute of International Studies at Monterey has 220 employees.
Bruce Edwards is a freelance writer from southern Vermont.
Due to an editing error, a previous version of this story indicated that Marlboro College has merged with the University of Bridgewater, when in fact they have so far only signed a letter of intent.