Departments at Whitman will have to fight for additional funds this coming year due to a shortfall in the college’s 2016-2017 budget. President Kathy Murray sent an email to all staff and faculty on October 3 alerting them that the normal budgeting process, where departments submit budget proposals for additional funds, will not take place this budget cycle and additional funds will be reviewed on a “case-by-case basis.” The email also noted that school employees can expect an increase of close to 28% in health insurance premiums starting this January because of an increase in health care claims in 2016.

The decision comes on the heels of a second straight year of lower-than-expected enrollment. The school originally budgeted for an enrollment of 1540 students for the 2016-2017 school year. Due to fewer returning students and a class of first years that just missed the budgeted targets, enrollment is expected to average 1485 students. According to Whitman Treasurer and Chief Financial Officer (CFO) Peter Harvey, extra funds that are built into the budget will cover the deficit of nearly $850,000.

“We’re in good shape this year, we have adequate contingencies to fund [the budget], but it means that in the future we’ll have less resources available for other initiatives,” Harvey said.

Budget deficits tend to reveal a school’s top priorities by forcing the institution to make difficult resource-allocation decisions. Whitman’s budget allocations seems to show an emphasis on student accessibility and scheduled faculty pay-raises. According to President Murray’s email, “all funds that would typically be allocated during the annual budgeting process will go toward health care costs for employees and financial aid for students so that Whitman can be accessible to as many students as possible and can continue to provide the highest quality health insurance to our employees.”

One of the most significant aspects of the email was the 28% raise in premiums, the amount of money that the insured pays for coverage. The school currently covers 95% of employee individual health care costs, with the premium contribution employees make determined by each employee’s income. The school also covers 50% of dependent costs, so starting January, 2017, employees with dependents that utilize the school’s health insurance plan will have significantly more to pay.

While a premium increase this high has not happened in Harvey’s extensive tenure as Whitman’s treasurer and CFO, he emphasized that the increase was not unprecedented.

“This is kind of a cycle that happens with healthcare for large employer plans,” Harvey said. “It’s nothing terribly surprising, every once and awhile you have heavy utilization all in one year.”

The 28% premium increase is large, but does not seem as significant when placed in a historical context. The school has not raised premiums the last few years and made slight adjustments to its insurance policy to lower the expected rise in premiums. Still, President Murray emphasized the difficulty many will have with the premium increase.

“The reality is that people are going to take home less money,” she said. “For many years, we haven’t had an increase at all, and one year we actually lowered the premium. That doesn’t’ matter if you’re sitting here right now and looking at a 28% increase.

The administration is currently exploring ways to adjust the payment model to lessen the burden on staff members with dependents.

Besides an increase in health insurance claims and a slightly off-target first year class, one of the main culprits is the school’s predictive model of enrolled students. Every year, a model assists the administration in determining the budget by estimating the school’s enrollment based on the number of preregistered students and, among a number of other factors, the targets for transfer and incoming first year students. The model has missed in its predictions by a higher rate recently than in years past. This year, Director of Institutional Research Neal Christopherson helped to create a slightly different model with better predictive capabilities. Christopherson’s model appeared more accurate after testing it using past years.

“[The previous] model wasn’t working as well as it needed to in the last couple of years,” Christopherson said. “So we’ve developed something that we hope will work a little better, we’ll find out next year.”

The model is only as accurate as its inputs. Although the creation of a better predictive formula will certainly help create a more accurate budget in the future, so will meeting the targets for incoming first years and transfer students. For the admissions office, headed by Dean of Admission and Financial Aid Tony Cabasco, the line between success and budget difficulties is razor thin. Last year’s incoming first year class totaled 381 students, well under the target of 415. This year’s first year class of 425 was much closer to the target of 435, but that is still a significant amount of lost revenue.

“In most things if you’re within 2-3%, you’re close, but that’s a lot of money the budget misses out on,” Cabasco said.

Despite the slight target miss, President Murray still emphasized how important it was to have such a large class of incoming first years.

“We were very successful with this incoming class of first years,” President Murray said. “If we’re within 10 students of our goal, that’s exactly where we want to be.”

The budget tightening will have no impact on the school’s “Living in Whitman” initiative, which would build a new residence hall for sophomores and a new dining hall. The sense around the administration is that despite the budget difficulties, the community will be able to handle the shortfall.

“My sense is that the Whitman community is pretty good about when they see a challenge, all working together to address that challenge so my hope is that will be the case,” Harvey said.