I write to inform you that the Board of Trustees has set the total for tuition, room and board, and fees at Macalester for 2004-2005 at $34,156. Tuition will be $26,638, room and board $7,350 and the activity fee $168. This represents an increase of 6.9 percent over the 2003-2004 total of $31,944.

In the view of the Board, the increase is necessary to ensure that Macalester can sustain and enhance the quality of the education it provides. During the past decade, quality at Macalester—as measured by admissions and retention rates, levels of student satisfaction and accomplishment, excellence of facilities and personnel, national rankings and many other factors—has been steadily improving. In the most recent U.S. News and World Report survey, Macalester’s academic reputation was judged to be fifteenth among all liberal arts colleges in the nation, an assessment of great and tangible value to all of our students and alumni. Indeed, we believe that the value of an investment in a Macalester education—both financial and personal—has never been greater. At the same time, the college has remained near the very bottom of its 40-school comparison group in both price and tuition revenue. We take natural pride in our ability to manage our resources carefully and to provide nationally-recognized excellence at a lower cost, but it will be difficult to maintain our comparative quality, and to offer all students the value they expect, if this substantial difference in revenue persists or expands. Even with this increase, Macalester will remain among the least costly of the premier private colleges and universities in America. Our 2004-2005 total for tuition and fees will be less than the current year’s total for many of those schools.

At the same time, Macalester remains committed to being accessible to as many qualified students as possible and to meeting the full financial need of all students admitted to the college. Nearly three-fourths of all Macalester students receive grant aid; our tuition discount rate—that is, the percentage of tuition that we give back in the form of grant aid to students—is nearly 45 percent this year; our financial aid budget next year will approach $22 million. (The net operating budget, exclusive of financial aid, will be about $64 million.) All of these figures are much higher than those at most of our comparison schools, a sign that Macalester continues to serve a population that is far more diverse economically than do those schools. We remain determined to do so. For those students with financial need, the aid package will be adjusted upward to reflect the increase in costs.

Macalester’s financial health is dependent on endowment income (40 percent of the operating budget), net tuition revenue (tuition revenue minus financial aid, 54 percent) and gifts and other income (six percent). While the endowment remains strong, it now sits near the middle of our comparison group because of recent declines in the stock market and because of the college’s formerly large holdings in Reader’s Digest Association stock. Fundraising, while improving, also lags behind comparison schools.

Some of our budget goes to pay for the various items that support the operations of the college, and some of those items—insurance and library materials, for instance—are increasing in cost at a rate that far exceeds our rate of tuition increase. The bulk of our budget, however, is spent on people, and this is also the portion that affects students most directly and profoundly: we employ one full-time faculty member for every 11 students, and these are supplemented by more than 300 staff members working to support our educational mission. These numbers are not profligate: our student/faculty ratio is comparable to that of most of the outstanding liberal arts colleges in the country, and our staffing levels are in fact much leaner than those at almost all of our peer institutions, a tribute to the quality and dedication of Macalester employees.

I should note, finally, that the amount we spend on the education of each student at Macalester remains well in excess of even the full rate of tuition and fees. Creating a residential learning community of the highest quality is an expensive business, though in my view the results for our students over the course of their lives more than justify the effort and expense. Every Macalester student’s education is subsidized by income from the college’s endowment and by the generosity of past and present donors, with the extent of the subsidy determined by level of need. Among our most important goals is to inspire through our actions increased generosity, so that our determination to offer high quality programs will not impose an unreasonable financial burden on our students in the future.

Among my own goals is to be as frank and forthright as I can about the operations and aspirations of our college. In that spirit, I would be pleased to answer any questions you have about the issues outlined in this letter.