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Kim’s $100M Fraud

(For students returning to campus, we are re-printing a few highlights from the last term.)

Jim Kim talks endlessly about his efforts to rein in spending at the College. The administation’s PR arm cites his budget work as Kim’s signature achievement in Hanover, and students repeat the party line, as in this D summary of the Kim Presidency:

In October, Kim expressed concern about the College’s endowment, which dropped 23 percent during the 2009 fiscal year. To manage the College’s budget, the Board of Trustees announced cuts of $100 million. The College laid off 38 employees and added loans to some students’ financial aid awards.

But were there really any “cuts” at all? In fact, at this point, now that the final numbers are in, we might better ask ourselves whether there was even a Kim-era budget crisis, or was the entire exercise a charade to let Kim solve a non-existent problem before moving up to the next rung on his career ladder.

Let’s examine the budget process: an institution like Dartmouth prepares a detailed budget each year for the following fiscal year. Priorities are set, estimates of income and spending are made, decisions are taken in order to balance the two, and then the Trustees formally vote to approve the budget. In the subsequent year each area of the College is duty bound to respect its budget allocation. As such, Kim’s first year as President — July 1, 2009-June 30, 2010 — took place under the financial strictures of Jim Wright’s Fiscal 2010 budget. Six months ago — on June 30, 2013 — we ended Jim Kim’s third and final budget year: Fiscal 2013.

How do things look? Jim Wright’s last budget actually included cuts in spending and manpower. Spending in Fiscal 2010 was down $17,985,000 from the previous year (from $735, 048,000 to $717,063,000) — the first absolute cut in memory — and approximately 40 people were laid off.

From a new spending base of $717,063,000, Kim took over, and his widely publicized budget process established Dartmouth’s level of spending in each of the next three years. With the publication in November of the College’s audited accounts for 2013, we can see the results of Kim’s work:

Kim Budget GrowthA.jpg

In all of Kim’s three budgets, expenditures increased, and they did so at an accelerating rate. Only in the first Kim budget was spending growth even with inflation.

Such out-of-control expenditures were entirely consistent with Jim Wright’s overall record of flagrant spending. By 2013, in absolute terms, Jim Kim’s budgets were back on the regression line of Wright’s spending:

Dartmouth Annual Expenses.jpg

Kim’s spending growth did not reach the heights of Jim Wright’s 2001-2003 binge, but Kim-era growth showed every bit of the indiscipline shown by Jim Wright:

Dartmouth Annual Expenses Percent.jpg

Between 1999 and 2013, Dartmouth’s budget grew by 126.4%; the consumer price index rose by 40.2%. And some people still wonder why we are the second most expensive school in the Ivy League.

That said, Kim and his team did make cuts: the number of student courses was reduced, SEIU union members went without a raise for two years (Don’t worry. For the work that they do, they still make about double what people earn in equivalent positions in private companies in the Upper Valley), and the faculty learned to take out its own garbage.

Given the reality of these cost savings and the fact that spending grew nonetheless, it is clear that under Jim Kim cash continued to be wasted at a prodigious rate. Where did the money go? Haiti? The Science of Healthcare Delivery Science Center? The Hanover Inn and other Pentagon-quality building projects? No doubt. But most importantly, as always, spending was directed to the ever-growing non-faculty staff: overpaid and underworked. In 2012, the number of non-faculty employees grew by 4.8% — an additional 153 people.

There are only two things that we can say for certain: all that extra spending did not go toward improving the quality of undergraduate education at Dartmouth — last year the faculty grew by only seven professors; and Jim Kim is now sitting pretty at the World Bank, having conjured up a reputation as a hard-headed cost-cutter.

Addendum: This space has often noted the Kim administration’s tendency to use accounting tricks to achieve its aims. The faculty’s multiple rejections of Kim/Folt’s budget explanations were based largely on a recognition of this kind of accounting legerdemain. Such habits lead one to think that Kim pushed a good number of expenditures from his second to his third fiscal year, secure in the knowledge that he’d have skipped town by the time the audited 2013 figures were made public.

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