January 18, 2013 Colleagues: As we highlighted at Spring Convocation on January 10, the times for higher education are

dynamic and challenging. Our students and their families continue to face economic uncertainties, and many are concerned about their own personal fiscal cliffs. Now is the time to stretch our expectations and ourselves so that we build stature, strength and flexibility for the future. As a result, we cannot overemphasize the importance of teamwork to grow revenue in ways that match our needed investments in the quality of our programs and operations. Without the strength that comes from growing enrollments, generous gifts, and an entrepreneurial spirit, we will not accomplish the bold and ambitious mission of transforming our students for individual excellence and global citizenship. During Spring Convocation we discussed the trends in our enrollments, noting that in too many cases the growth has been stagnant and in some cases trending downward. We also discussed that we have stretched to make needed investments in facilities, people, programs, services and technology. Yet our revenues have not stretched to match and we have an opportunity to self-correct mid-year. As promised, here is an update on our budget situation at the half-way mark of the academic year and where things stand today.

Budget Process Websters budget is projected based upon enrollment targets to achieve the growth necessary for a thriving university, as described by the 2015 Stretch Goals. When these growth targets are not achieved, revenues fall short of the funds necessary to match the needed investments we have made in people, facilities, programs, services and operations. That requires targeted mid-year reductions to ensure effective stewardship of funds. This in coordination with proactive strategy development will help us counter the gap between projected and actual enrollment numbers.

FY 13 Budget Realities If current trends continue, we are projecting revenue that is $12.2 million below our revenue goal for the fiscal year. Even considering our budget contingency of $3.6 million, we still have a significant shortfall. This shortfall is projected to generate an operating margin $2.7 million below our required 5% operating margin. To ensure that we meet this 5% operating margin, we will make strategically targeted reductions based upon these factors: Material size: Targeted areas for reduction are large enough that savings achieved are significant. Ease of implementation: Where possible, targeted areas are easy to manage and control and savings are aligned with areas of strategic importance. Protect the mission: It is essential to continue to provide high quality academic programs and services to students. The leadership of Academic Affairs and Vice President/CFO Greg Gunderson will collaborate to review target reductions, examine exceptions and recommend implementation of the needed reductions to Provost, Senior Vice President and COO Julian Schuster. FY13 Planned Reductions (through June 30, 2013) include: 5% general expense budget reduction for all budget lines except nondiscretionary expenses (salary lines and utilities) Restricted hiring. While some key positions will be replaced, all other open positions will held open through June Hold travel and entertainment expenses. If current spending continues, we will exceed this budget line by 12%. All non-essential travel should be held through June Cap new classroom furniture spending at $150K Cap deferred maintenance spending at $140K Cap new site setup spending at $250K Proactive Strategy Development We are taking proactive steps to grow our revenue, focusing on improved interactions with current and prospective students. Rolling out the new Webster.edu launched last fall Improving data-driven capabilities with new Datatel enrollment system Implementing new brand marketing campaign Enhancing our HR strategy with a focus on positions and activities aimed at recruiting prospective students

 Engaging faculty and staff to develop ideas and recommendations for some of our most pressing issues, including enrollment, through the Working Groups We were delighted that over 300 people volunteered to participate in the Working Groups. The Working Group Chairs will report out on their recommendations in an April Town Hall meeting. Colleagues, we each play a role in managing our available funds effectively and stretching ourselves to gain future strength that benefits our students and our institution. If you have other ideas or suggestions on how we might contain costs or grow revenue, please go to: http://blogs.webster.edu/townhall/ and enter in the password: gorloktownhall. Thank you for your continued dedication and support of our great work at Webster. All the best, Beth Stroble President, Webster University

Julian Schuster Provost, Webster University