I am pleased to share my quarterly report on the Peabody Institute.
The 2019 fiscal year, which concludes June 30, 2019, is the second year of Peabody’s current 5-year operating plan, built to support the strategies and initiatives in our Breakthrough Plan. In FY2019, we are making significant programmatic investments in new degree programs like New Media and Dance, reimagined programs in Jazz, the implementation of the Breakthrough Curriculum, diversity initiatives, and recruitment of new faculty for both new programs and expansion of existing programs. We had planned for a GAAP (includes capital depreciation) deficit of $3.8M and Modified Cash After Capital (operating position) deficit of $3.2M this year. Following completion of the 2nd quarter of the fiscal year, Peabody now projects a GAAP deficit of $3.1M and Modified Cash After Capital deficit of $2.6M, a $700,000 improvement to plan. We have been able to improve our projections, and continue to meet targeted programmatic investments, through judicious expense management and successful fundraising to date especially in the area of current use (operating) funding. As of this writing, Peabody is 50 percent towards its cash fundraising goal of $6.5 million for the current fiscal year, including current use revenues exceeding $2 million on a goal of $3 million. We believe we can surpass the current use goal which will benefit the final operating result, while helping to preserve reserves slated to be used to make investments in our plan.
In the context of our 5-year plan, we can report that we are on track to perform better than plan for FY2019, as was the case in FY2018. We will continue to focus in our operating plan on achieving significant growth in our academic mission, as detailed in the Breakthrough Plan, while building financial sustainability. I am grateful to our finance and development teams for all their efforts in helping to meet our financial benchmarks.
Auditions for next year are upon us, and we are excited about the quality of candidates that we are welcoming to Peabody auditions this year. It is also good to be able to report continued progress in increasing the number of applications for admission. We have received 2,114 total applications, a 4.5 percent increase over last year, continuing an upward trajectory that saw an 18 percent increase last year (with the launch of new programs in New Media and Dance.) Over the last two years, we have realized a 22 percent increase, up from 1,728 applications in 2017. We are especially pleased that undergraduate applications, an area of recent focus, rose 12 percent this year to 1,118, a 47 percent increase over two years from 761 applications in 2017. This admissions cycle also marks the launch of Peabody’s first early decision process.
As we move forward with implementation of the Breakthrough Plan and Breakthrough Curriculum, the term “breakthrough” has become more broadly applicable in many ways to the energy and activity that characterize the school today. Four noteworthy recent events, or breakthroughs, include the Bloomberg gift, the Breakthrough Curriculum itself, the institution of a new faculty promotion and rank process, and our focus on diversity at Peabody as a strategic pillar for the institute.
Bloomberg Gift: Since the November announcement of Michael Bloomberg’s historic gift to Johns Hopkins University and the resulting $50 million enhancement to Peabody’s endowment, we have been working to determine the best method for deploying this funding to increase access and affordability while continuing to attract the best and brightest musicians and dancers and achieve our goals for instrumental and departmental balance across the Conservatory. Beginning with the fall 2019 admission cycle, Peabody will target this new funding to admitted undergraduate applicants from the United States whose families earn less than $100,000 per year. The Bloomberg funding will be awarded in the form of supplemental grants which, when combined with our existing merit scholarship funds, will result in substantial financial aid packages for those talented students with significant need, within the parameters of achieving appropriate programmatic balance across Conservatory disciplines. This gift will enable us to meet, on average, 80 percent of demonstrated need for students whose families earn less than $100,000, putting a Peabody education within reach of many more talented students. Once fully up and running, it is estimated that this gift will help support 80 undergraduate students annually. Of course, with Peabody’s merit scholarship program unchanged, we will continue to provide competitive packages across all income ranges, maximizing our ability to attract top students while being increasingly responsive to financial need. And we can say with certainty that by making Peabody more affordable, we continue to raise the level and accomplishment of students who arrive at Peabody to study. We are so grateful to Michael Bloomberg and to the leadership of Johns Hopkins for their support of Peabody.
Breakthrough Curriculum: We are now eighteen months into implementation of Peabody’s Breakthrough Curriculum. As we continue to learn from what is truly a groundbreaking program, we do so in the spirit of refining and building excellence in delivery of the curriculum. In order to continue on this path, I recently appointed the Breakthrough Curriculum Work Group comprised of faculty, administration, and external experts in this work to review what we have achieved thus far and to recommend additional improvements. This group will take input from students, faculty, and outside experts in order to ensure that we are providing the essential supplemental skills that will allow our students to flourish in their professional lives. We cannot underestimate the importance of implementing the Breakthrough Curriculum. While there is no shortage of challenges to overcome as we forge a new vision of study, I am more convinced than ever of the importance of this work, and the level of commitment we must bring to creating a curriculum that can only improve our students’ prospects for fulfilling and meaningful careers.
Faculty Promotion Process: Having been discussed and considered for decades, a non-tenured promotions system that allows faculty to earn rank and be recognized for their significant accomplishments along their professional path is now being established at Peabody. The Promotion and Evaluation Committee, formed under Peabody’s faculty governance restructure two years ago, has worked diligently to oversee development of this process. For this initial process of ranking faculty, a special committee was formed to review all dossiers and formulate recommendations to the dean. The result will be a fully implemented rank/promotion process (non-tenured) beginning in July, 2019. Given Peabody’s long history of annual contracts for faculty, this is a significant step forward in attracting and retaining the most outstanding artists and pedagogues for our faculty. I am especially grateful to the Promotion and Evaluation Committee for their efforts in developing this important process.
Diversity: A few weeks ago, two colleagues from other music schools and I delivered a presentation on the subject of diversity in classical music to the chief executive officers of the top (Group I) orchestras in North America at the League of American Orchestras in New York. Diversity as it pertains to underrepresented minorities is an area that has long vexed our industry, especially in the orchestra world. In 2017, Peabody added Diversity as its fifth Pillar in its Breakthrough Plan to clearly signal that this is an area of key strategic interest to both Peabody and the wider field. The classical music world can no longer afford to see diversity as peripheral, or even on par with other key issues. In fact, it’s an existential question, key to future audience development and the very survival of the art form. Currently, the United States is a two-thirds white, one-third non-white country. By 2060, it will be the inverse. And we know that the current trajectory for classical music audiences is not a good one. If we want to grow audiences for the future, given demographic trends, we simply must make them more diverse. And audiences will only become truly diverse when the performers on our stages are diverse, making the focus on diversity and inclusion a strategic imperative for the future of classical music and in the interest of all genres of music, dance, and the performing arts in general.
It is for these reasons that Peabody is focused on increasing diversity in what has been a historically homogeneous field. One of the reasons Peabody was asked to help lead the discussion at the League is our commitment to this important work, which has started to show demonstrative results. In fall 2018, the number of underrepresented minority (URM) members of the faculty increased to 17 (10 percent of faculty) as compared with 10 URM faculty (6.5 percent) in the prior year. In 2013, there were 7 URM faculty (4.5 percent.) Demonstrating similar progress, the total URM student cohort for the 2018-19 academic year reached 80 students – the largest to date, representing 13 percent of the total student body, a 36 percent increase from three years ago. Diversity will continue to be an area of intense focus and commitment for Peabody in the years ahead.
I am so excited about moving forward on these many initiatives, and look forward to continuing to report our “breakthroughs” to members of the Peabody community and beyond. And as always, I remain so grateful to our outstanding faculty and staff who work tirelessly on behalf of our students.