Hanover -- The Dartmouth College Board of Trustees yesterday charged the administration with preparing a plan that cuts $50 million from the college's budget in each of the next two fiscal years.

Dartmouth President Jim Yong Kim said he and his administration will “engage with every corner” of the Dartmouth community to find creative ways to reach those financial targets, but acknowledged that job cuts were inevitable as the college copes with a sharp drop in the value of its endowment and operating expenses that exceed revenue.

“Now that we've looked at the budget closely, there's really no way we can avoid layoffs,” Kim said in a telephone interview yesterday.

As of June 30, the value of the college's endowment fell $835 million, or 23 percent, to $2.8 billion, due primarily to a 19.6 percent drop in investment performance.

The college also posted operating revenues of $701 million and operating expenses of $735 million. The $34 million gap was caused primarily by investment losses, the college said in a news release yesterday. Total net assets fell by $916 million.

Any new layoffs would follow the 72 job cuts the college made earlier this year, along with a reduction in hours for 68 other workers. (Some of the laid off workers have since been rehired.)

At their fall meeting, held Friday and yesterday in Hanover, the trustees asked Kim to develop a budget plan that aims to trim $50 million in expenses from the college's fiscal 2011 spending plan and another $50 million from fiscal 2012.

Trustees also requested a five-year investment plan to be submitted in stages for approval next spring.

Kim, who was inaugurated as the college's 17th president in September, said he and his staff already have been meeting with faculty leaders to discuss ways to reach these targets.

Between now and the trustees' February meeting, Kim said, he and his staff will meet in public forums with “all stakeholders” in the Dartmouth community, including faculty, staff, students and the wider community.

“We're going to try to be as transparent as we possibly can be,” Kim said yesterday. “We're not going to make top-down decisions.”

In addition to cutting expenses and improving efficiency, Kim said, the college will seek additional donations and “pursue initiatives that build on Dartmouth's strengths while providing new sources of revenue.”

What those new sources of revenue may be has yet to be determined.

“What we hope is, by engaging with the entire Dartmouth community, people will come up with creative ways of bringing new revenue into Dartmouth College,” Kim said. “This is an area that I particularly invite the creativity of the entire Upper Valley community.”

Spending from the endowment is the college's largest source of revenue, totaling $227 million in fiscal 2009.

The trustees yesterday asked the administration to plan on a “more sustainable” endowment distribution rate in fiscal 2011 of between 5 percent and 5.5 percent, down from the 6.3 percent rate in fiscal 2009.

Kim said he and the board agreed that any decisions about spending cuts, job cuts or program reductions will not change the college's “need-blind” admissions policy or threaten “the Dartmouth experience.”

“We will continue to be completely committed to need-blind admissions,” Kim said.

The college provided $99 million in financial aid in the last fiscal year.

“Let there be no doubt that we are committed to preserving the unique Dartmouth experience,” Ed Haldeman, chairman of the board of trustees and a 1970 Dartmouth graduate, said in a news release yesterday.

“We will continue to invest strategically in Dartmouth's future while recognizing that, as is the case across institutions similar to ours, the current economic environment has an impact on the revenues generated by our endowment,” Haldeman said.

In other business, the trustees honored Barry Scherr, who stepped down last month after eight years as provost. Scherr will continue as the Mandel Family Professor of Russian. And the trustees voted to approve the municipalization of the Hanover Water Works.