To the Williams Community,

Coming out of this weekend’s Board of Trustees’ meeting, I would like to
bring you up to date on how Williams is adapting to the downturn in the

Over the three months since I last wrote on the subject, the College has
deepened its analysis of the situation, mapped a way forward, and begun to
reduce spending. These efforts led to fruitful Board discussions, which
underscored several themes:

Despite the changed economy, Williams will remain Williams –
a vibrant college where students will receive the finest
possible liberal arts education.

We remain committed to retaining our full financial aid program
and to avoiding layoffs.

To accomplish this we need to find very significant savings
elsewhere in our operations.

We are in this relatively strong position because of the talent and
dedication of our faculty, staff, and students and the commitment of our
alumni and parents.

On this last point, I’m pleased to report great news regarding The Williams
Campaign. Despite beginning during the dot-com bust and ending in the
deepest recession in decades, the Campaign closed at a total of
$500,165,000. This heartening outcome results from the hard work and
generosity of many in the Williams family. On behalf of everyone who will
benefit from this effort, now and in the future, I thank all who have taken
part. Both capital and annual gifts have enabled us to make permanent
additions to our curriculum, financial aid, and campus infrastructure.
Without this extraordinary result and the ongoing capital and annual support
of those devoted to the College, our current challenge would be even

Another piece of reassuring news is that despite our concern about the
effects of this economic turmoil on current Williams families, we’ve been
relieved to see that the number of families who have asked for mid-year
financial aid reviews has been no greater than usual. We still understand,
and appreciate, the degree to which many families of all income levels are
having to sacrifice to make available for their children a Williams

The economy’s greatest effect on the College itself has been the degree to
which falling financial markets have reduced the value of our endowment.
While we’re fortunate that the endowment continues to outperform benchmarks
and to contain enough liquid assets for us to meet our obligations, it’s
still the case that the endowment’s overall value is significantly less than
the $1.8 billion recorded last June 30. Its liquid assets, which can be
valued day-to-day are down so far this fiscal year by a little over 20%.
Making a reasonable estimate of its illiquid assets, which can’t be valued
every day, leads us to conclude that the overall endowment value is down
this fiscal year by a figure approaching 30%. Meanwhile the financial
markets remain volatile.

In October we announced the College’s first responses. We postponed for a
year the construction of the new Sawyer Library and renovation of Weston
Field, reduced by $2 million the amount we’d planned to spend this year on
building renewal and maintenance, and decided to postpone the filling of all
but the most essential openings for faculty and staff. After careful study
by the Committee on Appointments and Promotions, we chose to postpone
searches for 6 of 14 tenure-track faculty appointments and to drop searches
for half of 22 visiting faculty positions. A separate ad hoc group has
recommended the postponement of around 20 of what were 30 staff openings,
while several remain under review. We also asked all budget managers to find
ways to spend at least 2% less than expected this year on non-personnel

Next year’s operating budget is planned to go down by $10 million to around
$207 million. Accomplishing this while protecting financial aid, avoiding
layoffs, and not overspending from the endowment will require the following

We¹ve cut spending on building renewal and maintenance next
year by over $6 million ­ a little more than half. The fact
that our physical plant is in such great shape makes this step
more practical than it otherwise would be.

We reluctantly join many colleges and universities in deciding
to have no faculty and staff salary increases for the year.
While relieved somewhat to note that general inflation is
currently near zero, we know how important competitive salaries
are to the health of our educational offerings and commit to
increasing salaries again as soon as feasible.

We¹ve asked all budget managers to submit plans for the coming
year that include cuts in non-personnel spending of 12% and 15%.
We¹ll decide closer to the beginning of the fiscal year which
level is necessary depending on external circumstances. We¹ve
also asked all budget managers to explain how they would cut an
additional 6% the following year.

We¹ve been greatly aided in the process by cost-saving suggestions from
faculty, staff, and students. Our thanks go to all who used the Website
developed for this purpose to submit nearly 400 ideas. They ranged from
small to large and covered almost every aspect of college operations. The ad
hoc Committee on Cost-Saving has reviewed them and passed them to relevant
managers. Two of the larger ideas have already been put into action. One was
to experiment with closing the campus as much as possible over the recent
winter break, which had the added benefit of reducing our greenhouse gas
emissions. Another suggestion with a large financial impact was to suspend
after this spring semester the Williams in New York Program. The faculty had
already voted last fall to end the program in its present form, pending a
process through which it’ll be re-imagined. That planning will continue and
I’m confident that the program will eventually reappear in new form. These
ideas, combined with several others, represent savings of more than

An important annual calculation for the College is how much to spend from
the endowment, keeping in mind the needs of both current and future
students. To strike this balance we¹ve generally aimed to spend in the long
run on operations an annual average of around 5%, though in some years in
which the endowment grew healthily we spent at lower rates to avoid spending
for spending’s sake and instead save for the future. That practice has
served us well. But in the same way that the College spent from the
endowment at higher rates during previous deep recessions, the Board has
agreed to do so now. We plan next year to spend up to 6.9% of the beginning
of the year value of the endowment ­ a level that’s sustainable for a few
years but not longer.

Like all financial plans, ours is based on assumptions about the external
environment. The steps that I’ve described here are based on our
conservative model that the endowment will drop 30% this year, stay level
for the next two, and in the following year go up by 8%, a figure closer to
its historical average. If the endowment fares better than this, we can
carefully increase spending more than currently planned and/or spend less
from endowment. If it does worse, we’ll have to adapt even further.

Economic downturns are stressful. This one, with its speed and depth, has
certainly put pressure on the families of our students, of our faculty and
staff, and of our alumni. But it’s in times of challenge that communities
find their greatest strength. I’ve been not only encouraged but also moved
by the deep goodwill that Williams people, on campus and afar, have brought
to our collective effort to meet the current challenge. We know that making
the most of this situation requires the best, shared efforts of us all.
Through this process we will reaffirm for our time those initiatives most
central to our mission and those, less essential, that can be pared away.

The ultimate result can only be an even stronger Williams — one that I
thank you all for helping to build.

M. Schapiro

Print  •  Email