The Trustees met this week-end. Will they and/or Morty be providing us with an update? My predictions below.

It was relatively easy to predict the letter in January, because the needed actions were fairly obvious and necessary. (Prediction here, reality here.) It is much harder this time because there is such a wide range of plausible choices. Comments:

1) There will be a letter from Morty, discussing what happened with the Trustees. The financial crisis is too grave and Trustee meetings are too infrequent to go without communicating with the College community.

2) An early retirement program will be announced. I bet that this was discussed at the the staff meeting a few weeks ago, but my sources failed me. The College needs to reduce its headcount and the most painless way to do so is to entice employees to retire early, as Wellesley has done.

Over the past six weeks, over 50 administrative and union employees have elected to participate in the voluntary retirement incentive program. Each of these decisions was a deeply personal, and sometimes difficult, choice. Through their efforts, these individuals have touched the lives of countless colleagues, students, and alumnae. Their contributions, knowledge, and expertise are woven into the fabric of this institution, and they will be sorely missed. As is our tradition, we will have an opportunity to honor and thank everyone who is retiring at a dinner on May 19th. In addition, we will hold a campus-wide celebration in May. Details will be provided in a future communication and I hope you will join me at this special event.

Williams will do the same.

3) Will lay-offs be announced? I doubt it. The dramatic upswing in the stock market — we either hit bottom right around the day I cried “Wolf,” or we are in the middle (toward the end?) of the greatest sucker’s rally in over 50 years — means that the College’s endowment looks much better now than it did just 6 weeks ago. So, even if there is a “hawk” faction on the Board, they may not have been strong enough to force action now. Also, given how Morty (but not lead trustee Greg Avis ’80) has promised that there would be no lay-offs, it is hard to believe that any would be announced just after the dedication (Christening? Bris?) of Schapiro Hall.

That’s too bad. Williams needs to lay-off around 50 people right now. Doing it before he leaves would be the best gift that Morty could give his successor.

4) How about a continued hiring freeze and staff attrition? Perhaps. As noted on several occasions (e.g., here and here), Williams could significantly reduce head-count by declining to fill short term positions (things like Campus Life Coordinators and Assistant Coaches) as the current occupants end their contracts and move on. One easy way to see that the College is not taking the financial crisis seriously enough is to note how many people the College has hired in the last 6 months. I am happy to grant that these are the most wonderful people in all the world, but the College can no longer afford to have so many employees. Every new hire this year means an extra firing a year or two in the future.

5) Announcement on Stetson-Sawyer? Recall that:

In response to the global economic crisis that began to unfold in the fall of 2008, construction of the library/IT center, as well as all other major campus building projects, has been postponed by the President and Trustees for at least a year. Several necessary steps in project planning will be pursued during the delay.

Perhaps Professor Michael Brown could give us an update. I am not sure how to interpret “at least a year.” If the Trustees think that th worst of the financial turmoil is behind us, then they will be sorely tempted to finish the project. After all, the College will have to (?) complete the work at some point. What is the difference between doing it now and doing it in three years. Spending money on capital projects is very different from spending money on the operating budgets because buildings and such are long-lived assets. Williams can either have an unfinished Stetson-Sawyer and $80 million in the bank or a finished Stetson-Sawyer. I think that either option is reasonable. I am a strong proponent of cutting the operating budget, but finishing capital projects is a much closer call.

Even if the Administration decides to continue to delay the project, I think that they can’t delay forever. Building permits have time limits so if the work is not started (finished?) by date X, a lot of the paperwork (and even the planning?) needs to be redone.

Might this be the moment to radically rethink the projects? Perhaps. I have always thought that the College spends way too much on library resources, that if you look at real usage trends over the last 5 to 10 years (and extend those trends into the future), the amount of time that the typical undergraduate (or professor) spends fiscally retrieving a hard copy of a book or article is rapidly decreasing. Williams does not need to keep all these books around, anymore than it needs a library shelving facility. Even if you agree with me on this (and few will), it is not clear what we should do with Stetson since the building is so far out of code that any major changes will still be very expensive. But, given the fallen value of the endowment, it sure would be nice to figure out a way to do the project for $30 million rather than $80 million.

6) A statement on the Weston Field project? Probably not. It is one thing to continue with a project that is half completed. Starting brand new project, while in the middle of the worst economic crisis in several generations, would be foolhardy. At the same time, canceling the project altogether might ruffle some feathers, so the easiest option is to ignore the topic.

7) I doubt that there will be any mentions of the items we discussed in our series on the Ad Hoc Committee on Budget Priorities, but I bet that there will be a discussion of the Committee’s work, the progress it has made and so on.

8) Details on the College’s long-term spending plans or a statement on the College’s debt load? I hope so, but don’t count on it. The people who run the College clearly believe that Williams should divulge as few details as any elite university. I can’t even get them to make public a time series of avail dollars over the last decade! The key topic that the Trustees discussed this week-end was:

How many dollars from the endowment should Williams plan on spending on its operating budget over the next five years?

A well-run academic community would make as much of the facts related to this topic as public as possible. I don’t expect (or want!) the College to broadcast Trustee meetings over the internet or even to release the notes that are taken at those meetings. Those discussions should be and remain secret. But there is no reason why Williams couldn’t distribute 90% of the supporting documents that were made available to the Trustees before the meeting began. Why can’t the rest of us know how many dollars the College spent from the endowment in, say, 2002? Why is that fact, and facts like it, treated like some sort of state secret?

We had a useful discussion of these issue a few days ago. Basic summary is that the College spent $79 million from the endowment in FY 2008 (June 30, 2007 to June 30, 2008), is spending about $92 million is in FY 2009 and plans on going back to around $78–$80 million in FY 2010. (I assume that this new target is not merely, by coincidence, the same as the spending level last year.) Given a net financial wealth (endowment minus debt) of at best $1 billion, a more appropriate spending target would be $50 million. (Financial conservatives like me would prefer $30 million.) No one thinks that the College should go immediately to this much lower figure. Sensible change takes time. Rashness is rarely rewarded. There is a chance that the market will bounce back. My position is that the Trustees should tell the Administration that only $65–$70 million is available for spending from the endowment in FY 2010. We need another $10 million in budget cuts. Alas, it does not look like we will be getting them.

But, again, I don’t expect any of these details in the letter.

Anyway, those are my predictions. What are yours?

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