From page 2 of the FY 2007 Form 990 (pdf), we have the most detailed publicly available breakdown of spending at Williams.

spending2007

Click for a larger image or, more conveniently, just go directly to the pdf. Detailed comments below.

UPDATE: Minor editing (less snark) done.

1) Why won’t the College make this sort of information public in a more timely fashion?

2) Note that this is for FY 2007. According to the College’s financial statements, operating expenses were $164 million. Alas, that is a number that we don’t see here. As discussed before, budgets are complex and different discussions of “operating” spending will include and exclude different items. Recall former Kevin Waite’s ’09 discussion of the College’s alleged operating budget of $216 million for FY 2009.

Checked with Lenhart and he says that total current expenditures are set at $216M this year. This includes operating expenditures, capital renewal spending and debt interest payments among a few other things. He says last year’s budget was around $200M.

As always, there is a lot of room for mistaken communication and I don’t want to attribute bad faith to anyone. I certainly believe that “total current expenditures” for FY 2009 is $216 million. But that’s not what Morty implied last January. He wrote, “Next year’s [FY 2010] operating budget is planned to go down by $10 million to around $207 million.”

Note the conflict. “Total current expenditures” is the money that Williams spends on everything, including items like “capital renewal.” “Operating budget” should be a subset of total expenditures. Reasonable people can disagree about whether or not the operating budget includes things like financial aid (or that can just be treated as a revenue discount), depreciation (a non-cash charge) or even capital renewal (remodeling Morgan).

But it sure seems like the College (in its public statements but not its financial filings) likes to throw everything and the kitchen sink into the definition of operating budget while, simultaneously, making it impossible for any outsider to compare those statement to the published financials.

How does the $205 million that the College plans to spend next year compare to the $177 million that we know it spent last year? I don’t think that any outsider knows. I suspect that the College likes it that way, that it has no particular interest in making tough choices now, that it is happy to let Morty ride off into the sunset as Mr. Wonderful.

3) How can we reconcile this budget with either the College’s report to alumni (pdf)

spending2007alumni

or its published financial statements (pdf)? (By the way, this document seems to have security settings that prevent copying. Annoying but almost certainly not nefarious. So, just go to page 2 yourself and look at the operating expenses.)

Hard to do!

4) A central debate in this discussion (primarily between HWC and me) is whether or not the $164 million (financial statement) or $161 million (alumni report) in spending includes or excludes financial aid. I think it does and that, therefore, the $174 million in FY 2008 spending compares unfavorably to to proposed $205 million in spending for FY 2010. Where is the budget discipline? HWC thinks it does not and that, with approximately $30 million in financial aid, there totals are similar.

Now, 9 times out of 10, HWC is right and I am wrong when we disagree about these sorts of details. So, I am probably wrong again. And I am having hard time figuring this out, so comments are welcome. Still, I look at Jack Wadsworth’s ’61 table and it sure seems like his $161 million in operating expenditures includes a line for $27 million in “Scholarships and Fellowships.” If that is not financial aid, then what is it?

5) Assume that I am right. How do I reconcile Wadsworth’s $161 million in spending ($27 million of which is financial aid) with the $189 million in spending on “functional expenses” from the form 990? Excellent question. First, note that there is a line for “grants and allocations” for $26 million. That sure looks like financial aid to me. Second, note the $17 million for “Depreciation.” As best I know, the College ignores (reasonably enough) depreciation expense from all its other published financials. So, I need to reconcile $189 – $17 = $172 million with $161 million. Third, note the $9 million in interest. Again, I think interest expense is removed from all discussions of operating expenses. That leaves us with $163 million, which, conveniently enough, matches almost perfectly with the “Total operating expenses and other” from the financial statement.

6) Summary: We have three sources for financial statements. Two of them (alumni report and form 990) have an explicit line for financial aid. Removing depreciation and interest expense from the form 990 allows us to match the totals from the other two almost perfectly. Therefore, financial aid is actually included in financial statement (probably under “Instructional and research”) for “Operating expenses and other” despite the fact that it is also listed “Student Revenue.”

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