Created new category of “letters” for these sorts of posts. Will post more of the conversation when events stop intervening with my discussions with AU. – Will

To the Williams Community,

As we begin the new academic year, I would like to update you on the College’s financial situation.

While maintaining our commitments to academic quality, to our financial aid principles, and to avoiding layoffs, we have made good progress in meeting the challenges created by changes in the world economy. That we have been able to do so is thanks to the careful and cooperative planning of people across campus and on the Board of Trustees and to the ongoing support of our alumni, parents, and friends.

Those of you who were here last year recall that when the capital markets dropped and the recession deepened, the College took steps to slow spending immediately and revised, with the direction of the Provost’s Office, our medium-term financial plan. We also formed a faculty-staff-student Ad Hoc Budget Advisory Committee to plan how best over the next three or four years to reduce expenditures to a sustainable level, given the significant decline in our endowment.

During the spring and early summer, capital markets regained some of the enormous losses of the previous months. Despite that rebound, broad U.S. equity market returns, such as the Russell 3000, were down more than 26% from July 1, 2008 to June 30, 2009. In our case, the return on our endowment over the same period is estimated to be about -18.4%. The final, audited figure may change slightly. After subtracting the money we spent from the endowment and adding the gifts made to it, the endowment’s value on June 30 was about $1.4 billion.

That is $400 million less than a year earlier but higher than had been predicted in the financial depths of last winter.

What does the rebound, so far, in the markets mean for Williams? It means that if markets don’t fall again, which some analysts believe could happen, and we follow through on our short- and medium-term plans to control costs, we will have made substantial progress toward achieving our goal of preserving Williams’ educational quality and accessibility.

To help smooth the effects of the economic crisis on our operations, the Board has approved spending from the endowment in the current fiscal year that represents 5.6% of its June 30 value. However, even in the medium run we cannot maintain that figure without financially endangering future students, faculty, and staff. We have to get it back to a sustainable level in as few years as possible, as previous generations have done for our benefit. This level, while not without fluctuations, historically has been roughly 5% or below.

This requires our following through on the spending disciplines we have collectively put in place.

You can find here a list of some of the College operations that will be different beginning this academic year, whether for reasons of cost control, reduced FTE, sustainability, or a combination of these. It is important that you be aware of them.

I am enormously pleased and thankful that we have found ways to control spending while supporting the finest possible education of our students.

I thank you for the roles you have played in this campus-wide planning and implementation process and for the patience I hope we all can extend to each other as we strive to do our best work with fewer resources.

All the best for a wonderful year of learning, exploring, stretching, creating, playing, reflecting, and growing – all the things that make me grateful to be a member with you of this special and strong community,

With regards,

Bill Wagner,
Interim President

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