Original here, archive here.

1) This table would be more informative with at least a few more years of data.

2) A senior faculty member told me that cutting the first $10 to $15 million out of the Williams budget was easy. There was a lot of fat. But cutting the next $10 million is very hard.

3) Reducing capital renewal by 50% saves a lot of money. But is it sustainable? I think that this line item includes two sorts of spending. First, is basic maintenance. We can skip painting the walls and fixing the roof this year and next. But, at some point, those dollars have to be spent. So, this part of the reduction is not sustainable. Second is green spending, doing things that reduce carbon emissions but which don’t really pay for themselves. Morty reported that they were cutting $700,000 of this last year out of, I think, a total budget of around $2 million. This spending is a waste, moral preening that Williams can no longer afford, at least if the faculty want raises and the students want no loans.

4) If Williams is paying $10 million in interest on around $260 million in debt, then the average interest rate is around 4%. Does that seem correct? As always, all that debt makes me nervous. Leverage kills. It would have been a mistake to start paying that off during the midst of the panic last year (which is why I did not recommend it). But what about paying some of it off now? Are you certain that the endowment is going to make more than 4% per year over the next decade? (My position: No need to pay it off now, but don’t increase it. Any spending for Stetson/Sawyer or Weston should leave total debt the same.)

5) Financial aid is tough. Many faculty members think that a family making $140,000 should have a) Saved enough money for Williams by now and b) Ought to be able to pay the full tab. They don’t like the idea of giving financial aid to such students, especially the no loan policy. I suspect that this faculty push-back is a big reason behind the policy change. As a student points out on WSO:

Morty, last April:

I am happy to report that at their meeting this weekend the trustees approved an operating budget for the coming academic year that calls for spending of $205 million, keeps our financial aid program intact, and contains no layoffs.

Bill Wagner, last July:

While the College continues to face challenging financial circumstances, we have a strong budget in place for this academic year and over the past several months have developed plans to meet a range of possible economic contexts in the years beyond. These plans preserve the quality of our faculty and our academic programs, reflect our commitment to the principles of need-blind admission and need-based financial aid, and avoid layoffs.

I wonder how canceling need-blind admissions for international students, saddling the new kids with loans, and cutting our $400 book grants and the 1914 library (and having the nerve to spin the last one as a positive!) “keep[s] our financial aid program intact” or “reflects our commitment to the principles of need-blind admission.” They could have at least tried to be honest about the cuts from the beginning.

Indeed. I, and most other observers, were caught off guard when Williams ended no loans. Did anyone predict this? Not that I have read. The Administration spent all of 2009 talking as if financial aid were sacred. And, during that time, the financial markets dramatically recovered. It would be one thing if the S&P 500 were still at 666. Then the college would be in huge trouble. But, above 1,000, we should have (unless there is some real nastiness yet to be revealed in the endowment) much more flexibility.

6) Random speculation: Who made the decision to end the no loan policy and when was it made? If I were an ambitious Record reporter, this is the story that I would follow. I find it interesting that the January trustee meeting ended a week before the letter announcing the change went out . . .

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