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The College and the Economy

To the Williams Community,

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.

Given what’s happened in the world economy, there’s still hard work for us
to do on charting the College’s way through the subsequent few years. But
it’s worth taking a moment to acknowledge the accomplishment to date. It
results from the creativity and shared sense of purpose among faculty,
staff, students, and trustees and was made possible by wise stewardship of
financial resources by generations of College leaders and the loyal support
of alumni, parents, and friends. If all these efforts continue, Williams
will emerge from these challenging times as strong as ever.

Among the many steps taken to reduce spending next year, we’ve frozen all
faculty and staff salaries, reduced the number of faculty and staff
positions through attrition, delayed major capital projects, lowered
spending on building renewal, and cut managers’ budgets by 15%. These
changes, while painful, have protected the College’s highest priorities of
maintaining our financial aid program, avoiding layoffs, and continuing the
high standard of our academic program.

So, it won’t be business as usual. But it will still be Williams at its best
— great faculty and students interacting inside and outside of small
classes, supported by dedicated staff, in first-rate facilities.

We’ve tried to be as thoughtful as possible about where to cut, focusing on
things that can more easily be reversed when the world’s business cycle
moves to recovery. We need to continue this deliberate process because
further cuts in subsequent years will almost certainly be needed.

For those of you interested in more details, what follows are the numbers.

Of the College’s main sources of revenue (fees, endowment, and gifts) the most significant change has been in endowment income, which in recent years has covered about 44% of our expenses. We’d planned in 2008-09 to spend $94 million from the endowment. That was about 5% of its $1.8 billion value last July 1. With the rapid drop in the endowment’s value, we cut spending enough to lower that figure to $91.5 million. For 2009-10 we’ve reduced it to $78.5 million, or $15.5 million less than what we started with this year.

We are modeling spending from endowment in 2010-11 of around $70 million, a drop of another $8.5 million. We believe that we can also hit that target without violating our key principles of financial aid and without layoffs. The Ad Hoc Budget Advisory Committee is working on recommendations for possible further cuts for 2011-12.

Planning that far ahead requires the wisest possible projection of future
endowment values. Here’s our latest thinking. As of today, the return on the
endowment since last July 1 is probably around negative 25%. This estimate
is based on what we know about the part of the endowment that can be valued each day because it’s invested in publicly traded stocks and what we know about the performance through Dec. 31 of the private investments that only get reported less frequently.

If that investment loss of 25% persists through June 30, then our endowment,
after subtracting spending from it and adding new gifts to it, would be
around $1.3 billion. We are modeling no growth in our investments in 2009-10
and 2010-11, followed by returns of positive 8% in future years.

If the endowment is around $1.3 billion on July 1, we’ll be spending about
6% of it in 2009-10. That spending rate makes sense in the short-run ­ to
smooth out the disruption of the business cycle — but we’ll need to get it
back soon to around 5% to avoid depriving our future students, faculty, and
staff, whom the endowment is also meant to support.

Fortunately we now have the time to plan for that in a careful, thoughtful
way, for which I give great thanks to all involved.

Regards,
M. Schapiro
President

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More Arrogant

This comment from Larry George merits placement on the main page.

I keep seeing this quote that Schapiro gave the Times:

It sounds immoral to replace really talented low-income kids with less-talented richer kids, but unless you’re a Williams or an Amherst, the alternative is the quality of the education declines for everyone.

The quote strikes me as more arrogant every time I read it. Williams and Amherst may well soon find that they, too, can’t afford pricey financial aid policies, especially in the face of tuition/fee increases that continue to outpace inflation greatly, a soured economy, and a demand curve that will soon start falling due to the end of the population boomlet. It is one thing to have a brand and pride in one’s offerings/product, but assuming one is invincible?

[Link and formatting added.] Comments:

1) I interpret Morty’s statement as less arrogant than a simple statement of reality, even a defense of all his buddies who run less rich colleges. Tufts just ended need-blind admissions. Morty is covering for them, fairly or not.

2) Many of these schools are not (yet) replacing “really talented low-income kids with less-talented richer kids.” Instead, they are replacing less talented low-income kids with slightly more or equally talented richer kids. Tufts, and most similar schools, have bragged for years about how they have increased the percentage of poor kids beyond what the percentage would have been had the school been family-income neutral. In other words, Tufts has been practicing affirmative action for low-income students. Now, the magnitude of that affirmative action has been small, certainly relative to the boost that elite athletes and under-represented minorities receive, but it has not been zero. So, as a first step, Tufts could just stop caring about family income in the same way that it does not care about astrological sign. Previous rant here.

3) But Morty is correct that for many/most of these schools, pure family-income-neutrality will not be enough. They will need to take dumber rich kids to pay the bills. And that is a shame. Fortunately, Williams is still far away from facing that choice, but not so far away that we shouldn’t worry, that we shouldn’t aggressively cut costs now so that we don’t face this dilemma in a few years.

4) Williams is not “invincible,” but I continue to think that folks like Larry under-estimate the strength of the demand for a Williams education and the resources that the sort of families who like elite LACs have and are willing to devote to a Williams education. We will get our first data point on that when the Common Data Set is released next fall. My prediction: SAT scores (rough proxy student quality) will be virtually unchanged between the class of 2012 and 2013. What is your prediction?

Another way to think of the untapped demand is to note all the alumni who would love to send their children to Williams. At my 20th reunion, there were almost 300 alumni children, and that was just among the attendees! Assuming that my class is not unusual and that the correlation between reunion attendance and fecundity is not too high, there are at least 500 alumni kids in each cohort of potential applicants. Williams currently makes space for about 65 legacies per class. What happens to the 435 other alumni kids. Some don’t go to college. Some could have gone to Williams but turn it down to go to Yale or wherever. Some have no interest in Williams. But many (100? 200?) would love to go to Williams but don’t/can’t get in. I think that is fine. But I would just point out to Larry that the latent demand consists of some fairly smart kids (certainly many that are as smart as our tip and URM Ephs) with relatively rich parents. I don’t predict that Williams will ever need to tap that demand, but it could if it had to.

5) Larry deserves a lot of credit for publicly suggesting that financial aid policies should be on the table for discussion, that instead of just focusing on all the cuts that someone like me wants to make, Williams should rethink need-blind admissions and the no-loan policy. I disagree, but Larry is a brave man to even raise the idea at EphBlog. Have at him!

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Smart and Rich

Special thanks to ’04 for posting this interesting article from The Boston Globe:

Economy lifting college prospects of the well-heeled.

Here’s a bit that includes a quote from Morty:

Morton Schapiro, president of Williams College in Williamstown and an economist who specializes in higher education finance, said there has “never been a better time to be a smart, rich kid. And at some schools, you don’t have to be as smart as you did before. That’s what happens in a recession.”

Schapiro referred not to his own institution, a top-tier private school that meets the full financial need of its students, but to the vast majority of schools that must base admissions decisions – at least in part – on financial means.

He predicted that colleges would find ways to boost tuition revenue. Some will require students to borrow more money and pay more of their summer and work-study earnings, for example, and others will ask parents to contribute more.

 

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Keenly Progressive

Think that Morty is working too hard, worrying about the future of Williams during the worst financial crisis in a generation, not even considering his future at Northwestern? Think again.

A former foe will accelerate his assimilation as a newfound friend of Northwestern football and other athletics when NU’s incoming president-designate arrives in San Antonio this weekend for the Alamo Bowl.

Morton Schapiro, the president of keenly progressive Williams College in northwestern Massachusetts, confirmed Tuesday he’ll be the guest of retiring NU president Henry Bienen when the No. 22 Wildcats (9-3) face No. 25 Missouri (9-4) on Monday night at the Alamodome (ESPN, 7 p.m.).

Late last month, the NU board of trustees announced that Schapiro, 55, will succeed Bienen in September. Ironically, when the Cats lost the 1996 Rose Bowl 42-31 to USC, Schapiro was a vice president and dean of USC’s College of Letters, Arts and Sciences.

”I was actually in the locker room and on the sideline for part of that game,” said Schapiro, a noted economist and administrator who left USC to be president at Williams in 2000. ”I remember coming out of the tunnel with the (USC) team and seeing all the purple and thinking, ‘Oh, my God, this is like an away game.’ We were 10 miles from the USC campus and 60,000 in the Rose Bowl were Northwestern fans.”

During Schapiro’s time in Williamstown, the Division III ”Ephs” – pronounced with a long ”e” in honor of college patriarch Ephraim Williams – won 13 NCAA titles in six sports, and three students were named Rhodes Scholars.

Said Dick Quinn, the school’s director of sports information: ”Morty is a great sports fan. I doubt there is another Big Ten president who has caught a field goal at a game. Get ready for him because he walks the sidelines at all home football games. The man is a great sports fan and his ability to remember students and athletes is amazing.”

While Schapiro has yet to formally meet Wildcats coach Pat Fitzgerald, they’ve exchanged e-mails and he expects to be introduced to Fitzgerald this weekend in San Antonio. He also has begun to study other Northwestern teams.

”I was very frustrated the other night because I had to follow the Northwestern-Stanford (men’s basketball) game on the Internet,” the Hofstra alumnus (Class of ’75) said. ”Despite having a (satellite) dish, I couldn’t find it anywhere. Nonetheless, I look forward to watching many, many games and many other student activities in the years ahead.”

Although we all wish Morty nothing but the best at Northwestern, I can’t help but worry that, during the inter-presidentum, no one is cutting the costs that need to be cut.

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Morty Schapiro to Become President of Northwestern (and thoughts about the Presidential Search)

To the Williams Community,

Morton Owen SchapiroUpon the completion next summer of my ninth year as Williams president, I will be leaving to become president of Northwestern University.

This was not an easy decision for my family and me to make. Twenty of my thirty years in academe have been spent at Williams and I’ve loved virtually every minute. The past nine as president have been the greatest honor and privilege of my professional life. But with the completion of our comprehensive campaign this month and my strong feeling that institutions need new leadership every decade or so, I think the timing is right.

There’s much I still hope to do in these intervening months to help steer this place I love so deeply. Most importantly, with the support of the Board of Trustees, we are putting in place a financial plan that will assure that our college will be in a position to provide an exceptional educational experience for future students despite the current financial turmoil. Williams will emerge from the present challenges with its values intact and positioned to recapture its momentum.

Mimi and I have made many close friends at Williams — students, faculty, staff, alumni, and parents — and we hope that you will remain in our lives. When you visit us in Evanston, feel free to wear your traditional purple, a color that both institutions proudly share.

All the best,

Morty

Morton Owen Schapiro
Professor and President
Williams College

(announcement from the Office of the President, posted on the Williams website on Dec. 16, 2008)

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Leaving Williams?

Most disconcerting Google search to hit EphBlog today? morton schapiro, leaving Williams?

1) Good news: We are the #1 link!

2) Better news: This seems unlikely. To leave, Morty, still in his fifties, would need to go somewhere. But where? The Dartmouth presidency is one of the few higher prestige (than Williams) academic jobs open, but it is more likely to go to an insider. Morty might be tempted by something like USC President, but it seems unlikely that he would leave Williams in the lurch. Say what you will, but Morty is a stand-up guy. A Williams administrator told me that, as far as he was concerned, the best part of the financial crisis was that it probably means another five years of Morty at Williams since Morty is unlikely to walk away from the struggle and the challenge.

3) Worrying news: It may be unlikely but it is not impossible. If the Mellon Foundation came calling, could Morty resist? He has served his time and done a great job. No fair minded person would complain if he called it quits a year or two from now. He is already the longest (?) serving NESCAC president.

Toward the end of the Boston Alumni meeting Morty talked wistfully of what an honor it was to be president of Williams. It was a heart-felt moment, just a few sentences toward the end of a long evening, which followed a long day of discussions and meetings with trustees. It was just the sort of sentiment that I expect to hear from Morty when he announces his departure some day far (we hope) in the future.

It was disconcerting to hear that kind of talk last week . . .

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Boston Meeting Notes

Below are my notes on Morty’s speech at the Boston Alumni Meeting on Tuesday night. Key points: WNY is dead. Financial crisis is not that bad. Need-blind admissions for internationals is safe (I think).

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Thank Goodness

One comment from Will Slack’s ’11 excellent summary of Morty’s talk on the College’s financial situation deserves a post of its own.

How will this change the endowment management?

Thank goodness for Collete Chilton. Without her, we might be down 40% this year. Hedge funds are not asset boosters; they are compensation schemes (and I have no clue what this means). Williams is buying more commodities, which are not hedges in bad times. However, we’re still being conscientious. Williams had the chance to buy into a timber thing, and chose not to (Killing the Amazon, etc.), forgoing real profits. It’s not only how you spend the money, but how you raise it..

Let’s unpack these items.

1) I love the moral preening. Williams did not go for the Amazon timber deal so this means we have a conscious. Hah! Does Morty not notice that we have five percent of the endowment in emerging market equities and, most likely, some of those investments are in Brazilian companies? And not just warm and fuzzy Brazilian companies that sell native-made tchotchkes, but the sort of companies that are chopping up all those trees in the Amazon? Of course Morty (like me) does not know anything about the specific companies that the College’s managers invest in, but unless Williams has placed specific restrictions on its managers (unlikely), you can be sure that we have investments in unsavory companies around the world. Not investing directly in some Amazonian timber does not mean that we aren’t profiting from logging and other depredations that Williams People Do Not Like. Recall the similar preening over Sudan divestment.

2) With regard to “compensation schemes,” Morty is probably referring to the fact that hedge funds generally charge much higher fees than traditional asset managers. (The College has 10% of its endowment in “Absolute Return” strategies, almost all of it in hedge funds. The compensation scheme for all the of the College’s Private Equity (9%) or Venture Capital (6%) allocations are almost certainly similar.) These fees generally have two parts: a management fee (1%-2%), which is just like the fee that you pay on your mutual fund, and a performance fee (around 20%), which is only paid on the profits over a specific benchmark. People who argue that hedge funds are “compensation schemes” generally believe that those fees are too high, that hedge funds don’t perform nearly well enough to justify taking such a large portion of the profits and that much of their success is a bull market phenomenon. The same arguments are made against private equity and venture capital.

But, guess what! Morty can solve this “problem” easily. Just pull all the endowment money out of hedge funds, private equity and venture capital. Problem solved! But recall (pdf) how trustee Dave Coolidge ’65 describe things last year.

We set our allocation targets for each asset class annually and over the last few years have increased our allocation to hedge funds, real estate, and international equities, while reducing our allocation to domestic equities and bonds. The Investment Committee recently completed a thorough review of the asset allocation policy for the endowment. The Committee adopted a revised policy that will continue to provide an appropriate return for the College with less risk by diversifying into more asset classes. Figure 3 shows our summary asset allocation policy as of July 1, 2007.

So the College, just last year, decided to add more money to hedge funds, organizations that Morty now describes as little more than “compensation schemes.” Did Morty miss that meeting? Has recent experience caused him to change his mind? Will he be proposing that the College decrease the percentage of the endowment dedicated to hedge funds in the future?

I doubt it. I think that this was Morty as wise guy rather than wise man (to steal Mark Taylor’s put down), Morty playing to the crowd and criticizing hedge fund managers even though he (and Williams) remain eager clients.

3) Is it really true that, without Collete Chilton, the Williams endowment would be down 40%? No. That’s absurd. Morty can only get away with howlers like this because there is no one in his audience knowledgeable enough (and willing) to call him out. I doubt that this talk impresses members of the Investment Committee. Some of whom, I have heard, are not Chilton’s biggest fans.

How can I be so sure that Morty is exaggerating Chilton’s contribution? Mainly because she has not been in her job long enough to make major changes in either the College’s asset allocation or in its manager selection. Recall that she started work in the fall of 2006. The College’s asset allocation policy was either already implemented or well on its way to implementation. Might Chilton have had an impact on the margin? Sure. But the College’s endowment looks more or less like it would have even if she had not been hired because it looks more or less like it has for a decade. (More on this latter.)

Leaving aside asset allocation, Chilton has not had time to significantly change many of the specific managers that Williams has hired within the different asset categories. You really think that, first day on the job, she fired all the College’s old managers and hired a bunch of new ones?

Again, Morty is 95% a straight-shooter, more honest and direct than the vast majority of college presidents. Moreover, every president needs to hedge a bit, praise in public while criticizing in private. But ridiculous claims about Chilton’s contributions are not helpful. They cause financially sophisticated alumni to doubt everything else that Morty has to say, to wonder if something else is going on, to worry that Morty is too-invested in his let’s-copy-Yale-and-hire-a-Swensen-clone plan to realize that the whole scheme is a mistake.

I was talking with a very rich, plugged-in alum a few weeks ago, someone who can get a meeting with Chilton (or Morty) whenever he feels like it. After talking with Chilton about the endowment, his first reaction was, “What is she hiding?” After further discussion, his opinion is “Don’t expect me to make a big donation for a major reunion if you have some idiot managing the endowment.”

Those are paraphrases. Although I have a reputation as a Chilton-critic, I was truly surprised at the depth of this alum’s dissatisfaction. Perhaps he is an outlier. Perhaps all the members of the Investment Committee are, with Morty, thanking goodness that Collette Chilton is managing the Williams endowment.

My position is the same as always: Williams should close the Boston investment office. It is too expensive and serves no necessary purpose. No one, least of all Chilton, should be fired. They should all have the option of moving to Williamstown. With luck, most of them won’t.

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No Longer AAA

Below is an article from March 2003 on the College’s borrowing $100 million, thereby losing its triple-A rating. Prior to 2003, the College had much less debt. Going back to the 2000 Form 990 (pdf), we see that Williams had only (page 74) $78 million in debt. That is why it had a triple-A credit rating.

When Morty arrived, Williams had a leverage ratio of around 6% ($78 million of debt on a $1.4 billion endowment) on June 30, 2000. Under Morty’s leadership, Williams more than doubled its leverage, hitting 15% on June 30, 2008 ($262 million of debt on a $1.8 billion endowment). How is that working out for us? About the same as it did for all those condo-flippers in Ft. Myers.

Although the math is a little tricky, Morty’s (?) decision to increase the College’s leverage has cost Williams at least $50 million dollars. If we had kept our debt at $78 million (or let it rise in dollar terms but no higher than 6% of the endowment), Williams would be more than $50 million richer. This was the most costly mistake made at Williams in the last decade. Why won’t the Record report on it?

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Another Top Ranking: Morty’s Salary in the Top 10

The Berkshire Eagle reports that “… a new survey puts Williams College’s Morton O. Schapiro ninth on the list of top-paid leaders at private schools that primarily award bachelor’s degrees. Schapiro’s compensation for the 2006-07 academic year was $514,744, including $62,729 in deferred compensation benefits, according to the Chronicle of Higher Education’s annual survey, released yesterday. Schapiro’s compensation total for the previous year was $474,518….”

Do I see both an excellent opportunity for leadership and a bit of a cost-cutting or hold-the-line possibility here?

Another interesting note: Rep. Grassley (he of the move to force more take down of endowments; I guess we already took care of that, unintentionally) was all over the rise in college presidents’ compensation.

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Shocked

A Eph working in finance writes about a recent Record interview with Morty.

Did you see this?

I’m shocked. I had no idea that Collette had lost so much of our endowment ($500M+). Plus, Morty sounds like he’s panicking. The fact that he doesn’t have a good grasp of the school’s finances AND that he used the phrase ‘brink of bankruptcy’ in a Record interview has me seriously reconsidering Morty’s competence at a time we need someone good at the helm. Either Morty is playing up the situation a little to try and good more donations or the college has seriously overextended itself.

1) You shouldn’t be “shocked.” With an 50% allocation to global equities, it is impossible for the Williams endowment to escape serious damage during a market meltdown. See our previous discussions.

2) Are we reading the same interview? Morty doesn’t sound panicked at all. In fact, he seems his always highly competent and (too?) honest self. This is one of the many things that I love about Morty! Consider the bankruptcy quote in context:

So, there are no plans to lay off any faculty or staff?

If we get to the brink of bankruptcy, who knows what’s going to happen? But as things are going, no plans for that … We come up with an attrition rate of seven faculty and 10 staff per year, which is lower than what it’s been. All over American outside of academia, people are being fired. Even within academia they’re being fired left and right. We’re the major engine of economic activity in the northern Berkshires. We talk all the time about how it’s not just the faculty are educators, but the staff as well, and they need us most when many of their partners or spouses are being laid off. Is this the time when we should lay them off too, or are we serious about the family and the community? I think we’re serious.

Morty is making it clear that, if the endowment levels off at $1.3 billion or above, there will be belt-tightening (no more visiting professors) without real pain (lay-offs). But, obviously, if the endowment falls further or stay flat for long enough (the Japan scenario), all options are on the table.

3) “[R]econsidering Morty’s competence” is absurd. It is hard to imagine a better leader to see Williams through a (potential) economic crisis. As you note, Morty may also be emphasizing the difficulties so that people start cutting costs seriously. (Please don’t tell me that the College is going to pay for a trip to DC for the Obama inaugural.)

4) It’s somewhat frustrating that some people (not this Eph) perceive me as a big Morty critic when, in fact, I am a huge fan. 95% of the decisions that Morty makes are correct. And the 5% that (I think) he gets wrong are often more a matter of tactics than ultimate goals. Yet I write much more about the bad staff than the good stuff. Let me rectify that my pointing to that Record interview. Read the whole thing. Morty is right about the challenges Williams faces and the best methods for confronting them.

5) The more subtle question is: What signs/decisions would make me rethink my faith in Morty? What evidence would falsify my hypothesis that he is a great Williams president? An easy question! A failure to start cutting costs in a serious fashion. Although it may be too late to do much with the 2008-2010 budget, Morty needs to start making tough decisions now that will contain the operating budget to zero growth for the next two years. If he doesn’t, I’ll start to worry that Morty is a just great fair weather president. When tough choices were called for, he failed to make them. Let’s all hope it doesn’t come to that. Popperian falsification is much more fun in theory than in practice.

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Notes on Morty’s Minutes IV

Thought that I ran out of comments on Will Slack’s ’11 excellent summary of Morty’s talk on the College’s financial situation? Oh, ye readers of little faith.

Background: Part 1, Part II and Part III.
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Notes on Morty’s Minutes III

Want even more comments on Will Slack’s ’11 excellent summary of Morty’s talk on the College’s financial situation? Of course you do!

Background: Part 1 and Part II.
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Notes on Morty’s Minutes II

More comments on Will Slack’s ’11 excellent summary of Morty’s talk on the College’s financial situation. Part 1 here. Part II below. (By the way, is anyone reading these? Are they valuable/interesting?)
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Notes on Morty’s Minutes

Will Slack ’11 took an amazing set of notes on Morty’s recent presentation of the College’s financial situation. Read them. Below are the first part of my comments/questions. Record reporters should use this as guidance in writing this week’s story on the event.
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Morty’s Minutes

Morty started off with the presentation he made to the staff and faculty chairs (paraphrased, quotes are verbatim):

The magic number to target, spending wise, is to draw on 5% of the endowment each year. This allows the endowment not to get behind inflation, as long as its being well managed. The idea is to balance the needs of current students against those of future students.

Last year, the investment return was a negative 1%, but the additional draw of 5% caused an over drop around 100 million dollars. This year, the best guess is that the endowment is down about 25%. In the past year and half, then, we’ve gone from 1.9 billion in the bank to about 1.3, which is a pretty massive change. In fact, all of Morty’s trips for the capital fund for the past five years were probably neutralized last month.

However, we’re still the 10th richest in endowment size/student. The plan, then, is to jump to a 7% draw. This is what happened in the early 1980s, when the college went to 7% for three years. However, a board member fears that we’ll have 10 years to recovery, like Japan in the 90s. The question is, “Is this a sea change?” If it is, “It’s going to be a different Williams.”

Williams lacks the dials that certain other colleges can use. Of the 35 private colleges that are need blind, Morty expects half of them to drop this status, and for the rest to amp up the % of admissions made partially on the basis of income. We’re not going to do that; Morty is committed to the idea of a good education regardless of income, though it may be different for Internationals, which largely pay either everything, or nothing. That decision has not been made, and should not be anticipated, but Morty didn’t rule it out the same way he did for domestic students.

To see the other dial (and the rest of the notes), click: Read more

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Morty on the Spot

Kudos to Morty for agreeing to this event and to College Council for organizing it.

College Council has organized an All Campus Question and Answer Session with President Schapiro. President Schapiro has offered to answer any and all questions students have about how the financial crisis will impact student life on campus (ranging from the impact on financial aid packages and expected family contributions, to the impact on funding for academic programs, to the impact on the resources available for student activities and residential life, to anything else students want to ask). Anyone who shows up will have an opportunity to ask questions and receive responses directly from the President.

Good stuff. My questions (with background) below the fold. What question would you ask Morty?
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Batten Down the Hatches

Thanks to ’10 (who really ought to join us an anonymous author) for posting the all-student mailing from Morty about the College’s financial situation. My Talmudic analysis was too long to add in a comment to Will’s post. Let’s go line by line!
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Financial Aid

In response to a question on financial aid, Morty told a story about an alum who is a college professor. Her son had been accepted by Williams and by an Ivy. [Morty did not so say directly, but the school was almost certainly Harvard, Yale or Princeton.] The alum told Morty that the Ivy was charging her family $20,000 per year less than Williams proposed. She just thought he ought to know. [EphBlog readers already know this and also know that Morty does not like bargaining.]

Morty used this anecdote to highlight some of the, in his view, absurdities in current financial aid packages at elite colleges. Morty had no problem with many of the recent changes. He thought that it was fine to allow the families of “poor” students (meaning families from the bottom half of the income distribution) to pay nothing for their child’s education. He seemed comfortable with eliminating student loans. But he felt strongly that HYPS were going to far, that offering financial aid to a family making $180,000 (and who had been making similar amounts for years) was ridiculous and that it was absurd to describe such aid as “need-based.” Morty also worried that, if Williams were to match the generosity of HYPS, it would set off a chain-reaction among other schools. Amherst, Swarthmore, Brown, Dartmouth would have no choice but to match us. Morty felt strongly that this would be a bad outcome, that these rich families ought to pay for the college education of their children. He implied that the current equilibrium, with HYPS being much more generous than other schools, was somewhat stable.

Morty also pointed out that much of the news coverages of these aid policies missed some of the juicy details. [I am embarrassed to admit that I missed these details as well.] For example, the family contribution for income levels from $120,000 to $180,000 is around 10% at Harvard. If your family makes $180,000, Harvard will only charge you $18,000. Morty pointed out that this was true but highly misleading. What happens if your family makes $181,000? Does Harvard charge you the full $48,000? Wouldn’t that make for a pretty horrendous marginal tax rate? Make an extra $1,000 and, not only does Harvard take all of that money, but it takes an additional $29,000 (post-tax!). Imagine the fellow offered a bonus at the end of the year and telling his boss, “No! Don’t give me the extra money!”

Morty explained that, of course, this is not the way things work. [I have never seen anyone point this out before.] Instead, the family who makes $181,000 still gets a huge break from Harvard, as does the family making $182,000, the family making $183,000 and so on. They may have to pay more than 10% of their family income to Harvard, but not much more. Morty said [not sure if he was estimating or claiming this as fact] that financial aid at places like Harvard actually goes to families making up to $280,000 because there is a smooth slope as you move above $180,000. In other words, the only families that pay the sticker price at Harvard are those with family incomes above $300,000 or so.

Below are highlights from an article which outlines Harvard’s new policy and my comments.
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Building Names

Morty mentioned that the North and South Academic buildings already had names. I think that they will be formally dedicated this fall. He gave no hint as to what the names would be. I am still guessing that one will be Kraft Hall. Other guesses? Assume for a second that the donor will not be named, what person from Williams history should be honored? Presumably, a professor would be a good choice, but many of the most famous (Perry, Dodd) are already immortalized. Suggestions? Time to dust off your copy of Mark Hopkins and the Log.

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Athletic Admissions

Morty took great pride in claiming that athletic admission were very different now then when he started 8 years ago. This was clearly a great success, in his mind. I agree. He offered few details, but see our previous discussions. If Williams still had the same process in place today that it hard 10 years ago, at least 10% of the class we actually have would be replaced with dumber (perhaps) athletically more gifted students with lower academic rankings. You can claim that Morty has gone too far. You can claim that he hasn’t done enough. But there is no doubt that he has made major changes, that the Williams student body is significantly different than what it would have been if Morty had not become President.

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Tutorials

Morty repeatedly sang the praises of the tutorial program. He mentioned that this was Williams’ “signature” program and cited impressive numbers as to tutorial growth over the last 8 years, something like 20 tutorials to 71 and 160 students enrolled to 760. [Does anyone have the exact numbers? I am (mis)remembering as best I can.] He thought that the College was on track (perhaps for the class of 2009?) to have at least 75% of the students graduate having taken at least one tutorial.

 Morty discussed a conversation he had with (previous president) Frank Oakley about tutorials. Oakley pointed out that, given Williams strength in tutorials, it made sense to devote more resources to them rather then towards areas of weakness. This made perfect sense to Morty since it is (more or less) the economic principal of comparative advantage.  Morty told this story in an amusing fashion, somehow managing to both compliment Oakley and make fun of his fellow economists.

Quick quiz: Can you see how that claim illustrates Mark Taylor’s critique of Morty as a “wise guy” rather than a “wise man?” Screed below. Read more

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Social Life

Morty discussed campus social life a bit, especially the housing system. He confessed that, when grading his own performance at last week’s trustee meeting, he gave himself the lowest grade in this category. He felt that the College was still trying to figure out the best ways to do things. He reiterated again his dislike of the student self-segregation that he had known as a junior professor at UPenn in the late 1970s. When he came (back) to Williams a president, he did not like it that all the football players lived together and that the same was true of African American students. (He used those two examples first and, perhaps recognizing that he was being a bit too honest, tacked on examples like Jewish students. [As far as I know, there is no evidence of meaningful self-segregation of Jewish students at Williams in 2000.]) He noted that a goal of the new housing system was to break up this self-segregation and that this goal had been achived. Morty also (correctly) sang the praises of having the first years in Mission. He pointed out that first years in the Berkshire Quad had always felt like isolated second class citizens. (Morty goes to each first year entry for snacks.) Putting all the first years in either the Freshman Quad or Mission has solved that problem. [Rob Chase ’88 and I discussed this very solution more than 20 years ago. This is probably the best thing that Morty has done for social life in 8 years.]

But he still felt that there was much more that should be done, that Williams students deserved a first class social system just as they deserved (and received) a first class academic experience. He mentioned obliquely the various troubles with the Office of Campus Life and noted that some restructurings had occurred. My comments below:

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Intellectual Vitality

Morty discussed the issue of intellectual vitality. He pitched this, not so much as a way to somehow identify kids with some sort of spark — see my previous discussion — but as a method for avoiding punishing kids who “take chances.” Let’s say you have two students, both with similar academic profiles. But one of the students took an academic chance [say, started studying a new language in 11th grade] and got a bad grade. Right now, the system favors the student who does not take that chance, who just studies the things that he is good at. Morty doesn’t like that. He wants to, at least, not penalize the student who studies something out of her comfort zone. He implied, but did not make clear, that he even wanted to favor such chance taking, all else equal. He mentioned that a very large number (80?) of the students in the class of 2012 had a intellectual vitality (“IV”) tag.

But Morty admitted that he did not know if their attempts to identify intellectual vitality were working. And, being an empirical economist (a phrase he used multiple times), he wanted to study it. Specifically, he mentioned supervising an honors student in doing this research. It was not clear if he had already selected a student. If you are a rising senior who has ever even thought about graduate school in economics (whatever your current major at Williams), you would be an idiot not to consider contacting Morty right now about working with him on this.

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Legacy Admissions

Morty answered a question about legacy admissions with all sorts of juicy details. He mentioned the distinction between direct legacies (one or two parents from Williams) and skip legacies (no parents but at least one grandparent). He noted that the former were more of a focus than the latter. He reported that 12%-15% of a typical Williams class was direct legacy. I think he said that the class of 2012 was 15%, but that went up to 17%-18% once you included Eph grandchildren. Morty mentioned that some people (other LAC presidents?) feel that you want to be wary of having “double digit” legacies, that you want to allow for new blood and not be too inbred. Morty thought this was nuts. He saw no reason to penalize an applicant just because her parents went to Williams. How does that make sense? If anything, he felt that such applicants were particularly desirable. They understood Williams, knew its strengths and weaknesses, and were probably making a very informed decision in coming here.

Morty noted that a decade or so ago [or perhaps when he arrived?], the average legacy was a 3.3 on the 1-9 scale of academic ranks while the average non-legacy was 2.3. Morty did not seem to be a huge fan of this gap, or of giving legacies such a preference. He then noted that the latest statistics show that legacy and non-legacy are now equivalent (both at 2.3). Morty confirmed, consistent with all the analysis I have done, that being a legacy is not a meaningful advantage in getting into Williams. Morty noted that the way that some people measure this — by comparing the general admissions rate (16%) with the legacy admission rate (40%?) — was misleading because legacy applicants are often told ahead of time that they have no chance. So, they don’t apply and/or withdraw their applications, thus artificially increasing the legacy acceptance rate. Non-legacies with no chance are not given this inside scoop. They just apply and get rejected.

Of course, being a legacy is still an advantage. Morty pointed out that the acceptance rate for AR 1’s was only about 30%. [I bet this was for all AR 1’s, not just US citizens, which almost all legacies are.] Legacies with AR 1s are “always” accepted. [I bet that AR 1 legacies are some of the best and happiest members of the Willams community, especially the subset that applies early decision. They could have gone elsewhere but chose Williams because they were more than ready to fall in love with it. In other words, even if you did not want to give legacies an advantage qua legacies, you should still admit the AR 1 legacies over other AR 1s because these sons and daughters of Ephs are much more likely to be happy at Williams and contribute to the happiness of others.]

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Williams-Specific Application Essays

Morty discussed the issue of how Williams can/should ensure that the students we accept want to come and will be happy here. We have a big advantage in that lots of people seek the number one liberal arts college, especially from abroad. But does someone from Shanghai really know what they are getting into? Do they understand what it means to spend 4 years in rural New England? Morty noted that the Common Application makes it easy for someone who is already applying to Harvard and Swarthmore to just add Williams to their application list. Why not? [It is free for someone who checks the financial waiver box and, since elite colleges want more poor kids, why not check it?] Morty noted that we want to somehow tell which applicants really understand Williams and want to come here for the right reasons.

A committee of trustees (led by Bob Scott ’68?) is actually looking at this issue and actively considering having Williams add a special essay section. Morty used the example [Not sure if this was actively under consideration?] of pointing out the course catalog and asking students to pick a few classes that they really wanted to take and to explain why. The expectation would be that students who really want to come to Williams would take the time to write these essays, would have the energy to look up the CVs of the professors and tell a compelling story. Even if this causes several thousand applicants not to apply [which seems plausible], Morty argued that this would be a feature rather than a bug. Why bother with students who aren’t that interested in Williams? They are unlikely to come even if we accept them. [And don’t forget adverse selection since the ones that would come from this category are the ones that couldn’t get in to any place better.] And even those that do come are less likely to be happy, contributing members of the community.

[I think that this is a great idea. In general, there are two models of Williams admissions. First is the contest. Once you set the rules (grades count for this much, SAT scores for this, X number of slots for athletes and URMs), you select the best candidates, regardless as to whether you think that they will come or be happy at Williams. You let them decide since they “won” the contest. The second model for Williams admissions is the dinner party. (Perhaps I need a better analogy? Suggestions welcome!) Although there are standards for who you most want at your party, you are especially interested in inviting people who will come and have a good time. Miserable guests make other people miserable as well. At the very best parties, all the attendees will be excited to be there.

In order to have a sense of whether this is a good idea, you would want to measure the happiness and contribution to campus life of different sorts of students, especially those who you think would have gone to the trouble of filling out an extra essay and those who wouldn’t have. One (imperfect) way of getting to that would be to compare early decision Ephs (both those accepted early and those admitted regular) with other Ephs. One assumes that the ED Ephs are more likely to understand what Williams is all about and be making an informed choice. If such students are much happier and more involved in the community than a matched sample of non-ED students, then requiring an Williams-specific essay makes some sense.]

If Morty and/or the Trustees go very far down this path, it promises to be the biggest change in undergraduate admissions in a decade. Comments anyone?

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Best President

I attended two events with Morty on last Friday at reunion: the Ephraim Williams Society breakfast (Williams wants to be in your will) and the general Q&A from 4:00 to 5:00. Morty was in amazing form at both events: hilariously funny, (almost) completely honest and (close to) exactly correct about the best policies for Williams. If Morty continues for another decade or so to serve as well as he has for the last 8 years, he will deserve to be named, along with Jack Sawyer ’39, as the best Williams president since Mark Hopkins. Each day next week, I will provide my summary, from memory, of the most important points, along with my comments [in brackets] and links to previous discussions. I encourage other readers who were there to chime in as well.

UPDATE: Here are my notes: Williams-specific application essays, legacy admissions, intellectual vitality, social life, tutorials, athletic admissions, building names and financial aid.

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Heresy

Morty and former Williams Economics Professor Mike McPherson on defining college success.

“What college success means depends so much on what [kind of] college you’re talking about and what students you’re talking about,” said McPherson, who is president of the Spencer Foundation and former president of Macalester College. He suggested that the best measures for college success would be specific but tailored to individual institutions. What that means, precisely, “each one can answer that question for themselves,” he said.

The panel was conspicuously divided into two halves: on one side sat McPherson and Schapiro, the president of Williams College; on the other were two representatives of public institutions whose students are much more likely to come from disadvantaged backgrounds and rely on financial aid. Williams, the moderator, didn’t hesitate to point out that the administrators from Miami-Dade and the University of Maryland seemed more willing to embrace strict accountability measures and the data collection that approach requires.

Schapiro, also an economist, suggested that there might be “some appetite” among faculty for more in-house accountability measures, but explained that much of the resistance stems from a fear that increased empiricism could lead to a one-size-fits-all testing regime — like a No Child Left Behind for higher education.

He stressed the need to more rigorously link what colleges do to their students’ professional and other outcomes after they graduate. Otherwise, it’s impossible to tell which teaching methods work and which don’t. Schapiro brought up a hypothetical proposal to compare students’ incoming SAT scores with outgoing GRE scores to determine whether they improved (and presumably correlate those scores to majors and other factors during the college experience).

“I would do that, but then again, I’m an empirical economist,” he said. Professors in the English department, he imagined, would view it as “heresy.”

When colleges experiment with different ways to teach critical thinking skills, as Williams does, Schapiro said, it should be seen as necessary to then empirically test what worked the best. Higher education is “horribly bad at this,” McPherson said — to take one example, colleges tinker with class sizes all the time — but they “never, ever look at the results.”

“Even at Williams, there’s not as much of an appetite as there should be,” Schapiro said.

Well, isn’t it (part of) the president’s job to generate that appetite?

Now, to be fair, Morty is already at the 99th percentile of all college presidents in terms of his willingness to measure Williams performance, so I shouldn’t be too critical. And, to be fair to my English professor friends (Hello Katie Kent ’88!), any measurement plan that uses a tool like the GRE is likely to fail, both because improving standardized test scores is not the purpose of a Williams education and because any such improvement is likely too small to notice.

Instead, my point is that there is an obvious policy change that would a) Allow fair-minded observers to see the causal effect of a Williams education on student achievement and b) Not force Williams professors to do much if anything differently. That change is the public display of student work. Put on the web all the papers that a student writes as a freshman for ENGL 101 and all those she writes as a senior for ENGL 401. If the Williams English Department is doing its job, the latter papers will be much better than the former.

There are, of course, all sorts of difficult issues to consider in any plan which makes student work public (as well as her professor’s comments but not grades). Perhaps freshmen should be exempt. Perhaps students should be allowed to opt-out from the requirement for one class per semester. Applying the requirement to non-paper-writing classes is difficult. And so on.

But the central principal is obvious: Being a part of an academic community requires public participation in the scholarly conversation. Making papers public will increase the quality of work done at Williams. Making the comments (but not the grades) public will have a similar effect. All the good reasons for making senior theses public apply in the context of other classes as well. (See Tim Burke for a related re-imagining of a liberal arts education.)

Assume for a moment that Morty agreed. What should he do? Best next step is to recruit some faculty to try out the experiment. (All the projects done by students in my Winter Study will be posted to the web, along with my comments.) See how it goes. I bet that someone like Joe Cruz would be willing to try it out in philosophy. Perhaps the whole thing will be a disaster. More likely, I think, is that other professors would be impressed with how making academic work public both improved the quality of that work and made it easier for everyone to see the progress that students make.

[Side note: Just noticed that the ENGL department no longer has a 101 (common introductory course for all students) or 401 (common senior capstone course). This is another sign of the Decline of the West, but save that for a separate rant. Just substitute 100-level and 400-level in the above.]

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Notes on Foxboro

Below are some notes from the Road Scholars meeting in Foxboro. These are all from the public sessions, either Morty’s introductory remarks or the panel of professors at the end. Any readers that were there should chime in.

All of these are from memory. I think that they are accurate, but I might have misheard or misremembered. I did not take notes.

1) Morty mentioned that international admissions were up to “almost 10%.” EphBlog gets results! Are there really 50+ internationals in the class of 2011? Perhaps this is the plan for the class of 2012? I still think that it would be good for the Williams community to have a more open discussion of this topic. Why not a high-level committee that would look at the experiences of international students at Williams, report on what is happening at other schools, provide an overview of the strength of the admissions pool and so on? I do not know if Williams should be 10% or 20% or 30% international in a decade. Yet this is a conversation that we need to have.

2) Trustee Jonathan Kraft ’86 gave a highly complimentary introduction for Morty. He mentioned that the capital campaign has reached $452 million. The campaign, while having surpassed its original goal, is still looking for a $50 million donor. The new North and South Academic buildings still need a name. Kraft Hall anyone?

3) There was some discussion at the professor panel about grade inflation. EphBlog sets the agenda! The basic story seems to be that the average grade rose from 3.0 to 3.3 from 1990 to 2000. The College made a big push to stop that a few years ago. The main tool is moral suasion. Also, each professor gets a report at the end of the year indicating how her grades compare to others from her department, other similar-level classes and the College as a whole. There are guidelines like: the average grade in 100-level courses should be 3.1; 200-level 3.2 and so on. These reforms seemed to stop the inflation for a few years. There was some discussion that things may have worsened (average grades going up) in the last couple of years, but no one knew the data off-hand.

4) I asked a question about the Report on Varsity Athletics and whether or not professors have seen a change over the last decade in admissions standards. In retrospect, I should have asked a better question since this whole topic requires more background — both for the audience and for professors on the panel — but I was eager to provide more detail for our discussion from Friday. None of the professors said that they had a problem with the current policy. (Of course, as the Report makes clear, problems are highly concentrated in a few departments.) Professor Will Dudley ’89 told the story of his hugely popular class of philosophy and sports which has attracted 100 athletes both times that he has taught it. He said that the quality of students in the class was much higher this last time (last fall?) then it was a few years ago. (Needless to say, there could be all sorts of reasons for that, but it is one interesting data point.) Professor Tom Garrity seems to have been a part of a committee that has looked at this recently. He said that athletes are doing as well at Williams as students with similar academic credentials. (Of course, this was largely true even in the days of much more significant admissions advantages, as the Report admits but tries to obfuscate.) Garrity also discussed the issue of clumping, of athletes taking classes together. He noted that, of course, we want friends to take classes together and members of the same athletic team are likely to be friends. But it seems like many of the concerns raised in the Report, especially about the negative impact of high profile tips on the quality of other students’ education, have gone away.

5) There was a question about the recent demands from Congress for information on the College’s endowment and spending priorities, in particular with respect to financial aid. Morty mentioned that the College had turned in its answers, after many, many drafts. It appeared yesterday. Morty thought that Williams did not have much to worry about because we already spend more than 5% of the endowment each year.

6) Morty discussed financial aid. One of the many reasons that Morty is so wonderful is that he is such a straight-shooter in these contexts. He mentioned that aid was going up so much that it was faintly ridiculous to talk about it in terms of “need.” When you are giving price cuts to families making $200,000 per year, how can that be anything but a “merit” award? He thought that Williams needed to keep pace with its peers but he saw no reason to be a leader in this unfortunate competition. He mentioned that Williams spending on aid has grown substantially in just the last few years. (Competition is a wonderful thing!) I think that the numbers he said were an increase from $20 million to $37 million. But I may have that wrong and I did not get the time period.  He hinted that the Trustees would be making an announcement in the next few weeks about Williams capping the contribution from home equity as a percentage of family income. I predicted this a few months ago, but I can’t find the link.

We still need a three part Record series on just how financial aid works at Williams: How gets how much money? How do those deals compare to the ones offered at other schools? What sorts of students does Williams gain and lose as a result?

Anyway, overall the event was well-run and highlighted all the best things about Williams. If you have a chance to attend one in the future, you should.

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Ride to Dartmouth?

WSO currently features a request for a ride to Dartmouth. Could that be from Morty?

Longtime observers of the Williams scene know several things. First, Morty is an ambitious man who dreams of more than the presidency of Williams. Over the last 8 years, he has been, and is widely perceived as being, a very successful president. Indeed, I do not expect to see a better Williams president in my lifetime. Second, James Wright is retiring as president of Dartmouth. A search for his successor will start up this spring. Third, Morty was a finalist for the Dartmouth job 12 years ago. He did not get it and, after a few more years on the presidential search circuit, the offer came from Williams.

Put those three facts together and there is little doubt that the Dartmouth search committee will want to interview Morty. Indeed, if Morty does anything other than turn them down flat, he will certainly make the list of finalists. What will Morty do when Dartmouth calls? If I were a trouble-making Record reporter, I would try to find out.

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