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Imagine that it is 2050 and Williams has suffered a dramatic reversal of fortune. We are no longer among the top 10, or even 20, liberal arts colleges. What is the most likely cause of this fall from grace? Financial mismanagement. What is the most common cause of financial disaster? Too much debt. Consider Williams today:
We have borrowed about half a billion dollars. The markets are at all time highs. The endowment earned -1% last year. What could possibly go wrong?
1) Are we really $500 million in debt? I am not sure. These Form 990s are confusing! Some debt may have been paid off already. And, most importantly, the endowment is, by now, probably over $2.5 billion. So Williams is still $2 billion or so in the black.
2) Why is there so much debt? Thirty five years of an equity/bond bull market and federal incentives for borrowing will make even the most risk-averse institution aggressive. In 1998, Williams had $72 million in debt. Increasing that by a factor of 7 can’t possibly lead to trouble, can it? Now, to be fair, as a percentage of the endowment, the increase has only been from 7% to 20%, so only a factor of three increase. And, if Williams had been more levered over the last 17 years, we would be much richer today. And borrowing lots of money to buy houses in Florida was a great strategy from 1998 through 2007. Until it wasn’t. Also, note how federal tax incentives (and loose regulations) encouraged such borrowing, both for speculators in Florida a decade ago and Williams today.
3) Is this too much debt? Tough to say! If we could be certain that the endowment, over the next 10 years, was going to go up by 7% (as it did over the last decade or two), then we ought to borrow billions more, since we only pay a few percent on the debt. (By the way, how much do we pay? Fixed income is confusing.) Most professionals, however, expect returns to be much lower going forward. If the endowment is flat over the next decade, then this debt will prove to have been a major mistake.
Recall these wise words: Leverage is a dangerous thing, for both hedge funds and small liberal arts colleges. It would have been a bad thing for Williams to reduce debt in the depths of the financial crisis a decade ago. Reducing debt now would be prudent.
Perhaps the best news is that the College did not, I think, waste a lot of money on local spending, at least in 2015.
1) I have no objection to the College donating small sums, especially for items like the local ambulance since these “donations” are really “payments” for services rendered. (The ambulance transports many students each year.)
2) I object to large donations. Alumni give to Williams to support Williams. If they wanted to give to other non-profits like the local hospital or MASS MoCA, they would. Again, the best way to understand the actual behavior of Williams is to imagine that it is controlled by a cabal of selfish insiders, intent on devoting the College’s own resources towards their personal use. Classic example of such selfish behavior include giving $1 million to North Adams Regional Hospital, $250,000 to Mount Greylock Regional High School, and $2 million to MASS MoCA.
3) Although some of the individual donations are reasonable, the total of around $250,000 is way too much. That money should be spent on items that directly impact the quality of the undergraduate experience at Williams. For starters, hire some visiting lecturers so that students aren’t kicked out of popular classes like CSCI 135.
We talked a bit about compensation on Day 1. Here are the details for 2015:
Again, the meaning of total compensation in the Form 990 has, I think, changed over the years. The requirements for who should be included has certainly evolved, with more and more employees getting caught up in the reporting net. One needs to be careful about mixing up permanent compensation with one-time payments tied to early retirement. (For example, both Eva Grudin and Michael Brown received large one-time payments associated with their retirements.) All that said:
1) Spending on administrators is out of control. Williams has, over the last 20 years, gone from being a faculty-run college to an administrator-run college. Although Adam Falk continues to talk a good game about “faculty governance,” who do you think has more power at Williams: Steve Klass making $367,000 and talking with the President almost every day or some random (full!) professor making $180,000 and never having shared a meal with Falk?
2) There are 7 people (Reed, Sousa, Puddester, Chilton, Crosby, Klass and Wakeman) whose jobs did not exist at Williams just ten years ago. How did Williams manage to be the #1 liberal arts college without someone doing these jobs? The answer, of course, is that other people (mostly members of the faculty!) did this work a decade ago and they were paid much less for it. The total annual compensation for this group is almost $4 million. Again, the best way to understand the actual behavior of Williams as an institution is to imagine a conspiracy of insiders seeking to maximize their own power and compensation.
3) The need to give one-off payments to encourage retirement is absurd, the fault of out-dated tenure arrangements and the (new) illegality of forced retirement. The best solution is for Williams, going forward, to award tenure as a 30-year (rather than life time) deal. From age 35 to 65, you have the same tenure as Williams professors have always had. But, at age 65, you become an at-will employee, just like the rest of us poor schlubs. Anyone who argues that such a change would materially impact Williams ability to hire high quality junior professors is clueless about the actual state of the academic job market.
Imagine that Williams was run by people whose sole goal was to maximize their own economic well-being. (This is not true! People like Adam Falk, Dukes Love and Denise Buell care a great deal about the welfare of undergraduates and the success of Williams as an institution.) But humor me for a second. Imagine that it were the case, that Williams, like many (most?) older non-profits were to be captured by its employees, its resources diverted to serve their ends rather than those of the institution itself. What would we see? Stuff like this:
Why does the College have to provide housing help to members of the 1%? Steve Klass, a smart and talent fellow, makes over $300,000 per year. Plenty of banks would be happy to lend him money for his (very nice!) house. Of course, if you think of the College has being run by a conspiracy of insiders eager to line their own pockets, this makes perfect sense.
The above demonstrates the mechanism by which College spending spirals out of control. (The exact same process is at work in the ever-increasing CEO pay in US corporations.) First, Falk’s compensation is set by incredibly wealthy individuals. The current members of the Evaluation and Compensation Committee are not listed. (More transparency, please!) But, I think that they are usually/always a subset of the Executive Committee and that group is always (?) only permanent trustees (not elected alumni) and, therefore, dominated by members of the 0.001%. Many billionaires wonder how Falk can survive on $768,000!
Second, compensation is under Falk’s complete control. Why shouldn’t he pay his buddy Fred Puddester the big bucks? Williams is rich and no one (?) congratulates Falk for keeping expenses down. So, why not increase Puddester’s pay from $365,000 to $442,000 over just the last two years? No skin off your nose!
Third, all the usual madness of surveys and consultants has the same effect here as it has in the out-of-control setting of CEO pay. Every NESCAC school thinks that it ought to pay its president, its CFO, its VP of Campus Life at or above the median of all NESCAC schools. Certainly Falk/Puddester/Klass are at least slightly above the median! So, half the NESCAC schools raise salaries this year, and then the other half raise them next year. In the absence of meaningful competition, it is not clear where this process ends . . .
Still, the Trustees are concerned that Adam Falk can’t really get by on almost $800,000, so they also provide:
Now, this is slightly unfair since the President has always gotten a house. (By the way, has Falk moved back in yet?) And arranging a golf membership is fairly common, and probably pre-dates Falk’s hiring.
I will save a my rant about the absurdity of paying-people-extra-to-quit for another day . .
Still, there is no excuse for feather-bedding like the below:
If you think of Williams as being run by a conspiracy of (highly intelligent) self-dealers, then all this makes sense. In fact, the most reasonable prediction is that more administrators will soon have access to these sweetheart deals . .
Form 990 is an IRS requirement filed by all US non-profits. It is a confusing document that has changed significantly over the years. See here for background reading. Williams only provides versions going back to 2009. Future historians will thank us for archiving older versions: 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007 and 2008. In fact, because Williams occasionally hides things that it once made public, let’s go ahead and save the more recent filings: 2009, 2010, 2011, 2012, 2013, 2014 and 2015. Wow! We have been doing this a long time . . .
Is the past another country? From 1998:
Cumulative inflation between 1998 and 2015 has only been 45% so we would expect the total compensation for Adam Falk and Fred Puddester, Payne and Healy’s successors, to be about $397,000 and $244,000 respectively, right? The actual numbers are $768,000 and $442,000. Williams has raised administrator salaries around 90% more than the rate of inflation over the last 17 years.
It has not, however, raised faculty salaries nearly as much. From 1998:
Note that is hard to make an apples-to-apples comparison with today because the highest paid professors in 1998 may be different — in terms of things like years of service or administrative duties — from the highest paid professors in 2015. Indeed, I am not even sure if items like health care and retirement benefits are included (or excluded) in 1998 versus 2015. However, a compensation of $175,000 for, say, Stewart Crampton ’58 is not out-of-line to the 2015 compensation of $231,000 for Bill Lenhart. In fact, that 32% increase is less than the rate of inflation!
The real change that jumps out is the huge increase in highly paid administrators. In 1998, only two non-faculty (Healy and Birrell) made the top 7 in compensation. In 2015, six of the top seven highest paid employees (Wakeman, Crosby, Klass, Puddester, Chilton, Sousa) were non-faculty.
Here (pdf) is a copy of the 1998 letter from President Schapiro to the Senate Finance Committee. Many thanks to the wonderful Mary Detloff for tracking down a copy. We first discussed this document almost nine years ago.
I have praised the Investment Office (and Collette Chilton) for their successes and criticized them for their pay and for the lack of transparency over performance and process. What is left to say? My (forlorn?) hope is that, over the next few years, the College can improve on the dimensions that it ought to improve on. We can be as transparent about our managers as Grinnell and about our benchmark as Amherst. We would then be in a better position to discuss more substantive issues with regard to endowment management. In the meantime, here are some final thoughts:
1) New Chief Communications Officer Jim Reische was kind enough to investigate whether or not the College’s policy with regard to transparency in the calculation of the performance of the benchmark portfolio has changed. It hasn’t. Thanks to Jim for asking!
2) Unless others object, I will probably make this series an annual lecture, a topic worth revisiting each year. Although we have regular readers at EphBlog who have been with us for more than a decade (Hi Frank!), many of our readers (mainly students and their parents) are new each year, so it makes sense to revisit these important topics, updating them with any changes in College policy.
3) What other topics would readers like to see a similar deep dive into? The latest Common Data Set (pdf) is available. And we haven’t gone through recent Form 990s or the College’s financial statements in a couple of years.
4) Kudos to Managing Director Abigail Wattley ’05 for offering this excellent Winter Study class:
POEC 23 Endowment Investment Management
This class is designed to provide students with an overview of endowment and investment management and is taught by members of the Williams College Investment Office. The Investment Office is responsible for overseeing Williams’ $2.4 billion endowment. Through presentations, discussion, readings, and project work, Winter Study students will gain a better understanding of the various components of an institutional investment portfolio, how it is managed, and how investment managers are selected and monitored. Students will learn about portfolio theory as well as specific asset classes such as global equities, hedge funds, venture capital, buyouts, real estate, and fixed income. Students are expected to attend all on-campus classes (approx. 6 hours/week) and complete a set of relevant readings, a case study exercise, journal entries, and a final project. Students will also be required to complete an introductory excel course.
Does this mean that the Investment Office is no longer offering its usual Winter Study internship? I think that that would be an OK trade-off. Do we have any readers in the class? If I can get permission to share a copy of the syllabus, I will.
We dramatically overpay the folks who work in the Investment Office, primarily Collette Chilton but also Bradford Wakeman. The Record ought to write an article about this. Here are the questions they should ask along with my commentary.
The latest Form 990 (pdf) reports that:
Q: How many people in the Investment Office are eligible for bonuses? What is the formula used to award those bonuses? How much money, if any, in total bonuses was paid out last year? [See here for more background. The College will try to claim that releasing this information would violate the privacy rights of College employees. But note that the questions do not ask for the specific amounts given to named individuals. We just want to know how many and how much in total. Privacy concerns do not prevent Williams from releasing this data.]
Q (for Collette Chilton): If the College decided to stop paying performance bonuses, would you work less hard? Would anyone on your staff? [The College worries that Chilton and other (how many?) investment professionals won’t work hard enough even though Williams is paying them hundreds of thousands of dollars per year. So, in addition to all that guaranteed money, we need to pay them extra bonuses or else they’ll —- what exactly? Spend all day at the movies?]
I think that this is the sleaziest arrangement at Williams today and have been complaining about it for years. How did this happen? Tough to know. I am still trying to get the inside story. My guesses/speculation:
a) Both previous president Morty Schapiro and key trustees were in favor of starting an Investment Office and other steps for turning Williams into Yale.
b) No one worried too much about Chilton’s compensation. The Trustees, of course, see their role as more supervisory. They don’t set salaries. There may have been a head-hunter or compensation consultant involved. Morty, while in theory worried about the College’s overall budget, had no real incentive to pay Chilton less.
Never forget that Morty, for all his many wonderful qualities, is not — How to put this politely? — immune to the siren song of worldly wealth. It is not out of the goodness of his heart that he serves on the board of MMC. It was not an accident that he failed to take a pay-cut, unlike presidents at some other schools, during the budget crisis. It is not irrelevant to him that the Northwestern job pays around twice as much. It was not via random motion that his annual salary increased by hundreds of thousands of dollars during his time at Williams.
So, subconsciously or not, Morty would realize that a proposal to pay the new Chief Investment Officer substantially more money than he was then making would only provide a (dramatic?) upward push to his own compensation.
c) This deal was made in the bubble years. There is no way that Chilton could find a comparable job paying this much money today. Even for 2006 (when Chilton was first hired), the compensation was excessive. Professionals I quizzed felt that someone with Chilton’s resume — modest compared to others in the field — would be somewhere in the $300,000 to $500,000 range.
Collette Chilton’s pay has almost doubled in 6 years. She now makes $1.3 million dollars! Bradford Wakeman’s total compensation has gone from $360,000 to $639,000. And it is not like Wakeman is some sort of financial genius. Recall our discussion from when he was hired:
Consider a presentation by Wakeman to a risk meeting. His content seems sensible enough, but the topic (making a better 401(k) plan for Lucent) has almost nothing to do with running a major endowment.
That’s fine, perhaps Wakeman knows about other stuff as well. But I laughed out loud when reading the last slide.
Outside experts have noted, and applauded the changes Lucent made to its 401(k) plans.
Nobel laureate William Sharpe notes the changes Lucent made to its 401(k) plan: “better aligns their DB and DC plan methodologies.”
James Palermo, Vice Chairman of Mellon Financial Corporation, observed that: “Lucent is on the cutting edge of our client base with respect totreating their 401(k) plan in the same manner as their defined benefit pension plan.”
Stanford Law School Professor and co-founder of Financial Engines, Joseph Grundfest, commented that: “Lucent has made an important step in fiduciary oversight by implementing consistent management practices from plan to plan.”
Fidelity Investments recognized that: “Lucent was early in this initiative.”
Wakeman is quoting a bunch of vendors who sold things to Lucent, for whom Lucent is a customer, people who will say nice things about Lucent even if (especially if!) they think that the people in charge of the Lucent pension fund are the dumbest of the dumb.
And, as best as I can tell, Wakemen is using these quotes without a bullet point of irony. He really thinks (?!) that William Sharpe’s complimentary testimony about Lucent is meaningful information to his audience even though his audience knows that Lucent is paying thousands of dollars to Sharpe’s company: Financial Engines. My hope is that Wakeman is not this clueless, that he showed the slide but made a joke about the reliability of the testimony cited. That, anyway, is the best case scenario.
The Record should do an article about Chilton’s (and Wakeman’s and the entire investment staff’s) compensation. Don’t the editors believe in muckraking anymore? I bet that some of the more left-wing Williams professors would provide good quotes, either on or off the record.
What should be done? The College ought to close the Boston Investment Office. (Read the whole comment thread for details and background.) Most/all of the senior investment professionals (like Chilton) would decline to move to Williamstown. Problem solved, without any nasty firings or salary cuts.
In the meantime, it is hard to take seriously any of the mewlings about the problems of increased income inequality in the US — which is, sadly, a real problem — from our progressives friends on the Williams faculty if they can’t even be bothered to ask questions about the out-of-control salaries/bonuses that Williams itself pays out to some particularly undeserving members of the 1%.
The Investment Report provides no information about the underlying managers. As with yesterday’s example of lousy transparency when it comes to performance measurement and attribution, the College does not measure up to the best practices of its peer group.
Abigail Wattley’s ’05 addressed the topic of manager transparency in a 2015 Record op-ed:
We don’t disclose the list of our fund managers because of agreements we have entered that relate to confidentiality.
Unsophisticated readers might assume that Wattley meant, “Our managers require us to not reveal that we have invested in them, otherwise they would not want to do business with us.” That is, the managers insist on confidentiality and there is nothing the College can do.
This is absurd, at least for 95%+ of the managers the College invests with. If Williams asked them for permission to reveal their name on a list of all its managers, the vast majority of investment managers would say:
1) “Williams is the client! If Williams wants to include us on a list of managers, that is its right. Indeed, many of our investors, especially state pension funds like Texas Teachers, are required by law to reveal all their managers and even our fees!” See below (pdf) for an extract:
Indeed, many (most?) of the College’s managers are publicly identified by at least some of their clients.
2) “We hope that Williams reveals our name (if not our fees and performance)! Having smart, sophisticated endowments invest with us is great advertising! The more people that know that Williams trusts us, the more money we are likely to be able to raise.”
The easiest way to see that Williams could easily make its list of managers public is to take note of other institutions that do so. (Previous discussion here.) Consider Grinnell College’s listing (pdf):
Or how about the listing provided by The Boston Foundation (tBf):
If The Boston Foundation can provide a listing of its managers, then why can’t Williams? Note, also, that these managers are some of the most elite and sought after in the business. Some (Baupost?) are probably even closed to new investors. And yet they have no problem with tBf making their status public.
Should we expect members of the Williams Investment Office (like Wattley) and the Williams trustees to know about the practices of places like The Boston Foundation? Well, in addition to being a similar sized endowment in the same city, The Boston Foundation has a CEO (Paul Grogan ’72) and a board chair (Michael Keating ’62) who are both former trustees at Williams!
Not enough evidence? Consider the comments (via personal correspondence) of Churchill Franklin, CEO of Acadian Asset Management and former chair of the board of trustees at Middlebury.
You are right (as usual) the answer is no we [Acadian] don’t care and are happy to have the advertising. Some fund of funds and outsourced CIOs are reluctant to share the names of the managers they select, because that is their “edge” and their value-add. Huge funds are sometimes reluctant to share the names of their managers if they are trying to protect limited capacity, but the managers are almost always happy to have their names shared.
I could produce similar quotes from Ephs in money management if I thought doing so wasn’t a huge waste of their time.
Is there any way that Wattley isn’t lying? The naive among you might guess that, perhaps, for historical reasons (or because our lawyers are stupid), there are stipulations in every investment contract along the lines of: “Williams agrees to never publicly reveal the name of the investment manager.”
If the College really had “agreements … that relate to confidentiality” and which prevented the College from reporting that its managers included SPO, Summit, William Blair, Charlesbank and so on, then how do I know about these managers?
The cynic in me is afraid that Wattley is purposely trying to mislead the Williams community. She (or her boss Collete Chilton . . . or her boss’s boss) don’t want other Ephs to know who we invest in. Of course, they don’t want to lie too obviously. They just want to string together a bunch of mostly-true-individually but misleading-in-the-aggregate sentences that give everyone the impression that the College’s hands are tied.
And note how the reasoning for this secrecy has changed over time. In the 2009 Annual Report (pdf), the rational for opaqueness was:
Williams doesn’t publish a list of its outside investment managers. Because some of our most successful managers insist on confidentiality, and because the College prefers to treat managers equally, all remain confidential
Compare and contrast this (more honest!) 2009 version with what Wattley wrote in 2015:
We don’t disclose the list of our fund managers because of agreements we have entered that relate to confidentiality.
Now, we pretend that lots (all?) managers have (legal?) agreements protecting their identity. Then, we admitted that some (10? 3? 2?) of our managers insisted and that, only because we felt like it, did we decide not to publish the names of the other managers.
If the Record were a better paper, it would find out the truth. Start by asking for some example language from one of these “agreements” about the required “confidentiality,” perhaps from one of the firms that are already public.
In fact, why not start with Charlesbank! It is perfect. First, it happily allows some of its clients, like The Boston Foundation, to report its involvement. Second, Williams already reports an investment. Third, a (the?) senior member of Charlesbank is Michael Eisenson ’77, chair of the Williams Trustees, and Abigail Wattley’s boss’s boss’s boss.
Here are more questions for the Record to ask:
Q: How many outside managers does the College employ? How many managers are there within each of the endowment categories? What is the largest amount managed by a single manager? [In theory, the College should not mind answering these questions. (I think that there are 50 – 75 outside managers, but I am not sure.) I am fairly certain that what the College does is consistent with best practices. They probably have lots of managers in each category with no one manager being too large. But there is no reason not to share these statistics with the Williams community.]
Q: How much money did Williams pay to all its outside managers last year? [This would be an interesting number to know. How are members of the College community to evaluate the performance of the Investment Office without knowing how much it spends? That spending comes in two components: that spent by the Investment Office directly and that spent to pay the individual managers. (We covered the first category a few years ago.) My guess would be that this number was between $10 and $20 million, but I could easily be wrong. Different investment categories (e.g., corporate bonds versus venture capital) have radically different fee structures. The College may be able to negotiate special rates. And so on. Again, individual managers would not want the College to reveal how much they get paid, less their other investors realize that Williams is getting a better deal. But no outside manager cares if Williams reveals its total spending on managers.]
Q: How many of the outside managers have a direct connection to a Williams Trustee or to any of the members of the “Advisory Committees?” How much did the College pay these managers in aggregate? How did their performance compare to other outside managers employed by Williams? Fiduciary Responsibility 101 argues that Williams must be very careful when the people making decisions about how Williams invests its money benefit from the investments so made. I have no problem with the College making such investments. Indeed, I suspect that such investments turn out better than the average investment, if only because rich alumni would hate to be embarrassed among their rich peers for putting Williams in a sub-par investment. Still, we need to be careful.
The College already collects all this information. The (very smart and experienced!) Ephs on the Advisory Committee — people like Noriko Chen ’89 and Liz Robinson ’90 — already study this data closely, or would if/when Collette Chilton provides it to them.
There is simply no reason why Williams could not share the same information with its alumni/faculty/students. Again, such transparency is uncommon but not unusual, especially for state schools subject to open records laws. Here are details (pdf and pdf) for the University of Texas. Needless to say, there are a lot of details to consider in what to release, how often to release it and so on.
Why doesn’t Williams release this information? Not because anyone is evil, but because bureaucracies (and bureaucrats) are naturally secretive. The more that Collette Chilton and her team know — relative to what you know — the less likely you are to make trouble for them.
The College (and Investment Office) provide little of the necessary information that we would need to evaluate their performance when it comes to the management of the endowment. The Record ought to write an article about this. Start by asking the Administration this question:
Q: The endowment dropped 1.5% last year. It is impossible to understand performance without reference to a benchmark. What does the College use as a benchmark and who calculates its performance? Can you provide us with the details behind this calculation?
The Investment Report refers to an “internal benchmark” and to a “Policy Portfolio Benchmark” (presumably the same thing) but has declined, in the past, to provide any details. That is ridiculous. There is no way for anyone to know if Chilton and her staff are doing a good job if there is not some (public) benchmark to compare their results with. Every mutual fund in the US is required by the SEC to provide performance relative to a well-defined benchmark. Consider this chart from the Annual Report:
This chart is designed to make us cheer: Yeah Williams! Hooray for Collette Chilton! We/she beat the “Policy Portfolio Benchmark” over the last 1, 3, 5 and 10 year horizons. Pay Collette and her team more money! They are geniuses!
But Williams does not provide the necessary details for us to calculate those benchmark returns ourselves. Consider how a peer school does it:
Amherst’s strategic policy benchmark is a weighted average return derived by applying the target strategic portfolio weights of each asset class to the performance of the respective asset class benchmark.
Just so. And because Amherst is a serious and honest organization (!), it provides all the necessary details, e.g.,
Investment professionals might quibble with some of the choices here. But there is no excuse for Williams not to provide the same sorts of data. Instead, we get prose like this:
We need the exact benchmark that William is using to measure the performance of, for example, its global long equity managers. MSCI World, MSCI ACWI, even MSCI EAFE plus the S&P 500, would all be reasonable choices. Nor is Amherst an outlier when it compares to transparency in reporting benchmark performance. Consider Yale:
Again, we can quibble. Is the Wilshire 5,000 really a good benchmark for domestic equities? But that is precisely the discussion we should be having. Williams has no good excuse for not being at least as transparent as peer colleges like Amherst and Yale when it comes to providing the details behind endowment performance calculations.
To be fair to Williams, not every school is as transparent as Amherst and Yale. Dartmouth, for example, does not provide the details (pdf) behind the returns of its Policy Benchmark portfolio. Perhaps our friends at Dartblog have some thoughts?
Let’s begin with the good news. First, the Williams Investment Office, led by CIO Collette Chilton, has done a solid job over the last decade, as EphBlog predicted in 2007.
How competent is Chilton herself? Informed commentary welcome! I have spoken with people who have run money for her and the consensus opinion is that she is a solid professional. She has experience selecting and monitoring investment managers
More importantly, she avoided the temptation of the Harvard model and has not tried to manage any of the money directly. Returns have been solid:
As long as the College’s endowment is somewhere in the middle of the pack when it comes to trailing 10 year returns, alumni should not complain about performance. (We will have many other things to complain about over the next four days.)
Second, the future of the endowment seems assured in that Managing Director Abigail Wattley ’05 will make a wonderful successor to Chilton someday (hopefully) soon. Recall my advice from 10 years ago:
The biggest risk issue in any asset management situation is the option value to the asset manager. Will Chilton take on the appropriate amount of risk, consist with her guidance from Morty and the trustees? I hope so. But doing so might not be in her best financial interest. Imagine, instead, that she “shoots for the moon,” that she levers up the endowment and invests in the riskiest stuff available. If she is lucky, she (and the College) will win big. Then the fawning profiles from the New York Times will roll in and she will have the option of starting her own hedge fund and (trying to) generate serious personal wealth. Heads, she wins.
And, if it’s tails — if those risky bets don’t pay off, if our endowment performs poorly — Williams loses. Chilton, probably, keeps her job. She blames factors beyond her control. And, it will be hard for anyone to know what really happened.
Yale, smartly, hedges this risk by hiring someone like David Swensen, someone whose commitment to the success of the institution is beyond question. Williams could have followed suit, could have selected an Eph Swensen, a younger graduate with finance experience and a deep connection to the College, someone already living in the Williamstown area or eager to move there. Someone committed to Williams for life, and not just until a better job comes along, until the commute to Williamstown becomes too annoying. Such candidates were available. Instead, the College chose Chilton. I hope it works out.
It has worked out. I may have overplayed the risk of Chilton pulling a Meyer. And, certainly, given Meyer’s implosion at Convexity among other changes, there are many fewer opportunities for successful endowment CIOs outside of the CIO market. But there is no doubt that Chilton has done a wonderful job of selecting and then mentoring Wattley, someone who is universally praised by the Investment Committee Ephs I have talked to. Wattley is married to Kevin Kingman ’05 and is as committed to the long term success of Williams as anyone. With luck, she will be managing the endowment for decades to come.
Third, although I would still prefer that the Investment Office were located in Williamstown, Chilton (and Wattley?) have done a great job in involving students and recent graduates in the office via (at least) three mechanisms.
- Full-Time Investment Analyst Program: A two-year position open to graduating seniors
- Summer Analyst Program: Summer positions open to rising juniors and seniors
- Winter Study Program: A winter study class open to sophomores and juniors
I have spoken to Ephs in all three programs, all of which are well-done. (One suggested improvement is that Chilton/Wattley ought to encourage younger Ephs to network more in the Boston financial community.) If Williams (like Middlebury or Smith) were to outsource the management of its endowment to a place like Investure, these programs would not be possible.
See! EphBlog can praise the praiseworthy! Relative to its peers, the Williams Investment Office in general and Collette Chilton specifically is just as competent and professional as, for example, the Wiliams English Department or Career Center. Kudos to Chilton and to the Trustees who selected her. Stand by for four days of (constructive!) criticism starting tomorrow.
EphBlog loves new Williams Provost Dukes Love. Why? Recall our recurrent complaints about transparency with regard to already published College documents, like the Common Data Set reports. Formerly, Williams only provided the reports back to 2011. Now, it provides an archive back to 1998. Well done Provost Love!
But because this era of Perestroika might end, EphBlog has taken the precaution of saving permanent copies: cds_2010-11, cds_2009-10, cds_2008-09, cds_2007-08, cds_2005-06, cds_2006-07, cds_2004-05, cds_2003-04, cds_2002-03, cds_2001-02, cds_2000-01, cds_1999-00 and cds_1998-99.
It is especially nice to see a provost committed to transparency as Williams begins the re-accreditation process. Long time readers will recall that we devoted the month of January 2009 to going through the last re-accredidation report. Alas, we did not save a copy! Is one available somewhere?
UPDATE: A loyal reader points to this archive of material related to accreditation. Thanks! And kudos to Williams for making this material available even a decade later. Anyone interested in following this round of accreditation should study the last round closely.
Interested in SAT score changes at Williams over the last 15 years? Me too! Alas, the College does not make it easy to study these things since they deleted the old Common Data Sets. Fortunately, I saved this link from 1998-1999 (although the link does not work):
and number of first-time, first-year students enrolled in fall 1998 who
submitted national standardized (SAT/ACT) test scores. Does not include
partial test scores. SAt scores are recentered.
submitting SAT scores: 99%
SAT scores: 529
submitting ACT scores: 15%
ACT scores: 80
of first-time, first-year students with scores in each range
Here is the Fall 2014 data from IPEDS:
By the way, does anyone know how to get time series data out of IPEDS?
And here is a relevant table from the 2015-2016 Common Data Set (pdf):
1) I apologize that this is such a mish-mash.
2) It is not clear how comparable these numbers are over time. First, the rise of score choice and/or super scoring has made it easier (and more common) for students to take a test multiple times and only report the best results. Second, students are now more likely to take both the SAT and the ACT and either only report one. (Or, they report both and the College only uses the better in its own reporting.) But ignore those complications for now.
3) Scores have increased meaningfully over the last 15 years. But, given 2), I can’t say whether or not this is because the students have gotten smarter. Opinions from readers?
An anonymous professor provided this Williams grade distribution (pdf) for 2013-2014. Comments:
1) Williams should be more transparent, especially with information like this that is available to hundreds of Ephs. (I believe that all members of the faculty are e-mailed a copy.)
Key question: Has grade inflation at Williams (almost) stopped? Recall this discussion from 8 years ago which quotes a Record article from 2000:
The most frequently given grade in 1999 was an A- and the mean grade hovered just above a B+ at 3.34.
If the average grade since 2000 has only increased from 3.34 to 3.41 then grade inflation, while still a problem, has at least slowed down significantly. The overall average in 2008–2009 was 3.39. Again, the thing I find most embarrassing (and what we need current data about) is the hundreds of A+ grades handed out.
3) The results by Division are consistent with the standard stereotypes.
The most distressing aspect of the differences across Divisions (and across departments) is the bad signals that it sends to students. If a student gets a B+ in an intro Computer Science class but an A in Theatre, she might thing that this means she is “better” at theatre than computer science. Isn’t this one way that Williams guides her on choosing a major that matches her abilities? But, of course, the College is lying to her. She is an average student in computer science and in theatre. Lax grading by the latter is misleading her.
There is much more here. Worth a week to discuss?
In our on-going efforts to make Williams more transparent, here (pdf) is a 2012 presentation on faculty diversity. A representative chart:
1) Graphs in Excel give me a headache! Please use R, like all the cool kids in the Williams statistics major.
2) I think that “US Minority” includes Asian Americans who are, of course, significantly over-represented among Ph.D. recipients and, I think, on the Williams faculty.
3) What is the latest count of Hispanic professors at Williams? Recall our detective work 11 (!) years ago on the magnificent 14. At that time, we though that these were the only Hispanic faculty at Williams:
Gene Bell-Villada (Romance Languages)
Maria Elena Cepeda (Latino Studies)
Ondine Chavoya (Studio Art)
Joe Cruz (Philosophy and Cognitive Science)
Antonia Foias (Anthropology)
Soledad Fox (Romance Languages)
Berta Jottar (Theater)
Manuel Morales (Biology)
Enrique Peacocke-Lopez (Chemistry)
Ileana Perez Vasquez (Music)
Merida Rua (American Studies and Latino Studies)
Cesar Silva (Math)
Armando Vargas (Comparative Literature)
Carmen Whalen (Latino Studies)
Some of those folks have left. Others have joined. What is the current count?
The College can not be trusted to maintain public copies of the reports it has made public in the past. So, the responsibility falls to EphBlog. You are welcome, future historians! Below are the most important reports regarding the failed implementation of Neighborhood Housing. There were two interim reports (part I and II) and two final reports (part I and II). The reports were written by the Neighborhood Review Committee in 2009-2010. We provided extensive discussion back in the day. Perhaps the part that is most relevant is the discussion of sophomore housing.
The best part of the Final Report (pdf) from the Neighborhood Review Committee (NRC) is its praise of sophomore housing.
It is striking to note that just over 70% of the first-year respondents believe that the College should offer sophomores the option of living in designated sophomore housing. … The committee concluded that the sophomore housing option is worthy of further study.
Read the whole thing. As best I can tell, the Committee was pro-sophomore housing but with a non-trivial minority against. Yet the central flaw of the Report in this regard was its complete failure to describe and analyze the history of sophomore housing at Williams, at least since 1990. (Useful references here and here.) Short version: Sophomores decided, on their own, that they wanted to live together in Mission. A large majority of sophomores preferred living in housing that was 90% sophomores. They achieved this goal in the early 1990s by trading their picks. Free agency arrived in 1994 and made the process more simple/fair/transparent.
Recommendation: Allow the sophomores to live together in the Berkshire Quad. The Kane Housing Plan (pdf) provides all the necessary details.
As true today as it was five years ago. The College only took a decade to realize that we were right about neighborhood housing. We knew it would be a failure and it was. How long until they come to see the benefits of sophomore housing and other changes?
It is becoming clearer each day that we can not trust the College to maintain public copies of official documents that it has, in the past, made public. Sad! So, before they disappear forever, here are various historical reports from the Honor and Discipline Committee: Honor and Discilpline Report Fall 2003, Honor and Discipline Report Spring 2004, Honor and DIscipline Report Fall 2004, Honor and Discipline Report Spring 2005, Honor and Discipline Report 2005-2006, Honor and Discipline Report Spring 2007,
Honor and Discipline Report 2007-08 and Honor and Disc Report 2008-09.
A typical example:
A Senior was accused of submitting a paper that included sections of another students’ work as part of a group project. The student admitted to the charge and described particular pressures associated with the assignment that clouded their judgment. The Committee found the student guilty and imposed failure in the course and Disciplinary Probation until graduation.
All hail the Honor and Discipline Committee! They take their job seriously and meet out serious punishment. Although grade inflation has been out of control at Williams for decades, my sense (contrary opinions welcome!) is that the punishment for, say, plagiarism is just as serious now as it was in the 1950s.
Sadly, it is becoming more and more obvious that we can’t trust Williams to make publicly accessible documents that it has made public in the past. The most obvious example involve the Common Data Sets, which used to go back to 1998 but now only go back to 2011. Isn’t that pathetic? (And, yes, I have e-mailed to complain.) So:
1) Below are permanent copies of what I have now, less they disappear in the future.
2) Note how we have copies for 2009/2010 and 2010/2011, but these PDFs don’t exist on the Williams webpage anymore. Isn’t it sad that, if you want to look at these, you have to come to EphBlog?
A key part of transparency (and taking history seriously) is maintaining permanent copies of public Williams documents.
I think the below links used to work, but they don’t now. I hope to investigate this later.
Here is the 2012 Fifth-year Interim Report on Williams, providing an update on issues associated with accreditation NEASC. Lots of good stuff there! Example:
Is the whole document worth a three week review?
1) Williams has removed copies of the Common Data Set from before 2011 from its website. Pathetic! So, because we can’t trust Williams to be honest about its history, we have to start maintaining our own copies: 2011-2012, 2012-1013, 2013-2014, 2014-2015, 2015-2016.
2) Do readers notice any major changes over the last five years? Should we spend a week reviewing these documents? Let us know your preferences!
3) Diversity is always interesting. Compare the first year class 5 years ago:
The biggest change is probably the increase in Asian-Americans and the decrease in whites. (Also, I would not be surprised if many students the “Two or more races” category were at least part Asian. Indeed, I know many mixed-race white/Asian applicants who check the “white” box on the Common Ap because they worry (correctly!) that elite US college discriminate against Asian-Americans. A majority (?) of international students are also Asian by race.
Put it all together and I would wager that 20% of the class of 2018 at Williams is Asian. Hard to believe that that proportion is going anywhere but up over the next few decades . . .
Not that there is anything wrong with that!
1) Should I spend a week dissecting this? Let me know in the comments.
2) If you are the Record reporter assigned to cover this, please be professional by contacting at least one critic of the Investment Office. The last few Record overviews on this topic have been less hard-hitting than the typical high school newspaper.
4) I am probably the Investment Office’s least popular Eph, going back to this (brilliant?) blog post 8 years ago.
5) Collette Chilton (not satisfied with her current $1.3+ million pay check) is looking for a raise! How else to explain this new (I think) line from the report:
In dollar terms, our added value for fiscal year 2015 was over $100 million.
Really? I have my doubts. And it would be pathetic for the Record to fail to determine exactly where this claim comes from.
President Obama on Saturday abandoned his two-year effort to have the government create a system that explicitly rates the quality of the nation’s colleges and universities, a plan that was bitterly opposed by presidents at many of those institutions.
Under the original idea, announced by Mr. Obama with fanfare in 2013, all of the nation’s 7,000 institutions of higher education would have been assigned a ranking by the government, with the aim of publicly shaming low-rated schools that saddle students with high debt and poor earning potential.
Instead, the White House on Saturday unveiled a website that does not attempt to rate schools with any kind of grade, but provides information to prospective students and their parents about annual costs, graduation rates and salaries after graduation.
There is no reason why the Federal Government needs to rate universities. Why would anyone think that the Feds would be particularly good at such an exercise? But only the Feds could have made the student loan and income data so readily available. With that info public, we can watch a thousand ratings systems bloom.
Perhaps some of our data jocks could tell us how Williams stacks up . . .
And, as usual, President Falk agrees with EphBlog!
Officials at many schools said the government had no business competing with college rating services like those offered by U.S. News and World Report. Many chose blunt language to describe what they said was a misguided effort by Mr. Obama and his administration.
Charles L. Flynn Jr., the president of the College of Mount St. Vincent in the Bronx, called the president’s idea “uncharacteristically clueless.” Adam F. Falk, the president of Williams College in Massachusetts, predicted that it would be “oversimplified to the point that it actually misleads.” And Kenneth W. Starr, who is the president of Baylor University in Waco, Tex., and who, as a prosecutor, led the investigations of President Bill Clinton, called it “quite wrongheaded.”
The Eph Brigade of the Vast Right Wing Conspiracy is pleased to see Falk in agreement with Ken Starr . . .
Here pdf are the notes for the February 2015 Faculty Meeting, as distributed the next month. Fascinating stuff! And many thanks to our anonymous source for sharing with us. Comments:
1) The College should make these meeting notes public. Since they are distributed to 350 (?) faculty members, they are mostly public anyway. They also show the College in a good light, demonstrating that Williams is run by smart, thoughtful people who are honestly wrestling with difficult decisions.
2) There is a ton of interesting stuff here! Any readers interested in a section-by-section review?
3) Best part is this requirement concerning the newly created Pass/Fail option:
Third, the CEP (in full agreement with those who raised this issue at the last faculty meeting) has added a five-year sunset clause to the option. This means that after five years – a length that will allow one student cohort to experience the option for a full four years – the CEA will have to bring a proposal for a renewal of the option to the faculty for a discussion and vote. Such a deadline will guarantee that the option is monitored, and that any problems be identified and corrected – if the option is to survive – at that five year point.
Well done! Who are the unnamed faculty members responsible for raising this issue? They deserve kudos! The pass/fail option, like the poorly conceived Gaudino option, is a bad idea. With luck, five years experience will demonstrate that. The proponents should be forced to make their case again, with evidence.
Almost every major change at Williams ought to come with such a sunset clause.
For the benefit of future historians, here is a permanent copy of the Williams Divestment Proposal, produced by the Williams Endowment Initiative, the most impressive Eph political movement in a decade or so. (What other examples would readers cite? Perhaps Stand with Us and Anchors Away?)
Divestment, of any kind, is a bad idea because we should not mix investment policy with political views, lest it generate endless rancor. Why these companies and not others? Investing in a company with oil fields is evil but investing in a company which makes oil rigs is not? Gas companies are verbotten but gun companies are OK? What about companies that do business in Darfur? What about companies pillaging the rain forest? What about private equity firms who make money by buying companies in trouble, laying off thousands of workers, and then reselling them? And on and on and on.
The best way to avoid this trap is not to play. Leave the investment decisions to the investment professionals.
As forwarded to me by a reader:
The tragic occurrence at Rutgers prods some colleges to open roommate selection opportunities.
Gender-neutral housing has been approved by the college following recommendations and discussions last March, 2010. as reported in The Record
The Committee on Undergraduate Life (CUL) and College Council (CC) both advocated gender-neutral housing last fall, following its proposal by the Queer Student Union (QSU). “I think there is a good chance that the NRC would have gone this direction anyway,” said Colin Adams, chair of the CUL and member of the NRC. “But the fact that CUL and CC supported and pushed for gender-neutral housing certainly helped to bring it to the forefront for consideration.”
In a campus-wide e-mail last week, Campus Life also announced that a gender-neutral housing policy has been approved by the College. According to the e-mail, upperclassmen can choose to live in a double with another student regardless the students’ genders, as long as both students agree to the housing arrangement. Gender caps will apply as usual to all dorms. The e-mail clarified that the gender-neutral housing policy is optional and unless students of opposite genders decide to live together, housing placements into doubles will otherwise be based on same-gender placements…
“I’m pleased that the College can go forward with gender neutral housing,” Dean Merrill said. “It’s been an issue that students have been talking about for at least as many years that I’ve been dean. There’s been a lot of student effort, both here, and around the country, and I’m glad that we can be part of a growing number of schools that offer it.”
Professor Heather Williams, chair of the Athletic Committee for 2008-2009, kindly replied to my request to know more about the details of their statistical analysis (pdf).
As chair of the committee, I am responsible for the statistical analyses. The design of the analyses was the responsibility of the committee, and several of us are statistically competent. The analyses themselves were run by the Provost’s office, and although you are certainly free to ask Chris Winters about them, I would imagine that he’ll be referring all questions to me. The report will not describe all of the results in detail, but will provide enough information about how the analyses were set up and the results to let the readers understand exactly what we did.
A quick summary, we ran a number of simple linear models (and logistic regressions, where appropriate to the question) that included a variety of variables that seemed likely to have affects on academic performance: reader rating, gender, class (fr., so., etc.), a proxy for socioeconomic status, and sport category (high/low profile), as well as a number of interaction terms.
I’m sure that, as an economist who is into numerical analyses, you would prefer to have more information, but I wouldn’t be comfortable about giving any additional details beyond this summary of how the analyses were done. The more details we give, the more people want to know, and it’s important not to make it possible for anyone (including us) to gain too much information about individual athletes.
Perfectly reasonable! I still think that the Committee ought to share the regression results (which are available in an Appendix on file in the office of the Dean of the Faculty) with the entire community, but this is a minor quibble. The Report is high quality and represents the best of the Williams tradition of faculty governance and transparency. Kudos to all involved!
For those interested, below is the e-mail that I sent to Professor Williams.
To the Williams Community,
That loud cracking sound you may have heard over the weekend marked a longed-for thaw of the freeze on major campus construction.
Encouraged by the great educational opportunities afforded by the proposed new Sawyer Library, by the readiness of the construction plans, and by generous pledges in recent months that bring total philanthropic support for the new library to more than half of its $80 million cost, the Board of Trustees has approved my recommendation that work on the new Sawyer begin at the start of the construction season this spring.
Part of the larger Stetson-Sawyer Project, which included Hollander and Schapiro Halls, the library was put on hold when the global financial crisis hit two years ago. We will now be able to provide for the arts, humanities, and social sciences the kinds of wonderfully effective teaching and learning spaces that Schow Library affords the sciences and math. Drawings and floor plans for the project can be viewed at http://library.williams.edu/newlibrary/floor-plans.php .
The schedule anticipates opening the new Sawyer Library, to be attached to a renovated Stetson Hall, in 2014. This will be followed by the razing of the current library building and the construction in its place of a new green space that will connect Stetson/Sawyer with the Paresky Center and the Frosh Quad.
Our thanks go to the many people, led for years by Professor of Anthropology Michael Brown and College Librarian Dave Pilachowski, whose meticulous work produced such an exciting project, and to the faculty, staff, and students who have patiently endured a postponement that had been of indefinite length until this moment. And, of course, the deep gratitude of us all goes to our donors, a number of whom wish to remain anonymous at this time, for their great generosity and for their commitment to this project and this college.
The other project postponed by the recession has been the renovation of Weston Field, which is now being thoroughly reexamined to ensure that it meets the College’s needs. We’ll report more on the details of that process as they become clear.
I can’t tell you how deeply delighted I am to have on track a project as important to Williams as construction of the new Sawyer Library.
Big kudos to President Adam Falk for fulfilling his promise of greater transparency at Williams by posting the College’s Form 990!
1) Thanks to whichever college officials (names?) were involved in this decision. The more transparent Williams is, the more likely we are to be the #1 liberal arts college in the world 50 years from now. (Special thanks, also, to Jim Kolesar for alerting us to the new policy.)
2) Thanks to fellow EphBlogger John Wilson ’64, who has been leading the charge on this topic for several years. This seems to be a clear case in which EphBlog has changed something about Williams. As far as I know (counter examples welcome), Williams is the only elite school which posts it From 990. If it were not for EphBlog’s agitation, I doubt this would have happened. Yeah, EphBlog!
3) Instead of just providing the most recent year, Williams ought to provide all easily accessible years. I originally stored this in Willipedia, but, now, the most accurate listing is at EphBlog, thanks to John’s efforts. Williams ought to add these past filings to the Controller webpage in the same way that it provides historical financial statements.
4) Interested in a two week seminar on the latest Form 990? Me too! But I sure wish that someone else would take the lead on that . . .
To put it simply, I believe a closer analysis of the Neighborhood Review Committee reports will give a lot of insight into the recent actions the College has taken.
First, let’s examine the claim that “The 2009 survey data on Neighborhood housing make clear that students are dissatisfied.” That is from the Interim Report of the Neighborhood Review Committee, October 2009 . This report described what the NRC found in May 2009 when they surveyed the student population. First of all, only 30% of the on-campus student body took the survey. That is not a lot. The report also says that more info was taken from past surveys, etc.
The Final Report of the Neighborhood Review Committee Part Two, April 27, 2010, notes that “[student surveys] added nuance to the most vocal complaints [about the neighborhood system]: some student dissatisfaction could be attributed to factors other than the neighborhood system and a substantial proportion of students believed the overall goals of the system were worthy” (1) .
The report continues, “Indeed, during the public forums of the fall, the NRC did not hear as much public criticism about the Neighborhood system as some of us imagined we would hear.
The comparative lack of criticism this academic year does not necessarily mean that the dissatisfaction had gone away or that many students were suddenly pleased with the Neighborhood system as a whole or with their individual Neighborhood. But it does suggest that what had been identified as dissatisfaction with the Neighborhoods was a complicated phenomenon” (1) .
Let’s take a closer look at the data to get a better understanding of these nuances. The class of 2009 was the last class to be under both the free-agency system and the neighborhood system, even though they were only in free-agency for their freshmen year. (Keep in mind that this is only the 5th year the neighborhood system has been around. It was instituted 2006-2007 .) They got the worst of both worlds–the un-unified freshmen experience and the lack of choice from the neighborhood system. At the time, they were randomly assigned neighborhoods, and penalized for trying to switch.
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