October 18, 2008
To the Williams Community,
As you would expect, much of our just-ended meeting of the Board of Trustees focused on current economic uncertainties and how they might affect the College and its members.
Recent swings in financial markets have been dramatic and no one knows how long it’ll take them to settle. Some things are clear, though. One is that well-endowed institutions like Williams are in a relatively strong position. Among the benefits of a healthy endowment is that it helps us weather difficult economic times. We’re fortunate that Williams leaders over the decades have been careful stewards of the endowment — growing it with reasonable risk and saving money when economic times were good. We benefit, too, from having such strong support from alumni, parents, and friends.
It’s also clear, however, that, despite our relatively strong position, our situation has changed. The College’s three main sources of revenue are endowment income, gifts, and student charges. When setting the College’s annual budgets, we project that the endowment will return over the long term at an annual rate of eight percent. In the last fiscal year, though, its return was minus one percent and since June 30 all world markets have dropped precipitously further. While we haven’t yet seen a substantial effect on giving to the College, it’s reasonable to expect that global economic uncertainty will dampen it for some time. Finally, as unemployment rises, some of our families will find it harder to pay student charges.
Also clear are the institutional values we must use in planning how to weather this storm. Our first priority will be to protect current and future Williams families. We’ll maintain our financial aid programs and extend help to those whose changed circumstances reduce their ability to pay. Second, we’ll remain committed to current faculty and staff. We foresee no layoffs and we understand the importance to Williams of competitive standards of compensation. However, spending at current levels in the face of reduced income would be irresponsible. We need to protect the endowment so that the students of the future can experience the same quality of education as the students of today.
With this background and with these principles as guides, here are the steps the College has decided to take:
- Postpone for a year the renovation of Weston Field and the remainder of the Stetson-Sawyer project. This will preserve capital, put off additional debt interest payments, and provide time to better understand the depth and breadth of the economic downturn.
- Reduce spending on other facilities renewal by around $3 million. We have very little deferred maintenance, so pushing some of this work off to the future makes sense when times are tight.
- Not fill newly open positions except those deemed most essential. The Committee on Appointments and Promotions will review faculty searches that had previously been authorized. As new faculty openings occur, the CAP will determine which few, if any, should be filled immediately. Likewise for staff openings such recommendations will be made to Senior Staff by the Human Resources Office and Provost’s Office working together. How long these positions remain open will depend on the time it takes for the College’s revenue to stabilize. That’s likely to be many months and in the case of some positions it could be years before we’ll be confident enough to fill them.
You’ll notice that these steps are less like switches that are either on or off, and are more like dials that can be adjusted as the economic situation changes.
In addition, in the weeks to come there will be many discussions among all parts of the College to focus on other steps we can take. One possible example would be increasing the size of each entering class by a modest amount. We’ll also need to find other ways to control spending this year and going forward and will use current governance and administrative structures to solicit ideas from faculty, staff, and students.
We’ll need to be creative in devising these plans and thoughtful about how they affect individuals. In particular, we’ll need to be sensitive to those among us who may be most directly hit by changes in the economy. I hope we’ll all be especially aware of how students are affected by changes in their families’ circumstances and be prepared to offer support.
Given the resources at our disposal and the intelligence and goodwill of the College community, I am confident that we’ll be able to manage our ride through this turbulence in a way that’s true to our institutional values and that will position Williams to emerge from the other side as strong as ever.
Regards,
M. Schapiro
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