College finances hold up, for now

Author: Derek Schlickeisen

While the ongoing economic crisis has already cost the College 20 percent of its endowment this fiscal year alone, administrators may take a certain measure of comfort from the fact that Middlebury is weathering the current financial storm comparatively well.

That was the message that Investure, the private firm which manages the College's portfolio, had for the Board of Trustees at the group's traditional February meeting this weekend. Despite falling to $684 million - a far cry from its June 2007 high of $936 million - Middlebury's endowment has out-performed that of almost every other NESCAC school since the stock market began its precipitous decline late this summer.

The picture will likely get worse before it gets better: losses in hard-to-value assets such as private equity have not yet been reported, and Middlebury (along with other colleges) is bracing for worse financial
reports in the future. Middlebury's losses, according to Chief Financial Officer Patrick Norton, will likely reach 25 percent in the final tally.

"The markets have been a disaster, and it's painful to watch hundreds of millions of dollars just disappear," said President of the College Ronald D. Liebowitz. "But we aren't having to take the dire steps that
some other schools are."

With the elimination of 100 staff positions through attrition, need-blind admissions for international applicants and the MiddView orientation program, the College has been digging deep to make up an anticipated $20 million deficit over the next two years. Liebowitz noted, however, that these measures have helped stave off cuts to other areas which he described as "untouchable" - the College's nine-to-one ratio of students to faculty and a need-blind admissions policy for applicants
within the United States (albeit one that will require a modestly larger family contribution once students are accepted).

While Middlebury's commitment to maintaining its need-blind admissions program is in line with the rest of the NESCAC colleges and other "peer" schools, the College's maintenance of its student-faculty ratio makes it one of only a
few: Wesleyan University plans to generate $3.9 million in new revenue by adding 120 students over four years, while Amherst will add 100 students over the same period and Bowdoin will add 50 students over five years.

The College has also avoided direct layoffs
of faculty and staff, opting instead to eliminate positions through attrition and incentives for early retirement. Dartmouth College, meanwhile, laid off 60 employees at the outset of February in addition to the 100 positions it will shed through attrition. The picture is even more grim at Harvard University, where - despite boasting the largest endowment in higher
education - fully 10 percent of the school's workforce of 16,400 will be laid off after an endowment loss of $8 billion since the summer.

Participants at last weekend's meeting
credited the College's comparatively strong
endowment performance to Middlebury's relationship with Investure, a boutique firm that works only with 10 non-profit clients. Based in Charlottesville, Va., Investure is known in the non-profit community for working closely with clients whose endowments are not large enough to justify an on-campus investment office.

"We are being just as well served as if they were on campus," said Rick Fritz '68, chairman of the Board of Trustees.

Fritz also stressed that, aside from working to close the College's budget deficit, the goal this weekend was to continue to maintain transparency within the Middlebury community as the financial crisis continues.

"We were early and methodical in our
communications, and President Liebowitz
has insisted on ownership and transparency
throughout the process," said Fritz. "I believe that some of the other schools have caught up, but not with the level of community involvement and meetings that we've had."

Transparency has consisted both of community-wide emails, such as one from the Office of the President on Jan. 29 outlining the Budget Oversight Committee's recommended cuts, and open meetings with students and staff in which Liebowitz has fielded questions from attendees.

The College's open approach to its budget
woes has earned it both praise and criticism, as evidenced in a Feb. 4 Higher Education article focused on student financial aid. While Middlebury was the first elite private college to announce modest changes to its financial aid packages (a $100 increase in the required
family contribution and a $50 increase in the work-study component for students receiving aid), the article quotes anonymous sources from other colleges speculating that it will not be the last.

"Some experts are surprised and a bit concerned by Middlebury's approach," the article reads. Others, however, said that such adjustments are probably inevitable for those schools, like Middlebury, that are wealthy compared to most of higher education, but don't have Harvard's billions. And some others speculated
that Middlebury may just be being more honest than other institutions that face similar pressures."