Vt. colleges' endowments show signs of recovery
Toolbox
By JOSH O'GORMAN Staff Writer - Published: January 31, 2010
One year after the recession decimated the endowments of colleges and universities in Vermont and across the country, many schools are seeing their endowments rebound.
The Commonfund Institute and the National Association of College and University Business Partners (NACUBO) on Thursday released results of their joint study that shows higher education endowments declined an average of 18.7 percent between July 1, 2008, and June 30, 2009. The study surveyed 842 U.S. institutions of higher learning.
The University of Vermont's endowment decreased 19 percent or $65.4 million. St. Michael's College in Colchester lost 24.5 percent or $17.9 million. The College of St. Joseph in Rutland lost $203,000, or 7.2 percent of its endowment. The biggest loss by a Vermont school, according to the survey, was Middlebury College, which lost 21 percent, or $185.7 million, of its endowment.
"In an 18-month period, we had a decline of about 33 percent," said Patrick Norton, Middlebury's chief financial officer, which relies on its endowment for 22 percent of its operating budget. In response, the college took a number of cost-cutting steps, including a two-year salary freeze for employees making more than $50,000, and an early retirement program that eliminated 100 positions, about 10 percent of the staff, Norton said.
However, Middlebury's endowment, like others, is beginning to rebound. While still short of its October 2007 peak, as of Dec. 31 the endowment stood at $792 million, up more than $100 million from a low of $684 million at this time last year.
Other institutions are also faring well, including the University of Vermont, whose endowment rose 22.5 percent during the 2009 calendar year, said Richard Cate, vice president for finance and administration. UVM's endowment dropped from a high of $352 million in October 2007 to a low of $242 million in December 2008.
Only 1.5 percent of UVM's operating budget comes from its endowment, according to Cate. Cate said the school's operating budget was affected more by losses in short-term cash investments than its declining endowment.
Things are looking bright for Champlain College, said David Provost, senior vice president of finance and administration.
"The last six months have been good for the endowment," Provost said. "As of Dec. 31, we've recouped all of the losses we suffered in 2007 and 2008 and are now positive."
Many schools use their endowments for financial aid. Even as endowments declined, however, they were able to avoid cuts to aid to students, and, in fact, some schools increased it.
At one point, Marlboro College lost 22 percent of its endowment, which peaked at $32 million, said spokesman Chris Lenois. However, the endowment is now at 93 percent of its peak and the school – which dedicates one-quarter of its operating budget to financial aid – increased its financial aid by 1.2 percent in 2009.
Bennington College also increased aid to $12 million, from $11 million the previous year, said David Rees, senior adviser to the president. The endowment now stands at just under $12 million, up from a low of $9.6 million but still below its peak of $13 million.
So how did Bennington College fill the gap?
"Fundraising, fundraising fundraising," Rees said. "We have an incredibly generous alumni population and our appeal to them was answered generously."
The college also made cuts, Rees said, including closing the early childhood center and a salary freeze for employees making more than $35,000.
Other schools cut their financial aid. Castleton State College was among them, said Dean of Administration Bill Allen.
"The initial understanding was that we would not offer as many scholarships," said Allen, whose school had given out about $100,000 in scholarships, but is providing less this year. "If a scholarship was typically $1,500, this year it would be $400."
Many schools took the recession as an opportunity to streamline operations. The New England Culinary Institute in Montpelier is a for-profit school and does not maintain an endowment, but enrollment declined 15 percent in 2009, said President Robert Myers.
"We used the occasion of the recession to firm up our business practices," said Myers, who expects a large incoming class this summer.
Middlebury College has no plans to restore its staff to prerecession levels, said Norton.
"I think everyone shared in the sacrifice," Norton said. "Our endowment continues to improve, but not at the rate we'd like." Middlebury had projected its endowment would now be worth $1.1 billion, instead of $792 million.
Still, many colleges have dealt with the ups and downs of the market, and last year's recession was not the first economic crisis they've faced and it won't be the last.
"Bennington College was started in 1932 during the worst economic times in history," said Rees. "We're a plucky institution and we'll weather this storm."
josh.ogorman@rutlandherald.com
98