Q: How is the college doing financially in this economy?
A: The college’s financial position, in terms of its balance sheet, is quite strong. We have only a modest amount of debt, and it is at fixed interest rates.
Q: How has the college’s endowment been affected by the recent economy?
A: The value of our endowment has continued to decrease, reflecting declines in virtually all markets and asset classes. At January 31, 2009, the value was estimated at $50.3 million, down about 29 percent from the prior year. Our Investment Committee continues to monitor the endowment, carefully managing its allocation to various asset classes and investment managers. It is well-diversified and prudently managed.
Q: What impact has the diminished endowment had on normal operations?
A: We are less dependent on endowment earnings than are many other institutions – less than 4% of our revenues come from the endowment.. Because of this limited reliance on the endowment for operating revenues, the decline in the endowment has a relatively small impact on the overall budget.
Q: Has the economy affected the college’s ability to meet its operating expenses?
A: Our cash position is strong and we project having sufficient cash through the end of this fiscal year (June 30, 2009) to meet all obligations. We have not borrowed on our line of credit, nor do we expect to do so through the end of the fiscal year.
Q: What is the college’s most immediate financial concern?
A; The principal risk for Saint Michael’s College would be a sudden and unanticipated decline in enrollment and/or a significant increase in the tuition discount rate.
Q: Are fewer students applying to Saint Michael’s in this economy?
A: As anticipated, applications are down from last year. Acceptances are up, however, as we strive to attract the most qualified students early in the process. With the direct help of faculty and current students, our admissions staff is intensifying efforts to provide a unique personal connection to Saint Michael’s as each prospective student makes his or her school selection.
Q: Given the state of the economy and wide reports of cost-cutting measures at many U.S. colleges, does Saint Michael’s have contingency plans to deal with the possibility of declines in enrollment and revenue?
A: Yes. As we develop the FY 2010 budget, there is no specific, objective indication that we should deviate from our Financial Plan. However, the news from Vermont institutions and throughout the country indicates that trouble could lie ahead. So, out of prudence, we are developing contingency plans that we could implement if necessary. Our current financial situation is manageable, and we are planning for and responding to additional information and market signals. While grateful for our financial stability relative to many colleges, we are not complacent.
Q: Might we see the sort of layoffs that many other colleges have found necessary?
A: Our intentions and efforts are focused on keeping our community –employees and students – together during what will surely be a difficult, albeit transient, economic period. The trustees and administration are committed to this priority, believing that continuing to offer students and families a college experience of undiminished quality is the best way to retain and attract the numbers and quality of students that will enhance both our academics and financial health. Should we experience a dramatic unanticipated decline in enrollment, layoffs would, of necessity, be among the responses, but only after other cost-cutting measures had been implemented. .
Q: How will the economic downturn affect financial aid?
A: Since we believe we have a responsibility to families to do everything we can to lessen the impact of college costs on already stressed budgets, we will maintain our financial aid commitments and do all we can to see that any savings we can find in the budget are available for additional aid.
Q: Will families have a significantly harder time getting college loans in this economy?
A: The primary source of credit for many of our students and their families is the Vermont Student Assistance Corporation (VSAC), one of the very few state loan organizations that have been able to maintain lending levels through this credit crunch. VSAC has already secured the resources needed to ensure that loan funds will be available to families (from Vermont and other states as well) in the next academic year.
Q: I’ve seen news stories about “Commonfund” and how its status has impacted college budgets. What is Commonfund? Is Saint Michael’s invested in or otherwise affected by it?
A: Commonfund offers colleges and other non-profits a way to manage their operating cash through a pooled approach designed to increase returns. Saint Michael’s is among about 900 colleges and universities that invested cash in the Commonfund Short-Term Fund, which managed nearly $10 billion. Schools use the fund for short-term investments of cash, such as fall and spring semester tuition payments. In late September 2008, Wachovia Bank resigned as the fund’s trustee and terminated the fund. At that time, the fund was “frozen” and redemptions were limited. The College had approximately $3.6 million in the fund at that time. Cash from the fund has been distributed in an equitable and orderly fashion over the past six months and we now have less than $800,000 remaining in the fund. We will continue to take cash from this account as the underlying assets mature, though we expect that the pace of redemptions is likely to slow because of the longer terms of those assets.
Q: Will the downturn affect completion of the new Pomerleau Alumni Center?
A: The funding for the Pomerleau Alumni Center has been received from the donors and will be used as construction proceeds, so there is no risk that the College will need to cease construction or provide funds from operations.
Q: Will the college still be willing to spend money in this economic climate to make improvements to the academic programs?
A: Yes. As Saint Michael’s President John J. Neuhauser told an open assembly with faculty and staff in December, “we don’t want to stop doing things that will benefit us strategically.”
Q: Is Saint Michael’s freezing salaries or positions?
A: Yes. For the next fiscal year, which begins July 1, 2009, the College has announced that there will be no salary increases. This step was taken to help meet the objectives of minimizing the increase in the cost of attending Saint Michael's College and keeping our community together.