Memo to the Saint Michael's Community

TO:     The Saint Michael's College Community                  

FROM:     Nancy Rowden Brock, VP, Finance and Treasurer

DATE:     March 2, 2009

RE:     Saint Michael’s and the Current Economic Climate – Volume 3

It has been about four months since my last update commenting on the College’s financial picture, so as we approach the mid-point of this semester, I’d like to provide an update.

Enrollment, Revenue and Financial Aid – Spring 2009

  • For Saint Michael’s, enrollment drives revenue – we do not rely on endowment earnings or other sources of income to a great degree to cover our expenses.  That is why we monitor so closely the number of admissions and returning students each semester.  Because Spring ’09 is the first full semester since the economic downturn took hold, we were especially concerned that there might be a decline in returning students. 
     
  • I am happy to report that enrollment held up well this semester.  In fact, we have a few more undergraduate students than we budgeted for, and are down only slightly in numbers from a year ago.

  • Financial aid, the second largest component of the College’s budget after compensation (i.e., salaries and benefits) is awarded on the basis of financial need and academic merit.  The College generally provides the same amount of aid to a student every year during his /her Saint Michael’s career.  With the disturbing economic news, we were concerned that there would be many requests this semester to reconsider financial aid awards as families’ financial circumstances change.  Those requests have been relatively few, and we have been able to provide financial relief equitably, consistent with our usual need analysis.

Cash and Investments

  • Our cash position is strong and we project having sufficient cash through the end of this fiscal year.  We have not borrowed on our line of credit, nor do we expect to do so through the end of the fiscal year.

  • Redemptions from the Commonfund Short-Term Fund have proceeded as anticipated.  We have redeemed $2.8 million, or 77%, since late September and our account balance is now $800,000.  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.

  • 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% from the prior year.  It is of some modest consolation that this decline compares favorably with several indices, such as the MSCI World Index (down 41%), the S&P 500 (down 39%) or the Russell 2000 (down 37%).  Our Investment Committee continues to monitor the endowment, carefully managing its allocation to various asset classes and investment managers.

Eyes on the Horizon

Fall 2009 enrollment is a focus of considerable attention.  The retention of students for Spring 2009 is heartening, and we are monitoring a number of key indicators that we believe will help us to anticipate trends and make adjustments as we plan for the next fiscal year.       

  • Admissions of first year students - 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.  Our Admissions professionals, selected current students, faculty and staff are especially focused on providing a unique, personal connection to Saint Michael's as each prospective student makes his/her school selection.

  • Returning students – a number of dates provide opportunities to gauge Fall enrollment trends

    • Room deposit – ongoing; currently no sign of unusually large decline in returning students
    • Room draw –  March
    • Fall class registration – April 24

Financial Planning, Budgets and Contingencies

At their December meeting, the Trustees approved the FY 2010 Financial Plan, which President Neuhauser has discussed in communications with the Community.  We have begun the process of translating this high-level plan into a department-by-department line-item budget. 

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 of higher education and colleges and universities throughout the country indicates that trouble could lie ahead.  So, out of prudence, we are developing contingency plans that we could implement if necessary.  A number of you have provided thoughtful ideas for consideration as part of this exercise – thank you for these.

While none of us can predict what will happen, nor make promises about the future, I again assure you that our current financial situation is manageable and we are planning for and responding to additional information and market signals.  Given the seemingly continuous negative economic news, we find ourselves in a relatively stable, safe harbor.  We are grateful, but not complacent.