Saint Michael's College and the economic crisis
November 21, 2008
Dear Parents and Friends:
Each day, new articles appear in the press about the plight of higher education in America. One reads of fairly drastic actions being taken by some of the wealthiest institutions, which may cause many of you to wonder about the situation here in Colchester, Vermont.
Much of the trouble in higher education arises from two principal concerns. First, with a precipitous decline in the value of endowments, many institutions that rely on investment earnings to support a significant portion of their operating budgets will see the need for immediate retrenchment. Second, credit markets have tightened to an extraordinary degree, which calls into question the availability of loans for students and families who need these funds to partially pay for college costs
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Three important points that particularly apply to Saint Michael's College deserve mention.
One, we are less dependent on endowment earnings than many other institutions. Since we have budgeted the use of these earnings quite conservatively, we will only experience a modest reduction in funds available to us from this source in the next fiscal year.
Two, 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 has 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 in the next academic year.
Three, the College’s financial position is quite strong. We have only a modest amount of debt, and it is at fixed interest rates. Further, we do not contemplate any significant capital expenditures other than those funded by restricted contributions.
Some time ago, we embarked on a serious budget-planning process for these very difficult times. It is based on three core beliefs:
- Our students must have a full range of class offerings and majors available, so they can continue to proceed normally with their course of study. We expect no disruption whatsoever in the capacity of students to enroll in courses of their choosing, nor any delay in their ability to complete degrees in a timely fashion.
- We want to prudently control expenses in all budget lines in order to contain next year’s tuition increase. 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 will do all that we can to see that any savings we can find in the budget are available for additional aid.
- We intend to keep our community—including all employees and students—together during what will surely be a difficult, albeit transient, economic period.
The Board of Trustees affirmed their support of these objectives at their meeting in October and will review details of the financial plan in the months ahead. The Investment Subcommittee of the Board has worked tirelessly to assure that our endowment assets are managed prudently and that the College is not overly dependent on them for operating expenses.
These are challenging times, but we expect Saint Michael's to weather them well. The College has been managed very carefully for some time, and we will continue to be good stewards of the institution for our students and the entire community. Not only will Saint Michael's emerge healthy from this economic decline, but we have every reason to believe that careful planning will put us in an even stronger position in the future.
Despite all, this is the season to give thanks for our many blessings. Thus, we thank you for entrusting your students to Saint Michael's and for your continued support of and involvement in their education and the life of the College. We pledge to ensure that the excellent experience students receive here remains unchanged, preparing them for lives of personal and professional success, and always ready to make the world a better place for all of us.
Yours sincerely,
John J. Neuhauser
President
Saint Michael’s College