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Wednesday, December 10, 2008
Swarthmore College endowment down $400M; budget cuts loom

Swarthmore College's endowment is down by $400 million, to around $1 billion, and it joins the University of Pennsylvania in slowing hiring and other expenses. Excerpts from an email from Swarthmore College President Alfred Bloom (who plans to retire soon) today:

"As you are all aware our nation and world are facing the most dramatic decline in financial assets in recent times. Unfortunately the College has not been immune from the effects of this decline.

"Swarthmore has benefited from a continuing tradition of generous philanthropy and has over the years enjoyed exceptional investment success. The College has held prudently to a conservative spending rate on its endowment during years of excellent return so that it would be well positioned in years of disappointing performance. It has also maintained a 15% allocation of the endowment to U.S. Treasury securities to support the budget and to avoid having to sell equities during periods of market weakness. This history and these measures have placed the College in a relatively strong position today.

Nevertheless, the almost 30% decline in the endowment from its June 30 value of $1.4 billion has been much steeper than anyone anticipated. If the endowment remains at its current level or declines further and we continue to spend at our current level, we would soon start to erode the financial foundation of the College's future. Moreover, until a turnaround takes place we can expect a reduction in philanthropic support and an increase in the cost of meeting the demonstrated financial need of our students. These conditions, coupled with the distinct possibility of a protracted recession ahead and uncertainty over when an eventual financial turnaround may take place, make it essential to plan for, and move prudently toward, a significantly more constrained budgetary environment.

"This past weekend the Board of Managers discussed the situation fully... Effective immediately, the College will pull back from all non-essential construction work, refrain from initiating any new programs, and stringently evaluate any faculty or staff hiring...We will develop a contingency plan for more significant reductions in the budget." But financial aid for this year and next stays in place.

Posted by Joseph N. DiStefano @ 3:14 PM  Permalink | 8 comments
Comments   
Comment removed.
Posted 04:12 PM, 12/10/2008
Blackswan
Good. I will never donate to a bloated college system that is subsidized by the government allowing wasteful budgets and $40K -$50K tuition bills. Many of these institutions should fail if they don't change.
Posted 04:31 PM, 12/10/2008
Mark55
1 billion is not enough? I have never, and will never, donate to any college.
Posted 04:42 PM, 12/10/2008
tdoc
Yeah, im with you guys! Cry me a river...Ha.. I'd say they should have their business professors look into this, but then i think of the old addage..."those who cant do, teach".
Posted 04:44 PM, 12/10/2008
slamber1
The endowment pays for financial aid for poor kids like i was :P I would not have been able to attend college (this one or anyehere else) if I didn't have a scholarship for tution.
Posted 04:58 PM, 12/10/2008
DonQ
What's the idea of refusing to help educational institutions? If you think higher education is not that important, you are either ignorant or very much out of touch with reality.
Posted 05:16 PM, 12/10/2008
EVA9601
Just goes to show everyone is hurting, but really, these inflated tuitions need to be looked at too, they're causing a lot of debt for students. Are the educations really that superior??
Posted 10:17 PM, 12/10/2008
sniperfiredup
A simple cell phone call to alum, Jerry Kohlberg of KKR could make them whole.
8 comments
About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column, which is printed in the business pages of The Philadelphia Inquirer every Sunday, Tuesday, Wednesday, Thursday and Friday. Joe has worked at the Inquirer, mostly, since 1988. He has also written for Bloomberg and Gannett, authored the book Comcasted, majored in economics at Penn, and fathered six children. Reach Joe at 215-854-5194 and JoeD@phillynews.com

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