President Adams on Colby and the Economy

I think the parents of current students and the parents of prospective students can be reasonably reassured about a couple of things. First of all, I think we have the capacity, right now and indefinitely into the future, to continue to offer the core educational program of the College in a way that will not appear to be terribly different from what we’ve been able to do in the past. So, in terms of the really fundamental programs and the teaching and learning mission of the institution, I think parents and students are going to be seeing very much what they have seen in the past. What’s going to be different is our operating budget is going to be significantly constrained in the coming years—again, in a way that I think leaves the core program unaffected but which may change some of things we do and some of the ways we do them in the coming years. I think they can also be assured, or reassured, that the College is working very, very hard to understand how to preserve our core commitments, to be responsible fiduciary agents in this tough time, and to lead the College as carefully as we can—but all the while remembering that we are trying to protect the fundamental experience of students and the educational program that is the most important thing to them and to us in their time here.

Current and prospective students and parents should be reassured on this matter as well in the following ways. One, we are very attentive to the pressures that are on students and parents financially because of this financial crisis that we are all experiencing, so we are going to be reserved and careful with respect to the comprehensive fee for next year and I predict for a number of years coming and mindful of the financial pressures they are experiencing. The second thing we are going to do with respect to affordability and access is do our very best to maintain the no-loan financial aid initiative that Colby initiated last year and that puts us among a very small number of institutions that are not packaging loans in their financial aid awards. So, our financial aid awards are going to stay relatively the same with respect to the comprehensive fee. They are going to continue to include the no-loan initiative. That is to say we will not be requiring loans with regard to financial aid packages, and we are going to be very careful with respect to the comprehensive fee.

We are going to do our very best to maintain that program. It was a very big step for the College. It was one that I think for all of who care about aid—and I think it’s one of the things we care about the very most—was very exciting and, I think, gave us a lot of satisfaction. It does put additional financial pressure on us and at a time when that pressure, obviously, is difficult to deal with. But, it is one of the highest priorities of the College. So, for next year, again, preliminarily, we believe we can maintain that program and we are going to do everything we can to maintain it in future years as well.

Well, the endowment presents two immediate challenges to us—and also opportunities, I guess I would say. The challenges are, as everybody knows, the market value of our investments has declined significantly, in the range that is being publicly discussed at many other institutions—25 to 30 percent, roughly—and that, of course, constrains us financially, materially, in subsequent budget years because our spending is based upon an average of the endowment’s market value over time. So, we are going to have less endowment-related dollars to spend. It is possible to imagine using more of the endowment in these tough times to be able to preserve certain kinds of things, but we have to remember that when we do that we’re spending a greater percentage of the endowment as the endowment market value drops. So, even as the endowment is reasonably considered a source of support in tough times, and I think that’s one of the reasons you have an endowment, we also have to be careful to make sure that we don’t rob from future moments and generations to make our lives a little bit easier. I think we’re going to have to answer those questions one by one as they come along with respect to what’s really worth investing more endowment dollars in, but we also have to be mindful that endowment is for future generations as well. So, while we may indeed find reasons to spend a bit more—I would not say a lot more—of the endowment than we have in the past, we are always going to have an eye to the future and knowing that any increases we have to make are limited and temporary.

I think alumni have been very interested in how we are dealing with this situation, and they have been very sympathetic to the problems that it presents for us, and I think they have been very solicitous for our well-being and the situation we find ourselves in. I think they are wanting to help in any way they can, and we are, of course, eager to have their help. There is nowhere where their help is more important than in preserving the power of the annual fund, the Colby Fund, which brings millions of dollars into the operating budget every year. It’s a huge part of what we do, and we need, to the best of their abilities, for alumni to continue supporting that program. But, in addition to the general, I think, concern, for our well-being, alumni want to know in some detail, in some cases, how we are managing the situation—how well we’re doing, how the endowment is doing, what kind of adjustments we see. So, I find them to be very curious, very inclined to be helpful and supportive, and very thoughtful and concerned about the College.

Absolutely. We’ve been in very close contact with the trustees really since the beginning of this. We had a lot of very focused discussion at our October board meeting, and since then we have been on the telephone with a number of trustees literally weekly working through variously financial scenarios with them, getting their help with the endowment management questions that we’ve confronted and will continue to confront, and generally speaking about how we move the institution through this crisis in the best possible way. And I have to say they have been absolutely wonderful. In times like this, I think, you appreciate the depth of their intellectual and moral resources. For me, personally, as the president of the institution, it’s been wonderfully reassuring to have them there, because you don’t feel isolated, you don’t feel alone, and you feel like you have a lot of very expert help along the way. So it’s been terrific.

It’s not a short-term matter, probably, that we’re confronting. It’s something that’s going to affect us for a number of years, so we are already talking about some deeper structural adjustments we can make in the future to meet the constrained financial circumstances which have already come our way but are likely to be with us for a while. And I think that involves two kinds of exercises. One, focusing on what really matters at the institution and sorting out our priorities and being very clear about what we care most about. Of course, what we care most about is the existing educational program and the people who are here, whether they be students or employees of the College, so we’ve been talking a lot about priorities. We are also trying to talk about how we get through all of this to make a better Colby—come out the other end with a better institution. I don’t think that’s an impossible task, and I think it’s one of the ways we have to be thinking about this in addition to trying to understand how we do more with less. We have to understand how we can do a better job at what we are trying to do. And, third, and probably most obviously, we are trying to understand how we can reshape the expense base of the institution and reduce the size of that expense base. We don’t know yet how much we’re going to have to do in that regard; I think it’s probably more than we have planned to do next year. We are trying to use next year’s budget to give ourselves some time to really be thoughtful about how we constrain the expense base of the College and all of the things we do. To have that time is terrific, and I think we’ve got it because the College has been very careful and carefully managed, and we have a little more time than some other institutions, I think, to deal with this. So, using that time, again, to sort out our priorities, to understand how we become a better institution and how we can constrain further our financial resources is really the agenda that’s before us now. So, those are the things we are most focused on and that we’re doing with respect to this longer-range problem that is—probably is—before us.

Well, I think that, again, to restate a couple of things I’ve already said: The support of alumni in this time is wonderfully reassuring and extraordinarily helpful, so I encourage alumni and friends of the College to stay engaged with us and to stay well informed about what we’re doing. We are trying to be as open and as clear as we can about what is happening and what we’re thinking and having to do. I’m also very mindful of the support and extraordinary talents of the Board of Trustees and other people who work with us in a very close way as volunteers to the College. I think it brings out the best in them, and I think it brings out the best in us. We are working very hard to understand, of course, most immediately, next year’s financial situation and budget. I think I can define what currently appears to be that budget by saying that it’s very constrained. It’s not what I would call draconian, but it does cause us to pull in with respect to some of our commitments. However, it does permit us to continue some of our core commitments, most importantly the no-loan financial aid policy and some other things that we think are very important. Again, we are trying to do everything we can to preserve the essence of what we do and to make adjustments in things that aren’t quite as important to what we do. And, I think, so far we are doing a pretty good job.