By Matt Bachtell
Beginning last fall, Grinnell College faced a financial crisis. The College’s endowment lost 20 percent of its value since June 30, 2008, dropping from $1.47 billion to $1.1 billion. The College relies on its endowment for a large portion of its funding. Responding to the heavy endowment loss, the Budget Steering Committee decided to slow spending for the student body.
“Unlike most places, we don’t slash the budget all at once,” said President of the College Russell K. Osgood. “The way the endowment spending policy works [is that] it slows down spending over several years.”
The spending policy currently allocates 4 percent of the endowment’s money to annual expenses, but prohibits using 100 percent of the contribution for annual operation costs. A fraction is thus put in a reserve fund. This year the reserve fund is worth about $65 million.
“This capital reserve is a part of our endowment spending that we’re using to replace our facilities,” said Treasurer of the College David Clay. “It’s there for any kind of strategic condition and it’s also there to be a buffer to protect us from unexpected events like this.”
The Budget Steering Committee increased the cost of tuition and room and board by 3 percent in order to make up for the reduced endowment. Additionally, the committee increased scholarships, grants and aid by 13.3 percent.
“They cut back as much as they thought they could, considering the economic times,” said Assistant Treasurer of the SGA Gabe Schechter ’12, who sits on the Budget Steering Committee.
According to each institution’s respective website, the economic downturn has affected liberal arts colleges and universities across the nation. St. Olaf College in Northfield, Minn., lost 24 percent of its endowment value. Carleton College, also located in Northfield, announced hiring and salary freezes. Beloit College of Beloit, Wis. announced a 10 percent staff cut after an unexpected drop in enrollment led to a $1.2 million operating loss. According to the Stanford Report, Stanford University’s endowment is expected to lose 30 percent of its value this year, its biggest hit to date.
“Interestingly…the biggest cuts have been at…the swankiest places: Harvard, Stanford, Wellesley,” Osgood said. “I think they had made the most promises about the future
they had a lot of hugely expensive buildings…[though] the budget may have gone way down they were still spending money. We didn’t do that.”
Karen Voss, Vice President for Finance and Associate Treasurer, maintains a sober optimism.
“We know it’s not over yet, and we just have to be cautious,” Voss said. “But the entire campus is engaged in it, and as I said it’s preserving the program and meeting need, and it’s been very successful so far.
