“I’ve been at Amherst almost 12 years now and, without question, these economic times are the most difficult that we’ve faced in terms of the cost of goods and materials,” said Director of the Physical Plant Jim Brassord.
For Valentine, this means working harder to find the best deals, and in many cases, swallowing the higher costs. For the endowment, it means accepting a significantly lower return and relying even more on diversification. And for those in the Office of Development, it means working a little harder than usual to get contributions.
According to Director of Dining Services Charlie Thompson, at least 60 to 70 percent of the items in inventory have increased in price over the last year to year-and-a-half. The combined effects of high gas prices, increased emphasis on ethanol production from corn, and even the Midwest floods from the summer have impacted the price of products from Jello, to hoagie rolls, to milk, according to Thompson.
“Before, we might have gotten one to two letters a year from distributors about higher costs,” said Thompson. “I bet we’ve gotten a dozen in the past six to eight months.”
As an extreme example, Thompson cited the College’s supplier of liquefied eggs, which was based in the South and recently stopped supplying their products to the entire Northeast because of the high fuel costs. “When I read that letter [from the egg company], it drove it home to me,” said Thompson, adding later, “Almost from every distributor, we’ve experienced some increase in the cost of delivery because of the increase in fuel costs … It has cost the College more money to provide the food we’ve provided to date. Our mission is to see how we can make up that up-charge.”
Thompson said the dining hall is focusing on cutting costs by limiting waste, both in the production process beind the scenes as well as with students. Thompson hopes that a soon-to-be unveiled composting program will make students more aware of their food waste, and have both an environmental and economic impact.
Recently, a number of colleges, including Middlebury, have turned to tray-less meals, in an effort to cut down on waste, for environmental and indirectly economic reasons. Thompson said there have been conversations about having a tray-less meal or day, though there are no specific plans on the table.
Though it does not have as direct an impact on students as the dining hall, the College’s endowment return has been significantly impacted by the Wall Street woes. Last year the College announced record returns of 27.8 percent—the second largest returns in the nation, only behind Yale University. When the returns for the fiscal year ending June 30 are soon announced, according to Chief Investment Officer Mauricia Geissler, the gains will likely be in the low single digits. Across the board, Geissler expects colleges and universities to experience single digits, or even negative returns on their endowments for the past year.
“It’s hard to predict the future, but I’d expect the next 12 to 24 months to be quite challenging as well. I personally believe that markets will continue to be volatile,” said Geissler. “You can pick up a newspaper on any given day and there’s more bad news. That impacts the psychology of investors and they become more and more negative.”
The key for endowment in times like this, according to Geissler, is diversification. “When things get volatile, a lot of times in the short term, everything moves in sync with one another. But as time moves forward, that diversification will serve you well because certain things will pop back faster than others,” she said. “In a rising market, all ships rise, and you look like a hero no matter what. It’s in the volatile times that you truly know whether you’re diversified.”
According to Geissler, as well as College Treasurer Peter Shea, the low return will not impact students, at least for now. “The way that the College does its planning, they don’t look just at any one given year to drive the budget and spending for the College. It’s done with a view of the past several years, so there’s a smoothing effect,” said Geissler, whose thoughts were reinforced by Shea. However, according to Shea, “Long term, if the market continues to be down for a long period of time, it would affect the money we’re able to spend.”
Fortuitously, physical plant has set itself up well to deal with the increasing utility costs. Two-and-a-half years ago, the Board of Trustees approved the construction of a co-generational electrical power plant to service nearly all of the campus. The project was completed in the spring, and is reaping environmental as well as economic benefits. “It was the understanding that it had a dramatic environmental impact, but it was also a hedge against increasing costs in electricity and gas,” said Brassord.
The plant takes a process that is inherently 35 to 40 percent efficient and makes it 75 to 80 percent efficient, according to Brassord, by capturing wasted heat and converting it into steam. With the new plant, Brassord said the school is saving over $1 million a year and has reduced its greenhouse gas emissions by almost a third.
The down economy though is not stopping the College from going ahead with its long planned comprehensive campaign. With the quiet phase ongoing—in which President Marx and other board members have been collecting large committments from friends, parents and alumni of the college—the campaign will officially be launched on Family Weekend, to raise money for a number of initiatives, including hiring 18 new faculty members as well as long-term work on Merrill Science Center and Frost Library. “If you waited for the right time in the economy, then you’d never be ready for a campaign,” said Chief Advancement Officer Megan Morey. “An institution is ready for a campaign when they have a clearly stated case for the campaign … and Amherst is ready to launch into the campaign despite the economic climate.”
While Morey would not disclose the target dollar amount of the campaign, she said Amherst’s figure is tied tightly to the initiatives of the campaign. Whereas other liberal arts college have tried of late to collect record dollar amounts, Morey said Amherst will just collect what it needs.
On a much smaller scale, it might also come as a surprise that the Dining Hall would get new dishes, despite the ever-high food costs. According to Thompson, too many of the old plates had been broken or lost, and it was time for an update. As for the purple and yellow colors of the plates and bowls, Thompson said that he did not have any allegiance to the Ephs of Williams. “It had nothing to do with Williams colors. We just thought, ‘lets pick a dish of every color,’” said Thompson. “It was just an effort to bring a little color into the servery and not to support Williams.”
Soon, new black trays will also make an appearance. Thompson joked that he could sell the old trays to students as sleds to raise funds for the increasing dining hall costs, though the trays—as well as the old dishes—will in fact be donated to local charities.