This was the most concrete cost-cutting measure outlined in Marx’s letter, which more than any news before it showed that the College is feeling the effects of the economic crisis plaguing the globe. “College and university endowments across the country have been significantly affected by market volatility in recent weeks, and Amherst’s is no exception,” wrote Marx. “Even with our relatively strong investment management, the endowment has lost roughly a quarter of its value since June 30.”
As of June 30, the College endowment was roughly $1.7 billion, having grown 4.6 percent in the previous fiscal year. Marx’s statement puts the endowment closer to $1.3 billion.
In addition to putting off the renovation of the Lord Jeff Inn, the letter said that all departments will be asked to review their expenditures and look for ways to cut costs. Furthermore, the College will look closer at requests for replacement or additional positions.
“It’s too early to see what we’ll be doing precisely, but we will certainly be looking at all expenditures,” said Dean of Students Ben Lieber. “We’re looking carefully at our expenses to see where and how we can cut back.”
Marx’s letter comes on the heels of this past weekend’s Board of Trustees fall meeting, in which adjusting to the new economic climate was the key topic.
Amherst is not alone in facing the financial challenges of this time. Within the past several weeks, the presidents of Williams, Middlebury, Hamilton and Bowdoin Colleges, among many other schools, have released similar letters. Williams put off its planned library and football field renovation while Middlebury called for a 20-percent reduction in college-related travel costs.
In addition to the substantial reduction in the endowment, the College has also lost money in the short-term, which is now stuck in the Commonfund Short Term Fund, an investment fund that manages almost $10 billion from 900 colleges and universities. The fund provides returns slightly above U.S. Treasury bills and had been 100 percent liquid until late in September, when Wachovia Bank resigned as the fund’s trustee and terminated the fund. Amherst originally had $25.9 million in the fund, and now has a little over $13 million, College Treasurer Peter Shea told The Student last week. He said that the bulk of that sum should be returned in the next six to 12 months as the securities in the fund mature. “It’s freezing up our money, but not enough to make a real impact,” said Shea.
Marx is confident that the decreased spending will have little impact on daily life at the College. More importantly, he believes it will help “ensure that Amherst will continue to fulfill its mission for many generations to come.”