Thank Goodness
One comment from Will Slack’s ‘11 excellent summary of Morty’s talk on the College’s financial situation deserves a post of its own.
How will this change the endowment management?
Thank goodness for Collete Chilton. Without her, we might be down 40% this year. Hedge funds are not asset boosters; they are compensation schemes (and I have no clue what this means). Williams is buying more commodities, which are not hedges in bad times. However, we’re still being conscientious. Williams had the chance to buy into a timber thing, and chose not to (Killing the Amazon, etc.), forgoing real profits. It’s not only how you spend the money, but how you raise it..
Let’s unpack these items.
1) I love the moral preening. Williams did not go for the Amazon timber deal so this means we have a conscious. Hah! Does Morty not notice that we have five percent of the endowment in emerging market equities and, most likely, some of those investments are in Brazilian companies? And not just warm and fuzzy Brazilian companies that sell native-made tchotchkes, but the sort of companies that are chopping up all those trees in the Amazon? Of course Morty (like me) does not know anything about the specific companies that the College’s managers invest in, but unless Williams has placed specific restrictions on its managers (unlikely), you can be sure that we have investments in unsavory companies around the world. Not investing directly in some Amazonian timber does not mean that we aren’t profiting from logging and other depredations that Williams People Do Not Like. Recall the similar preening over Sudan divestment.
2) With regard to “compensation schemes,” Morty is probably referring to the fact that hedge funds generally charge much higher fees than traditional asset managers. (The College has 10% of its endowment in “Absolute Return” strategies, almost all of it in hedge funds. The compensation scheme for all the of the College’s Private Equity (9%) or Venture Capital (6%) allocations are almost certainly similar.) These fees generally have two parts: a management fee (1%-2%), which is just like the fee that you pay on your mutual fund, and a performance fee (around 20%), which is only paid on the profits over a specific benchmark. People who argue that hedge funds are “compensation schemes” generally believe that those fees are too high, that hedge funds don’t perform nearly well enough to justify taking such a large portion of the profits and that much of their success is a bull market phenomenon. The same arguments are made against private equity and venture capital.
But, guess what! Morty can solve this “problem” easily. Just pull all the endowment money out of hedge funds, private equity and venture capital. Problem solved! But recall (pdf) how trustee Dave Coolidge ’65 describe things last year.
We set our allocation targets for each asset class annually and over the last few years have increased our allocation to hedge funds, real estate, and international equities, while reducing our allocation to domestic equities and bonds. The Investment Committee recently completed a thorough review of the asset allocation policy for the endowment. The Committee adopted a revised policy that will continue to provide an appropriate return for the College with less risk by diversifying into more asset classes. Figure 3 shows our summary asset allocation policy as of July 1, 2007.
So the College, just last year, decided to add more money to hedge funds, organizations that Morty now describes as little more than “compensation schemes.” Did Morty miss that meeting? Has recent experience caused him to change his mind? Will he be proposing that the College decrease the percentage of the endowment dedicated to hedge funds in the future?
I doubt it. I think that this was Morty as wise guy rather than wise man (to steal Mark Taylor’s put down), Morty playing to the crowd and criticizing hedge fund managers even though he (and Williams) remain eager clients.
3) Is it really true that, without Collete Chilton, the Williams endowment would be down 40%? No. That’s absurd. Morty can only get away with howlers like this because there is no one in his audience knowledgeable enough (and willing) to call him out. I doubt that this talk impresses members of the Investment Committee. Some of whom, I have heard, are not Chilton’s biggest fans.
How can I be so sure that Morty is exaggerating Chilton’s contribution? Mainly because she has not been in her job long enough to make major changes in either the College’s asset allocation or in its manager selection. Recall that she started work in the fall of 2006. The College’s asset allocation policy was either already implemented or well on its way to implementation. Might Chilton have had an impact on the margin? Sure. But the College’s endowment looks more or less like it would have even if she had not been hired because it looks more or less like it has for a decade. (More on this latter.)
Leaving aside asset allocation, Chilton has not had time to significantly change many of the specific managers that Williams has hired within the different asset categories. You really think that, first day on the job, she fired all the College’s old managers and hired a bunch of new ones?
Again, Morty is 95% a straight-shooter, more honest and direct than the vast majority of college presidents. Moreover, every president needs to hedge a bit, praise in public while criticizing in private. But ridiculous claims about Chilton’s contributions are not helpful. They cause financially sophisticated alumni to doubt everything else that Morty has to say, to wonder if something else is going on, to worry that Morty is too-invested in his let’s-copy-Yale-and-hire-a-Swensen-clone plan to realize that the whole scheme is a mistake.
I was talking with a very rich, plugged-in alum a few weeks ago, someone who can get a meeting with Chilton (or Morty) whenever he feels like it. After talking with Chilton about the endowment, his first reaction was, “What is she hiding?” After further discussion, his opinion is “Don’t expect me to make a big donation for a major reunion if you have some idiot managing the endowment.”
Those are paraphrases. Although I have a reputation as a Chilton-critic, I was truly surprised at the depth of this alum’s dissatisfaction. Perhaps he is an outlier. Perhaps all the members of the Investment Committee are, with Morty, thanking goodness that Collette Chilton is managing the Williams endowment.
My position is the same as always: Williams should close the Boston investment office. It is too expensive and serves no necessary purpose. No one, least of all Chilton, should be fired. They should all have the option of moving to Williamstown. With luck, most of them won’t.
Do the Dishes
Dan Drezner ‘90 is bullish on Treasury Secretary designate Tim Geithner.
If Tim Geithner weren’t so nice, he would probably be insufferable right now. For a few weeks, Geithner was my boss when I worked at Treasury. Even after he left, I never heard a single Treasury employee say a bad thing about him. This befits his reputation as someone who was exceptionally smart (like Larry Summers) and someone who was surprisingly affable (not like Larry Summers at all).
This is a good thing too, because one could forgive Geithner right now if his head swelled just a little bit. The Dow Jones Industrial Average shot up five hundred points on Friday as word of his appointment leaked. The Dow jumped close to another four hundred points yesterday after Obama officially introduced him. One has to wonder if, sometime this week, when Geithner’s wife asks him to do the dishes, he will be tempted to respond, “Have you caused the Dow to jump by more than ten percent? I didn’t think so!”
Have any Ephs been nominated by Obama? Are any likely to be?
Endowment Research
Here is a useful overview on college endowments. Does anyone know what NACUBO has to say about Williams? Note that the average returns for an endowment of Williams’ size (greater than $1 billion) were 15.2% in 2006 and 21.0% in 2007. Williams’s results were 12.8% and 24%. Nothing wrong with being average among that exalted company.
No Man’s Land
Erin Burnett ‘98 was on “Meet The Press” last week (go to the six minute mark).
For those to busy to view, here is the the passage.
MS. BURNETT: We need more clarity, though, on where these two and a half million jobs are going to come from because, as I say, I think that’s a lot less than a lot of people on Wall Street were expecting to hear out of Obama, maybe a larger number. But if you’re going to talk about restructuring here, you’re going to lose jobs no matter what. And finding some sort of an immediate transition seems to be very important. And if you’re talking about infrastructure, there’s only about $18 billion of projects ready to go that you could really put people to work on. So there is this sort of no man’s land that we’re going to go into where you could have a lot of people looking for work in addition to where we are right now and not really having anywhere to go right, right yet.
Indeed. Steve Sailer makes a similar point.
More Burnett quotes below.
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Goodell ‘77 to Maverick
Bill Goodell ‘77 has joined Maverick Capital (pdf).
Perhaps the only good news of the past quarter was the addition of two senior members to the Maverick team. Bill Goodell joined the firm on September 1st (great timing!) as our Chief Operating Officer and has been asked to coordinate our non-investment functions and to serve as a resource to those teams. Before joining Maverick, Bill spent ten years as the General Counsel of Tiger Management and served as the President of the Robertson Foundation. Bill also spent two years as the Chief Administrative Officer of Moore Capital. Before entering the hedge fund world, he was a Partner of King & Spalding.
Bill serves on the Board of Trustees of Washington & Lee University, Episcopal High School and the Tiger Foundation. He received a B.A. in Political Economics (Cum Laude) from Williams College and a J.D. (Magna Cum Laude) from Washington & Lee University’s School of Law. This is a new role for
Maverick, but as the complexity of our environment increases to have someone with Bill’s experience and judgment has already proven to be of tremendous value.
The whole letter is an interesting view into the world of hedge funds. Bet that Goodell is thankful that he signed his contract before September 1. What do you have to be thankful for today?
Plugging Holes
Update on hiring.
Williams Stresses Tenure Track Hires
The economic downturn is forcing a conversation about priorities on even some of the most well-heeled of college campuses, as evidenced by the recent deliberations of the Committee on Appointments and Promotions at Williams College. The six-person committee, which is made up of high-level administrators and some elected faculty, recently reviewed faculty searches that had been authorized last spring before the economy took a dive.
Bill Wagner, dean of faculty at Williams and a member of the committee, says the group outlined a series of criteria required for moving ahead with searches. A premium was placed on filling vacancies that, if unfilled, would prevent students from progressing through majors. Beyond that concern, the committee focused on meeting a few long-term hiring goals, rather than simply plugging a lot of holes with temporary solutions.
“It would make more sense to give preference, therefore, to those [tenure track] positions, as opposed to trying to replace tenure track positions with visiting positions in the short term,” Wagner says. “We think that’s a shortsighted policy.”
The committee ultimately approved six of 14 previously authorized searches for tenure track faculty, and approved about one-third of the more than 20 proposed visiting professorship searches.
Tough to believe that Morty is taking the financial situation seriously when Williams is still hiring 7 (?) visiting professors. That is around $700,000 that should be saved from the 2009-2010 budget. Any class that might be taught by one of these visitors (and that is needed for major requirements or whatnot) should be taught by some other member of that department.
The dean of Harvard’s Faculty of Arts and Sciences has called for an immediate freeze on staff hiring and strongly encouraged department heads to consider canceling faculty searches.
In an e-mail to department heads Monday, Michael Smith, dean of the largest Harvard faculty, outlined immediate steps in response to the worsening economic climate.
“Given our heavy reliance on endowment income, these losses will have a major and long-lasting impact – one that will require significant reductions in our annual expenses,” Smith wrote.
Williams is poorer than Harvard. The longer Morty waits to make significant budget cuts, the more painful the adjustment process will be. It is hard to think of an easier step then not hiring any visiting professors for 2009-2010. If Morty won’t cut that, what will he cut?
Google Me
Most depressing news in the Alumni Development Office this month? Henry Silverman’s ‘61 forthcoming divorce.
ANOTHER high society divorce is about to hit New York - and insiders say it’s going to get ugly.
According to friends, three weeks ago, Cendant Corp. founder Henry Silverman “abruptly” told his wife of almost 30 years, Nancy, that it was “over,” and “moments later moved out of their apartment on East 72nd Street.”
Newyorksocialdiary.com noted that Henry “has reached that point in his life when he . . . wants to taste the wines of youth, meaning, perhaps, those wines we never quite tasted in our youth.”
In fact, insiders told Page Six that last spring, Henry, 68, met a hot, blond 28-year-old woman from the Midwest while in line at Starbucks at Columbus Circle. Henry chatted her up, gave her his number and told her, “Google me.”
Cendant, a provider of travel and residential real-estate services, has owned Days Inn, Avis Rent-a-Car and Telemundo. Billionaire Henry and his mystery woman are now sharing a rental apartment at 15 Central Park West and Nancy is said to be “devastated.” The once happy couple were spotted two weeks ago - a week after Henry moved out - having a “heated discussion” over lunch at The Four Seasons. Nancy “quickly quieted down after several heads turned in her direction,” our spy said.
Henry and Nancy - who met while they were both working for Saul Steinberg and who have one daughter, Casey - “didn’t have a prenup,” a friend said. “It is going to get ugly. Really ugly.”
Nancy, who has yet to hire lawyers, is said to be preparing to fight for a huge hunk of Henry’s cash as “she helped him build his business. She was with him when he had nothing.” Henry’s lawyer declined comment. A pal of Henry’s said, “Listen, he’s a great guy. And sometimes as people get older they just want to live their lives and be happy.”
It has always been a mystery to me why Silverman is not a major donor to Williams. He is certainly generous enough (and seems to have no need for anonymity). Consider the Henry R. Silverman Professor of Law and Professor of Philosophy at Penn Law, from which he graduated in 1964. Where is the similar named professorship at Williams?
Although Silverman has had a very successful business career (but note these criticisms), it is unlikely that he is worth a billion dollars today. And, after an acrimonious divorce in New York State without a pre-nup? Forget about it. Perhaps the Alumni Office will be able to solicit his future ex-wife . . .
Further update here.
FRIENDS of Cendant Corp. founder Henry Silverman are jumping to his defense after we reported the billionaire left his longtime wife, Nancy, for a hot blonde 40 years younger than himself. “When Hank and Nancy met, Hank was already successful in business and financially substantial,” one pal said. “Nancy was in the typing pool at Saul Steinberg’s company, saying to Bernard Schwartz of Loral one night, ‘I’ve come a long way from the typing pool, Bernie!’ Hank gave Nancy a life she would not have known from her very humble background and was as loving and loyal as a husband could be. Hank put all their properties into Nancy’s name, because he always said, ‘That belongs to Nancy,’ only too delighted to share his wealth with her. No man could have been more generous or more loving a husband or more of a gentleman to his wife . . . I simply hate to see a decent man castigated when it is not deserved.”
I guess it depends on what you mean by “loyal.”
I tried to address the issue of successful (male) Ephs who abandon their wives here. Still one of my favorite (and most criticized) efforts. In the discussion thread, I argue that:
One of the purposes of Williams is, in Professor Murphy’s phrase, to shape the “hearts and minds” of her students. EphBlog, in its own small way, aspires to do the same. I bring up infidelity because infidelity is an important topic and the way to approach important topics is not with bromides and cliches. Better is real people living real lives teaching all of us real lessons. Sam Crane talks about marriage as “duty.” Read what he has to say. Did Mayo Shattuck meet his duty? Or is divorce just a personal choice that deserves no praise or blame from anyone?
…
But how are we to shape “hearts and minds” — both our own and those of others around us — if we do not discuss topics of marriage and duty, infidelity and respect? I submit that we can’t.
How seriously should I take my marriage vows? How seriously should the recently married and soon-to-be married commentators in this thread take theirs? These are hard questions without easy answers.
If I were selecting Bicentennial Medal winners and had to choose between Silverman and another Eph, slightly less successful in business but loyal to his wife, I would choose the faithful Eph. Silverman, by assumption better meets the criteria for Bicentennial Medals — distinguished achievement in any field of endeavor — but he fails as a husband. I want to shape the hearts and minds of current students and, to do so, I prefer to honor the honorable even if their objective accomplishments are less.
Most readers seem to disagree, seem to feel that our personal failings — and we are all sinners — should have no place in awarding Bicentennial Medals. Is there anything (not illegal) that Silverman could do that would lead you to pass him over?
Unique Attributes of the JA/Entry System
This thread raises the question about what attributes of the junior adviser/entry system are unique to Williams, at least among elite colleges/universities. Short answer: I don’t know! Long answer: Here are my guess as to items that are unique.
1) JAs are not paid by Williams.
2) JAs receive no non-pay compensation (i.e., room and board).
3) JAs are selected by other students, the Junior Adviser Selection Committee.
4) JAs are co-ed paired.
5) The 12:1 (?) student:JA ratio is very low.
6) There are many more applicants (100-150) for the JA position then there are spots available (52).
7) Since JAs are not employees of the College, they have many fewer obligations vis-a-vis reporting requirements then they otherwise would have.
8) JAs have an especially strong identity as JAs. They are much more cohesive as a group then students holding similar positions at other schools.
Am I sure that these are unique to Williams? No. For all I know, the system at Bates or Stanford is exactly the same. Do our readers know which, if any, of these items are unique to Williams? Are there unique aspects that I am forgetting? Perhaps we could begin by listing schools that have any of these aspects.
Neighborhood Woes
I am shocked, shocked that Neighborhood identity continues to be a figment of the Administration’s imagination.
When the neighborhood housing system was first implemented, the question was not whether current students would like it – they didn’t – but whether future generations would benefit socially and come to appreciate it. It is now in its third year, and the administration must be wondering how the current generation of students is dealing with it and whether we have begun to warm up to the system. After all, it’s been over two years. Has our opinion of the system changed?
To put it bluntly, it hasn’t. It was often said during the initial controversy that the furor over the new housing system would disappear in four years when the people who remembered the old system graduated. Now that we’re in our third year of neighborhood housing, this seems to be wrong.
Well, there are two separate issues. First, would students forget the details of the controversy, the history of how we got to today? Answer, as Andrew Triska’s ‘10 later comments make clear, is Yes. Students do forget. Second, would students grow to love or at least not-hate the Neighborhood system? Triska is correct that the answer to that is No.
Even students who didn’t live under the old system – myself included – think the new system is a mistake. Even the freshmen have opinions on the issue, and those opinions are generally negative. You can’t implement a system that’s opposed by a majority of students and expect new generations of students to welcome it. Students who didn’t have housing choice can still imagine what it would be like, and it’s an enticing idea.
Indeed. During his talk at Foxborough last March, Morty (wistfully?) quoted a statistic about student opposition to the elimination of fraternities 45 years ago and student opposition to the ending of free agency. He implied that future generations would look as kindly on his overruling of student opinion today as we look upon Jack Sawyer’s ‘39 leadership in the early 1960s.
Unlikely!
Morty, as an economist, may not give history the weight it deserves. Recall the Terrible 22, and the Administration’s (Morty’s?) misleading description of that history to impressionable Ephs like Jonathan Landsman ‘05. The fight against fraternities was led by the students. (Does Morty know that history?) Sawyer’s genius was not so much in overruling student (and alumni!) opinion as in harnessing it. He didn’t eliminate fraternities, he allowed the Williams community to make the decision for itself. Morty’s single biggest mistake in trying to improve student life was his failure to create the equivalent of the Angevine Committee.
More quotes and ranting below.
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Links
Brief news story on Congressional Black Causus event. The Eagle provides more extensive coverage. Fun photo gallery here. I talked to an attendee who estimated student attendance at 400-500, with many being turned away once Chapin and Brooks Rogers were full. He estimated the total cost at $50,000. (I would have guessed a lower cost and more students.) Others?
Fascinating story of the turmoil at Coke from four years ago. Lots of Herb Allen ‘62 stories.
Two stories on the turmoil in private equity investments. Could the private equity and venture capital investments in the Williams endowment, marked to market, be down 50% from June 30? Yes, they could.
More Reserved
Meet the new boss, Eph like the old Boss.
Hal Steinbrenner ['91], the younger and more reserved of the Steinbrenner sons, was given control of the Yankees on Thursday in a unanimous vote by Major League Baseball owners. George Steinbrenner ['52], the Yankees’ principal owner, asked Commissioner Bud Selig to pursue the change last month.
Hal Steinbrenner, responsible for the business and financial side of the Yankees, was handed control of the team Thursday.
While Hank Steinbrenner, George’s older son, has been much more talkative about the Yankees in his frequent interviews, Hal has been more involved in the daily operations of the team. It is Hal, not Hank, who deals with team executives and spends considerable time in the Yankees’ offices in New York.
“I realize it’s a great responsibility,” Hal Steinbrenner said. “My dad is, needless to say, a tough act to follow. But I’m going to do it to the best of my ability and give it my all every day.”
Good luck to Hal.
Technical Changes
We are making major technical changes and will update this post when we (think we are) “done.” Your patience and comments are much appreciated.
Update: The major changes are complete. More technical details after the break.
Public (?) Faculty Meetings
There was debate last week about whether or not the monthly Williams faculty meetings are public. The truth seems to be that, for decades, they were but that, very recently, things have changed. Pathetic. If you believe in the virtues of academia, then you believe in openness and transparency. Although many meetings at Williams will, of course, need to remain private, any gathering of the full faculty should be public. Aren’t all my progressive friends supposed to believe in open meetings? Details below.
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Volleyball
Video of NCAA elite 8 match here. Adequate video quality, but not as good as JumboCast. Informed commentary. Williams is down 23-16 in game 1 against a team that seems very strong . . .
UPDATE: Alas, Williams was crushed. Ohio Northern was much better than Wellesley.
On the good side, there was a nice shot of a Williams fan (Melissa Pun’s mom?) with a cute hand-made sign after the second set.
Best Practices for the Endowment
I had an interesting discussion with a Williams administrator yesterday with regard to
my concerns about the endowment. No one expects Chief Investment Officer Collette Chilton and the Investment Committee to work miracles. But they should be able to adhere to a set of best practices as exemplified by peer institutions. To be specific, consider The Boston Foundation (tBf), led by former Williams trustee Paul Grogan ‘72, and Wellesley College. Both organizations do a fine job with resources similar to those of Williams. Which best practices should Williams emulate?
1) Quarterly reporting. Consider this webpage and pdf from tBf. Given that Chilton and her staff compile quarterly reports for the Investment Committee, there is no excuse for not sharing that information with the rest of us.
2) Manager transparency. Consider the explicit listing of Boston Foundation managers.
Note that there is not complete transparency here. In particular, we do not know which private equity and venture firms tBf invests in, much less which specific funds sponsored by those firms. That’s a complex issue which we can save for another day. But there is no excuse for Williams not to tell us which firms it uses to manage the standard equity and fixed income portions of the portfolio.
3) Clear asset allocation, benchmarks and category performance.
The Boston Foundation provides its asset allocation here. As discussed previously, Williams makes public its asset allocation policy, but we have little idea which benchmarks it uses to measure manager performance nor how well those managers have done, at least in aggregate. Consider the 2003 Report (pdf) from Wellesley.
There are two components to endowment returns. First, what categories were the funds allocated to? An endowment that is 75% in equities will perform very differently than one which allocates only 25% to equities. Second, which managers are selected within a given category? Two endowments can both allocate 50% to equities (as Williams does) but their performances can differ dramatically depending on which managers each selects. There is a case to be made that the performance data for a specific manager should be kept secret. But there is no excuse for not doing as Wellesley does above and reporting the aggregate performance of the managers within each specific category of the overall asset allocation.
Again, it would be one thing if reporting this information to the Williams community were a major burden to Chilton and her staff. Transparency is valuable, but not at any cost. However, every single piece of information (manager identity, asset allocation, benchmarks and relative performance, all on a quarterly basis) is already collected and reported to Morty, the Trustees and the Investment Committee.
Best practices require that Williams share that information with the rest of us.
Links
A new category in which I provide quick links to stories of interest, often pulled up from our comment threads.
McClatchy Newspapers coverage of the Congressional Black Caucus event on Monday.
Percentage of grades in the A range at Brown now at over 50% (pdf). My request for similar data for Williams was denied today. Previous discussion here.
Morty mentioned as a possible candidate for the presidency at Dartmouth; also, confirmation (?) that he was a finalist during the last search in 1999. Or did they just get that by reading EphBlog?
No Longer AAA
Below is an article from March 2003 on the College’s borrowing $100 million, thereby losing its triple-A rating. Prior to 2003, the College had much less debt. Going back to the 2000 Form 990 (pdf), we see that Williams had only (page 74) $78 million in debt. That is why it had a triple-A credit rating.
When Morty arrived, Williams had a leverage ratio of around 6% ($78 million of debt on a $1.4 billion endowment) on June 30, 2000. Under Morty’s leadership, Williams more than doubled its leverage, hitting 15% on June 30, 2008 ($262 million of debt on a $1.8 billion endowment). How is that working out for us? About the same as it did for all those condo-flippers in Ft. Myers.
Although the math is a little tricky, Morty’s (?) decision to increase the College’s leverage has cost Williams at least $50 million dollars. If we had kept our debt at $78 million (or let it rise in dollar terms but no higher than 6% of the endowment), Williams would be more than $50 million richer. This was the most costly mistake made at Williams in the last decade. Why won’t the Record report on it?
Budget History
Isn’t it pathetic that, while Williams is going through its biggest financial crisis in 25 years, no outsider knows the total, much less the details, of this year’s budget? Yes, it is!
As a service to the Williams community, here is some data on the recent history of the College’s finances, via financial statements and this 2002 report. Numbers are in millions and the fiscal years end on June 30.
Year Operating Expenses Tuition Revenue Shortfall 2008 177 61 116 2007 164 59 105 2006 154 56 98 2005 140 55 85 2004 137 53 84 2003 130 49 81 2002 129 46 83 2001 116 46 70 2000 108 47 61 1999 99 NA
There is probably a disconnect between these numbers around 2002/2003 since I get them from different sources. The jump from 129 to 130 in spending is smaller than normal, although it could be that the College was belt-tightening in conjunction with the 2002 bear market. Reasonable people will differ on just what is included in “operating” spending, and the College may very well change its classifications over time.
For pre-2003 data, I add “Renovation, Repair and Adaptation” to “Operating Expenditures” in the 2002 report because I think that this makes the total consistent with the 2003+ data. I estimate the tuition revenue for pre-2003 by subtracting “Scholarships & Fellowships” from “Student Charges.”
Comments:
1) The key issue is that Williams has been increasing spending year after year while not raising after-aid tuition nearly as much. Since 2000, spending is up 74% compared to a 30% increase for student revenue. As long as the bull market roared, that was a sustainable policy. Now, it’s not. Almost all of the shortfall is made up by annual giving and endowment income. Unfortunately, it is very hard to get the data on those numbers to get a sense of the problem. We need an annual endowment number and a spending percentage.
2) When the Record reported that the College’s “operating budget” for 2008–2009 was $216 million, I was immediately suspicious since, after relatively steady growth over the last decade, it would be strange for the College’s budget to suddenly go up by 22%, especially in the year after the endowment was flat.
I followed up with the Record. Editor-in-Chief: Kevin Waite ‘09 writes:
Checked with Lenhart and he says that total current expenditures are set at $216M this year. This includes operating expenditures, capital renewal spending and debt interest payments among a few other things. He says last year’s budget was around $200M.
So looks like operating expenditures are a good deal lower than $216M (probably closer to the number you published) making our article incorrect. Since we’d be a week late on running a correction, you can use what I told you here on Ephblog to correct our mistake.
Happy to help. I still wish that the Record would gather the necessary information in one handy table. Is that too much to ask for? And, of course, the College itself ought to make this data easily accessible and intelligently organized. It is almost impossible for any outsider (even members of the faculty) to have an informed opinion about the seriousness of the financial crisis at Williams without this sort of information.
3) If last year’s budget (2008) was $200 million under this definition (i.e., $23 million more than the $177 published in the financial statements) then one guess at the 2009 number that would be comparable would be the reported $216 million minus the same $23 million, or $193 million. That would represent 9% growth, more than I would expect but not implausible.
Free Speech
There is an interesting discussion at WSO about free speech and related issues. The problem is that, like a poorly run Williams seminar, it is a bit all over the place. It is too bad that more Williams faculty don’t participate in this aspect of the Williams Conversation. Imagine if Will Dudley or Mark Reinhardt or Cheryl Shanks or insert-your-favorite-professor-here were involved in that thread. Wouldn’t the conversation be a lot more focused and productive?
The key is to have a concrete example of “free speech” that some people ay Williams would like to ban and others would protect. Such an example will highlight the opposing views and the reasons behind them. My suggestion: Imagine a student (or professor!) with the following sign on her own door.
The average combined SAT score (math + verbal) for Chinese-American students at Williams is 200 points higher than the average for African-American students at Williams. The College should stop discriminating in admissions again Chinese-American applicants.
Would such a sign be obnoxious? Obviously. Would it lead to hurt feelings and even emotional pain among some members of the Williams community? Of course. Would I recommend that the student with this sign on her door take it down? Yes. But should the College require that the student remove the sign? No.
If free speech at Williams means anything, it entails the right to voice unpopular political opinions.
If the WSO discussion would use that specific example (or a different one), the conversation would be more productive.
Appoint Sloane
Wick Sloane ‘76 on NPR. Listen to the whole thing. Related post here.
Save Soane
Want to get in a big fight on WSO? Start a thread about dogs in Paresky. Some background here.
The Board of Health unanimously approved a variance Monday night allowing Williams College employees who work on the second floor of the Paresky Center to bring their dogs to work with them under strict conditions.
“The success of a variance of this nature relies on the honesty of the Williams College people,” Jeffrey C. Kennedy, health inspector and conservation agent, said Monday night.
And, yes, this does provide the excuse for Meagan Muncy on WSO to post the live puppy feed that my wife and daughters find irresistible.
New Theme
We are experimenting with our new Vertigo theme. Authors and others logged in should be able to see it. Regular readers won’t. Comments and suggestions welcome. Things will be a bit rocky throughout the weekend. Please be patient. Previous discussion here.
Shocked
A Eph working in finance writes about a recent Record interview with Morty.
Did you see this?
I’m shocked. I had no idea that Collette had lost so much of our endowment ($500M+). Plus, Morty sounds like he’s panicking. The fact that he doesn’t have a good grasp of the school’s finances AND that he used the phrase ‘brink of bankruptcy’ in a Record interview has me seriously reconsidering Morty’s competence at a time we need someone good at the helm. Either Morty is playing up the situation a little to try and good more donations or the college has seriously overextended itself.
1) You shouldn’t be “shocked.” With an 50% allocation to global equities, it is impossible for the Williams endowment to escape serious damage during a market meltdown. See our previous discussions.
2) Are we reading the same interview? Morty doesn’t sound panicked at all. In fact, he seems his always highly competent and (too?) honest self. This is one of the many things that I love about Morty! Consider the bankruptcy quote in context:
So, there are no plans to lay off any faculty or staff?
If we get to the brink of bankruptcy, who knows what’s going to happen? But as things are going, no plans for that … We come up with an attrition rate of seven faculty and 10 staff per year, which is lower than what it’s been. All over American outside of academia, people are being fired. Even within academia they’re being fired left and right. We’re the major engine of economic activity in the northern Berkshires. We talk all the time about how it’s not just the faculty are educators, but the staff as well, and they need us most when many of their partners or spouses are being laid off. Is this the time when we should lay them off too, or are we serious about the family and the community? I think we’re serious.
Morty is making it clear that, if the endowment levels off at $1.3 billion or above, there will be belt-tightening (no more visiting professors) without real pain (lay-offs). But, obviously, if the endowment falls further or stay flat for long enough (the Japan scenario), all options are on the table.
3) “[R]econsidering Morty’s competence” is absurd. It is hard to imagine a better leader to see Williams through a (potential) economic crisis. As you note, Morty may also be emphasizing the difficulties so that people start cutting costs seriously. (Please don’t tell me that the College is going to pay for a trip to DC for the Obama inaugural.)
4) It’s somewhat frustrating that some people (not this Eph) perceive me as a big Morty critic when, in fact, I am a huge fan. 95% of the decisions that Morty makes are correct. And the 5% that (I think) he gets wrong are often more a matter of tactics than ultimate goals. Yet I write much more about the bad staff than the good stuff. Let me rectify that my pointing to that Record interview. Read the whole thing. Morty is right about the challenges Williams faces and the best methods for confronting them.
5) The more subtle question is: What signs/decisions would make me rethink my faith in Morty? What evidence would falsify my hypothesis that he is a great Williams president? An easy question! A failure to start cutting costs in a serious fashion. Although it may be too late to do much with the 2008-2010 budget, Morty needs to start making tough decisions now that will contain the operating budget to zero growth for the next two years. If he doesn’t, I’ll start to worry that Morty is a just great fair weather president. When tough choices were called for, he failed to make them. Let’s all hope it doesn’t come to that. Popperian falsification is much more fun in theory than in practice.
Notes on Morty’s Minutes IV
Thought that I ran out of comments on Will Slack’s ‘11 excellent summary of Morty’s talk on the College’s financial situation? Oh, ye readers of little faith.
Background: Part 1, Part II and Part III.
Read more
WNY Decision
I think that the faculty is deciding the fate of Williams in New York right now. Predictions? (I have no idea.) Perhaps a faculty reader will let us know what happened. Tough for supporters to rally the troops on a day when the stock market is testing the October lows. I hope that WNY gets saved, but only under the condition that it starts to be run more sensibly and cheaply, starting by having only one professor in residence at a time but with the responsibility of running all the course work herself. Prior commentary here.
UPDATE: WNY lives! An anonymous faculty resource reports that the vote was 77 to 44. I think that there may also been a directive to “reimagine” the program, but the details are hazy. Will Slack ‘11 was at the meeting, so perhaps he will post a blow-by-blow. Kudos to all the supporters of WNY for a fight well fought.
Readers
Looking for an update on our readers? As always, the links to the lower right provide some transparency, to our statistics from Site Meter and Extreme Tracking. We seem to average around 1,000 unique readers a day. The chart to the left gives the breakdown by domain from Site Meter. The 16% from williams.edu is about typical. I think that many of the readers from rr.com (Road Runner) are from the Williamstown area. As a rough guide, I think that about 1/3 of our readers are students, faculty, staff and local residents. Another third are regular readers (mainly alumni and parents) from outside the Williamstown area. The final third are random web surfers who come to us just once for information on a specific topic.
Some of those are quite disappointed in what we offer. (Most visitors to this page do not find what the seek.) But I think that many/most visitors don’t regret the visit. Consider the most popular posts/categories of the last month (pdf). Visitors looking for information about Bethany McLean ‘92 and Erin Burnett ‘98 are probably interested in the material we have. (Unfortunately, I can’t figure out a way to make our Google Analytics data transparent to readers. If you have an interest in poking around, let us know.)
For me, the most interesting report involves visitor loyalty (pdf). It seems like we have had a total of around 60,000 “visits” since the start of the school year. 35% of these have been one click stands. But the vast majority of the other visits represent regular readers, people who visit EphBlog multiple times a week. This is the core of our audience, the ones that I, at least, am most interested in catering to.
How big is that audience? Tough to tell. Google reports that those 60,000 visits were generated by 22,792 “absolute unique visitors.” I am not sure on the exact methodology but I assume that it involves IP addresses. Google doesn’t know that you read EphBlog at work and at home so it probably thinks of you (one person) as, at least, two visitors. And, in the other direction, two different people reading EphBlog from the same computer in Sawyer appear to Google as one visitor.
Ignoring those complexities, is there a simple way to determine how many unique IP addresses visited EphBlog on more than 10 different days since the start of the school year? Not that I can see. Perhaps a reader can help us out. My guess would be that 23% “of all visitors” (bottom row) have visited EphBlog more than 200 times since the start of the school year. If we have a total of 22,792 unique visitors, then our core readership would be about 5,000. That seems much too large to me. Another analysis would take the 22,792 unique visitors and subtract the 21,456 who only visited once, leaving a more-than-one-time readership of 1,300. That seems too small. Suggestions?
Stupid Grins
Ready for another one of my famous parodies? How about this e-mail from Dean McKeon to all Williams students studying abroad:
Hi student travelers,
You have not doubt heard the thrilling news that Barack Obama was elected President last night. Most people here are walking around with stupid grins and new hope in their hearts. We have a long hard road ahead but “Yes we can.”
I believe that this election will change the standing of the United States abroad quite noticeably. I would be delighted to learn from you what you are hearing and feeling and seeing.
All best wishes on your adventure in learning and being,
Laura McKeon
I must have made that up, right? No Williams Dean would so blithely assume that every single student would find Obama’s election thrilling. Only a rightwing Troglodyte like me would ever think that the ideological unanimity of Williams leads inevitably to this sort of stupidity.
Alas, no parody. A student writes:
You can imagine my surprise, then, when I opened an email from Dean McKeon on Wednesday only to find her fawning over Obama as if her were the second coming of Christ. As if this weren’t enough, it was followed by another email two days later with an AP article that, in my opinion, captures the media’s failure in this day and age. Both the email and article are attached below.
Really, is all this absolutely necessary? I wonder if Dean McKeon sent study-abroad students a similar email in 2004 after Bush won–I’ll go ahead and say no. And if her email is accurate, it also makes me wonder what the campus’ political atmosphere is like right now.
No worries, though! Professor Sam Crane is always telling me that the lack of ideological diversity among the Williams faculty (and staff) is nothing to worry about. Perhaps this student should seek psychological counseling. All Ephs should all be walking around with “new hope in their hearts” . . .
Business Etiquette Dinner
Although the competition is fierce, I’ll nominate this as the stupidest event ever sponsored by Campus Life.
Sign up MONDAY in Campus Life to attend the Business Etiquette Dinner.
Wednesday, Nov 12
5:30-8:30
Bus Departs Chapin at 4:45Pittsfield Country Club
Business Attire
And, no, this is not one of those posts where I make up something that seems plausible but is actually a parody. This is the reality of what Campus Life spends money on.
Honest.
Are any readers planning to attend? Please do! And tell us what happens.
Predictions for what might be “taught” at such a dinner? This overview does not sound promising. The whole exercise — Three hours? In a suit? In Pittsfield? — is so pathetic that even a heartless blogger like me is forced to turn away in pity.
Worsening Situation
The New York Times reports on the financial crunch hitting higher education.
Tough economic times have come to public and private universities alike, and rich or poor, they are figuring out how to respond. Many are announcing hiring freezes, postponing construction projects or putting off planned capital campaigns.
With endowment values and charitable gifts likely to decline, the process of setting next year’s tuition low enough to keep students coming, but high enough to support operations, is trickier than ever.
Dozens of college presidents, especially at wealthy institutions, have sent letters and e-mail to students and their families describing their financial situation and belt-tightening plans.
At Williams College, for example, President Morton Owen Schapiro wrote that with last year’s negative return on the endowment and the worsening situation since June, some renovation and facilities spending would be reduced and nonessential openings left unfilled.
…
Vassar College will give out $1 million more in financial aid this year than originally budgeted, even though the endowment, which provides a third of its operating budget, dropped to $765 million at the end of September, down $80 million from late June. President Catharine Bond Hill of Vassar said the college would reduce its operating costs, but remain need-blind.
I never knew that Cappy Hill’s ‘76 middle name was Bond. Is there some union rule that requires the presidents of elite liberal arts colleges (Morton Owen Schapiro, Catharine Bond Hill) to have three names, sort of like presidential assassins?
All of Us
Launch for Claiming Williams tonight.
What’s Claiming Williams All About? Come find out from:
Ephlats, Lily Rodriquez, Coco Smith, Morty Schapiro, Stand with Us, Robyn Marasco, Rachel Ko, Dorothy Wang, SpeakFree: Oriana McGee, Stephane Robolin, Gretchen Long, The Oikos Ensemble, Tony Coleman, Henry Montalbano, Ethan Timmins-Schiffman, Rick Spalding, Shayla Williams. Staff, Students, Faculty. It’s about all of us.
This is at least the second version to appear on WSO. The first made it seem like Claiming Williams was a concert, with no political context whatsoever. Comments:
1) Any event involving the Ephlats, Morty and Rachel Ko ‘09 can’t be all bad. EphBlog’s advice? Go! And tell us what it was like.
2) What is “SpeakFree?” UPDATE: SpeakFree is the College’s spoken word group.
3) Isn’t Stand with Us with us more or less defunct? Do they still have meetings? Who is in charge? Their website was last updated six months ago. (Previous coverage of the events last year collected here. )
4) I stand by my prediction that Claiming Williams will be a complete failure.
But nothing (reasonable) that the College can do could force students to attend the events associated with Claiming Williams. Since none of those events will be anywhere near as fun as Mountain Day, few students will go to them. And those students who do go will be precisely the 10% (2%?) that see Williams as a infected with a “culture of hate and indifference.” There will be much preaching to a small choir.
The central problem is that the people in charge of planning Claiming Williams Day are “hyperbolic and accusatory” in their view of Williams, to quote Professor Robert Bell. “Hate and indifference?” That’s absurd. And, more importantly, 90%+ of Williams students think it is absurd. Why would they bother to attend programming put on by a committee that they think is run by extremists? They won’t. You can cancel classes but you can’t make students pay attention to your cause.
I predict a big day on the ski slopes!
Perhaps the organizers are smart to turn the event into a party. Everyone likes to listen to the Ephlats. A lecture on right thinking and good behavior by Professor Dorothy Wang or Chaplain Rick Spalding? Not so much.
The organizers of Claiming Williams are completely opaque in their plans and, as best I can tell, have sought no input from those suspicious of the whole exercise. (Contrary evidence welcome.) Compare that insularity with the transparency of the Committee on Community Interaction. If you want to make Williams a better place, that’s how you conduct business.
5) My advice for those who want to make Claiming Williams an annual event? Make it as much like Mountain Day as possible. Minimize the politics. Maximize the fun. I realize that this plan conflicts with the vision of some proponents, especially those who see Williams infected with a “culture of hate and indifference.” But if you make it too political, no one will come. And if no one comes, Claiming Williams will be canceled next year.
6) Again, to the extent that you believe that the Williams culture has serious problems, the only way to change it is to start with the freshmen. You can’t meaningfully change seniors. Expand First Days by a week next year and, assuming success, several weeks in following years. Focus on fun projects, games, contests and other activities that introduce as many Ephs as possible to each other. It is a lot harder to be a jerk to someone you know. If every freshmen knew the name of every other freshmen in her dorm (not just her entry) because she had done something (ate a meal, gone on a hike) with all her dorm-mates, the culture of Williams would be improved for the better.