Amherst & the Economy

Advisory Budget Committee

Charge to the ABC

August 4, 2011
Amherst College successfully remarketed $41.3 million in tax-exempt securities at 0.2 percent for a 45 day period, a level Amherst officials say they are pleased with because it reflects the college’s strong financial position and substantial resources. Read more in Amherst’s news release.

July 7, 2010
In its most recent periodic review, Moody’s Investor’s Service, whose ratings of the fiscal health of colleges and universities determines the interest rates those institutions pay when they issue bonds, has restored the college to the highest possible rating and outlook that Moody’s gives to colleges. Read more in Amherst’s news release.

January 26, 2010
President Marx sent this letter to students, faculty and staff on January 26, 2010, to update the campus community on the college’s budgetary process and recent Board of Trustees meeting.

August 3, 2009
In late June, the College’s Advisory Budget Committee (ABC) presented a series of recommendations for slowing previously projected growth in Amherst’s budget during the next three years. The President and the Board of Trustees have deliberated on these recommendations and have outlined their response in two statements to the Amherst College community:

Report of the Advisory Budget CommitteeAmherst and the Economy: A Report from the College, as published in Amherst magazine, summer 2009

Background

Across the United States, liberal arts colleges and research universities have been profoundly affected by the economic downturn. From private institutions dependent on endowment returns and gift income to public institutions suffering from steep cuts in state and local funding, higher education’s very financial model is being directly threatened.

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May 30, 2009—In a filled Johnson Chapel during Reunion 2009, Amherst College President Anthony W. Marx offered an overview of the college’s response to the economy and fielded questions from alumni. Play video above, or download MP3

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Many college and university endowments have declined by 25 percent to 40 percent, forcing institutions to make very hard decisions as they grapple with budget shortfalls that are likely to continue for the foreseeable future. To address these shortfalls, the majority of Amherst’s peer institutions have reduced or eliminated hiring, frozen salaries, implemented across-the-board budget reductions and re-evaluated or deferred capital projects. In addition, many are laying off employees and/or implementing voluntary early retirement packages.

Amherst is not immune from this economic distress. Because of past fiscal prudence—and hard work—the college is in a stronger position than it might otherwise have been in. Nonetheless, the college faces significant and steep challenges ahead. It costs approximately $76,500 per year to educate each Amherst student. When financial aid costs are factored in, the figure rises near $95,000. These amounts are substantially greater than next year’s $48,400 comprehensive fee, which includes tuition, mandatory fees, room and board and other charges. Meanwhile, the endowment, which provides 35 percent of Amherst’s annual operating budget, is down approximately 25 percent as of March 31, 2009.

Given these harsh economic realities, the college created the Advisory Budget Committee, or ABC, to review the budget and make specific recommendations for the president and the trustees to consider. The ABC is comprised of faculty, students, staff, alumni and trustees, and consulted with a range of College committees and constituencies in the course of its work, which culminated in a report presented to the Board of Trustees and the campus community in June, 2009.


More Information

The college administration has drawn up a list of questions and answers about the endowment and budget.

President’s Statements:

Alumni, students, faculty and staff are invited to view information presented at a recent meeting on campus about the history of the College’s budget and some of the options for controlling our costs in coming years:

If you have any questions or suggestions, please contact alumni@amherst.edu.

 

Johnson Chapel