Amherst Magazine

Better Than Expected

By Emily Gold Boutilier

The Amherst endowment ended the fiscal year on June 30, 2009, with an investment performance of negative 20.1 percent. After accounting for gifts to the endowment and spending from it, the endowment balance was $1.3 billion at the end of the fiscal year, down a total of 23.4 percent from the year before.

“It’s hard to be happy about a $400 million reduction in endowment value,” says Peter Shea, the college treasurer, “but that result is better than we had projected, so from that perspective it is good news, especially for the long-term planning at the college.” The college had been projecting a 30-percent loss for the fiscal year.

Despite the 2009 return, the endowment’s average annual return for the past 20 years is positive 11.6 percent.
The better-than-expected numbers, combined with budget cuts, will “go a long way to bringing us back into financial equilibrium within 10 years,” Shea says. In the 2009 fiscal year, the college trimmed $3.5 million from the $163 million budget by making cuts to non-personnel spending. About 40 percent of Amherst’s operating budget that year was funded by endowment distributions—a number that is expected to remain unchanged in the current fiscal year. (These budget figures include debt service, which was accounted for separately in the past.) The projected budget for the current fiscal year is $168 million.

Last spring the Advisory Budget Committee—a group of faculty, staff, students and trustees—made recommendations on cutting $37 million from the 2010, 2011 and 2012 projected budgets. (Another $11 million had already been eliminated from the projected 2010 budget by, for example, freezing salaries and further reducing non-personnel budgets.)

The ABC recommendations included, among other things, reducing the number of staff and administrative positions, if possible through voluntary retirements and attrition; further reducing the number of visiting faculty; and additional reductions in non-personnel budgets across the board.

The committee recommended no change in basic financial aid policies—the college will work to ensure continued access to Amherst with strong financial aid. The ABC also suggested increasing the number of searches for tenure-track professors (to replace visitors) and continuing to plan to build new science facilities.

The Board of Trustees and the administration have since moved to implement the ABC recommendations. The plan is to resume salary increases next year, if at more modest levels than in the past.