University expects financial stability

In the midst of a national financial crisis, colleges and universities across the United States are grappling with their own economic realities and challenges related to operating budgets, financial aid for students and endowment spending.

“I am confident that we have the ability to weather these difficult financial times,” said Chancellor Mark S. Wrighton in an interview last Friday. “I know that many in the Washington University family are experiencing the unpleasant effects of the recent market turbulence. We will continue to pay very close attention to the financial situation and we will make prudent adjustments as they are necessary — adjustments that will be minimally disruptive to our core academic mission.”

According to Barbara Feiner, vice chancellor for finance and chief financial officer, the University’s broad mix of investments, diverse revenue streams and prudent endowment spending policies should allow WUSTL to lessen the impact of the recent market volatility on University operations.

“We continue to review and assess our financial situation and believe that recent events will not affect our ability to operate the University and address the individual financial situations of our students and their parents,” Feiner said Oct. 9. “We’re not sitting back and waiting to see what’s going to happen; we are proactively taking steps to ensure the University’s economic health during these difficult financial times.”

Feiner said that because WUSTL has been a strong and dedicated steward of all of its financial resources, it is in the position of having the liquidity required to meet its daily needs. The University’s financial strength gives it access to various sources of liquidity, including bank lines of credit, if needed.

But that doesn’t mean that the University can proceed without caution and careful planning, Feiner said. She noted that, as the budgeting process begins for the coming academic year, schools and departments of the University will be reviewing all expenditures to see where appropriate cuts and belt-tightening measures might be made, if necessary.

“It is our responsibility to the entire WUSTL community and to the future of the University to do so,” she said. “Like all of our own household budgets, the University’s may be tight in the near term.”

University financial administrators are evaluating the impact of the current crisis on the endowment, charitable giving, operational budgets and construction plans, as well as the financial situations of students and their families.

Director of Student Financial Services William H. Witbrodt stressed that students who have seen a change in the financial situations of their families are encouraged to visit the Office of Student Financial Services in North Brookings Hall.

“The University is committed to helping students and considering all aspects of the financial circumstances of their families,” Witbrodt said. “We never want to lose one of our great students because a family financial situation has changed. We are here to help.”

During the past year, there have been calls from special interest groups and some in Congress for universities to have a mandated rate of endowment payout. But according to Feiner, the current financial crisis illustrates well why colleges and universities have been adverse to such calls.

“A minimum payout requirement could significantly deplete the corpus of the endowment in a period of investment declines,” Feiner said. “Unlike charitable foundations that are required by federal law to spend a minimum of 5 percent of their assets each year, spending from a university’s endowment is done with a long-term view in mind.”

Kimberly Walker, the University’s chief investment officer, concurs. “Endowment management is challenging during this period of volatility and uncertainty in the financial markets,” she said. “The University’s endowment is managed to both fund current operations and provide for the future. We never lose sight of the fact that what we do today will affect the University for generations to come. Our investment policy calls for a diverse mix of assets that should serve the University well both over the near- and longer-term horizons.”

As the current financial crisis evolves both nationally and at the university level, Feiner said the University is committed to ongoing, clear and realistic communication with the WUSTL community about both positive and negative developments.