Money Freeze?

Myers addresses SLC's financial "vulnerability"

by Kimmie Nguyen

Tuesday October 11, 2005

Although the academics at Sarah Lawrence are the strongest they have ever been, the college remains financially "vulnerable," according to President Michele Tolela Myers.

In the last issue of The Phoenix, an editorial by David Brody quoted Myers saying, "Sarah Lawrence is in serious financial jeopardy" at an alumni fundraiser.

In response to the quote, Myers stated, "financial jeopardy would indicate a crisis— a financial crisis, which we are far from having. But [SLC] has always been… a place that has been financially vulnerable, and there are some very simple reasons for that. And the fact is that we have a very small endowment."

The current size of the endowment is close to $55 million. Myers attributed the small size of the endowment to the school being "young," as well as the late development of the endowment and alumni network. Myers also mentioned the difficulty of raising funds from alumna who are predominantly female.

In comparison, schools in Sarah Lawrence’s peer group have much larger endowments.

"All of them have sometimes 10 times— 15 times the size of our endowment. Schools such as Vassar and Smith have endowments at $600 and $925 million, respectively," said Myers.

Those schools can weather problems more easily, but SLC has "practically no cushion," Myers said. "And the reason we have this vulnerability is because we provide an education that’s very expensive."

The education that Sarah Lawrence provides— the seminar and conference systems, the one-on-one don meetings, and the small student to faculty ratio— requires a lot of faculty.

"Sixty-five to seventy percent of what SLC spends is spent on the compensation of faculty and staff," Myers said, "So we have a lot of fixed costs that are very high."

According to Myers, SLC provides the most expensive education and has the smallest endowment of its peer group. "It’s why the tuition is very high," she said.

However, the college maintains a 6:1 ratio when other "much wealthier" schools have a 9:1, 10:1 or 11: 1 student to faculty ratio, Myers said.

"That’s the one thing [on which] we won’t relent. We just will not change that," Myers said.

Still, SLC is unlikely to break even this year. Myers anticipates a budget deficit.

According to Brody’s editorial, the school "has an unforeseen deficit of $1.8 million." While Myers confirms the number, the $1.8 million actually refers to an estimate of the college’s "coming deficit."

The number will change throughout the year and the school will not know for sure until the end of the year, Myers said.

"Utilities are going to be up. We’re going to pay more for gas and oil, that’s for sure. Everybody is. So that’s creating one of the problems for us. We’re going to certainly live through it, but it is a problem," Myers said.

"But it isn’t a situation where the school is going to collapse," she said. "It’s very strong. Actually, it’s a lot stronger now than it was 10-15 years ago."

As for utilities, Sarah Lawrence will need to be "careful and frugal" with energy this year, said Rengers, director of operations and facilities. This means keeping the heating zone at about 68 degrees this winter and 74 degrees come summer.

Last year, Sarah Lawrence spent roughly $30 to $40 thousand on gasoline. This year Rengers expects to spend $80 thousand.

"So if we do nothing, not one extra mile of trips this year, the cost of gasoline to the college—just because of the price increase—is more than twice," Rengers said.

However, the college is not limiting the number of trips.

On the other hand, to compensate for inflated costs, Rengers has increased his budget. "It’s not a direct result of [gasoline prices], but we will be doing less repairs and renovation, not to the degree of the whole increase in utilities, but just because there were areas where I could in fact postpone things."

"It’s going to be a very tight budget year," he said. "And energy is one of those factors, and it’s one of the ones we control the least." In order to operate, SLC depends on three sources of revenue: net tuition (tuition minus financial aid), endowment income and gift money from alumni. The size of the budget is roughly $57 million.

"And…close to 80 percent of that comes from net tuition," Myers said. The college is "highly dependent" on having a "strong enrollment" with both students who can pay full tuition and students on financial aid.

"We’re not able to do certain things, because we are really investing most of [the revenue] into the educational mission of the institution," Myers said. SLC is "strong" because lots of students come here who want this kind of education.

"Which is why we’re growing," Myers said. "So, I would say that although we are financially vulnerable, educationally we are the strongest we have ever been."