Caution, Not Crisis

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Listen to an interview with President S. Georgia Nugent on how the recession is affecting Kenyon.

By the Numbers

View graphs and charts from this issue of the Alumni Bulletin.

Colleges and universities around the country are feeling the pain as the current economic crisis shrinks endowments and sows anxiety among families contemplating tuition payments. Grim news--about salary freezes, layoffs, budget cuts, and construction moratoria--has been issuing from some of the nation's most prestigious institutions of higher learning, including Kenyon's peers.

Middlebury, for example, plans to eliminate at least a hundred staff positions by 2011. Colorado College has axed three varsity sports, including football.

How is Kenyon faring?

Short answer: Caution, not crisis, is the watchword for now.

Longer answer: Determined to preserve the core of the Kenyon experience--the academic program, the close-knit community--the College is tightening its belt "around the edges" and temporarily holding off on major new construction. There will be no layoffs, but most salaries are frozen for next year. And most of the small budget increase for 2009-10 is going into a larger-than-ever contingency fund.

The following report provides more detail about how Kenyon is affected by, and is responding to, the recession.

The big picture

Kenyon's longstanding weakness--a relatively small endowment--means that a plummeting stock market has less impact than it does for wealthier schools. The College relies on endowment income to fund only about 7 percent of its operating expenses. (For Middlebury, the figure is 22 percent. For Grinnell, 50 percent.)

The flip side is that Kenyon relies heavily on tuition and fees, which fund about 75 percent of the budget. (Gifts, support from reserves, and income from auxiliary enterprises make up most of the rest.) "The major factor in our financial health," wrote President S. Georgia Nugent in a message to employees this February, "will be students' and families' ability to afford a Kenyon education. In these times, this factor is no easier to predict than is the stock market."

Working in Kenyon's favor is a tradition of fiscal prudence. "Over time, we have learned how to operate with financial limitations," said Teri L. Blanchard, associate vice president for finance. "We know we don't have the money to make mistakes, so we're very thoughtful about what goes into the budget." Blanchard pointed out that in June, the College will complete its thirty-ninth straight year of operating in the black. And there is no question about continuing that practice in the future.

She added, "Our motto in budget-building is: ‘Let all our surprises be happy ones.'"

The 2009-10 budget: overview

At its February meeting, Kenyon's Board of Trustees approved a 2009-10 budget of $98,124,000. That's an increase of about $2.25 million, or 2.3 percent, over the current (2008-09) budget.

The increase is small compared to recent years. And most of it, $2 million, will go into a contingency fund. The College includes contingency money in the budget every year, but this is a record sum--four times more than the $500,000 budgeted for contingencies in 2008-09.

The reason, simply, is that the unknowns loom larger now. In the past, contingency money has been used to cover unexpected developments like a spike in fuel prices or an increase in workers' compensation insurance premiums. For next year, the biggest concern is financial aid. Kenyon's policy is to meet the demonstrated financial need of admitted students for all four years, even if family circumstances change. With the economy shedding jobs and the stock market battered, both current and incoming students may confront new, unforeseen needs.

It should be noted that, in addition to the contingency fund, the College maintains a reserve intended for use in dire emergencies. Totaling at least 10 percent of the operating budget, this "quasi-endowment" (which is invested) can be used at the discretion of the trustees. If a catastrophe strikes, like a huge drop in enrollment, the reserve will allow Kenyon to respond carefully and deliberately while maintaining normal operations, instead of having to act in haste.

Next year's budget entails an array of cutbacks that don't directly affect the core mission of teaching and learning. For example, the College will eliminate the printed annual report issue of the Alumni Bulletin (the donor lists will be posted online) and will reduce spending on items such as computer equipment and furniture.

Tuition & fees

Kenyon's mandatory charges for 2009-10 will be $48,240. That represents an increase of 3 percent, the smallest increase in more than thirty years.

"The cost of educating a student at Kenyon is actually greater than what is covered by tuition," said President Nugent. "But, in light of the financial uncertainties that families may be confronting this year, the trustees and all of us at the College felt that it was important to keep the tuition increase as low as we could. It now appears that tuition increases for private colleges will typically be about 4 percent next year, so we feel that we were successful in trying to keep costs down for Kenyon families."

The trustees decided last October to keep on-campus enrollment at the current level of approximately 1,600 students for the near future. (At any given time, about two hundred additional students are pursuing off-campus study.) The administration has wanted to bring enrollment down to 1,575, a target set by a board task force in 2004. But "this is not an appropriate time to decrease tuition income" by reducing the size of the student body, said Nugent.

Financial aid

For 2009-10, the financial aid budget will increase by 3 percent, matching the tuition hike. Next year's spending plan includes $20,144,000 for financial aid, more than 20 percent of the total operating budget, a similar percentage as in the current year.

This year, approximately 66 percent of students received some form of financial aid, with the average aid package totaling $34,444. "We are beginning to see more appeals for additional aid than in prior years, due to the economy," said Craig Daugherty, director of financial aid. The contingency fund, he noted, will prove crucial in providing additional aid to students whose parents have lost jobs or seen their home equity and stock portfolios fall.

As of this writing, the aid picture for the incoming class remains unclear, because most admitted students haven't yet indicated whether they plan to accept Kenyon's offer.

Faculty & staff

Kenyon has not cut any faculty or staff positions as a result of the economic downturn and, unlike some other institutions, has no plans for layoffs or furloughs. But salaries will not increase in 2009-10. There are exceptions for two groups. One is the group of nineteen faculty members who, according to a predetermined schedule, were eligible for merit increases in the coming year and went through reviews in 2008-09. The other consists of unionized employees in the Maintenance Department, who will receive previously negotiated increases. (In 2009-10, they will be in the second year of a three-year contract.)


Kenyon's tuition dependency means that successful recruiting is vital every year. But economic turmoil made the 2008-09 recruiting season "the most confounding in my six years here," said Jennifer Delahunty, the dean of admissions and financial aid.

Soaring gas prices and airfares last summer depressed the number of campus visits, while also reducing travel by admissions officers. Those factors--plus families' financial worries--contributed to an overall decline of 12 percent in applications. On the other hand, Early Decision (ED) applications rose, perhaps because anxious families wanted "to lock Kenyon in," said Delahunty. (ED applicants make a commitment to attend if admitted, although they can back out if the financial aid offer is inadequate.)

Concerned about overall applications, the admissions staff took advantage of the higher ED numbers--and their academic strength--by admitting a record number of ED applicants. The College filled an estimated 48 percent of the first-year class with ED students.

Acceptance letters for the Regular Decision applicants went out in late March. Counting both ED and regular applicants, Kenyon received 3,985 applications and admitted 1,528. The selectivity rate, 38 percent, compares to 31 percent last year.

The College anticipates enrolling 450 students in the Class of 2013.

The endowment

Kenyon's endowment, valued at almost $188.7 million on June 30, 2008, has suffered in the market downturn along with the investments of other colleges and universities. Across the country, endowment returns dropped by 22.5 percent between July and December of 2008, according to a recent survey of 435 institutions.

Kenyon's losses may turn out to be similar, said Vice President for Finance Joseph Nelson. But as of this writing, it's hard to be precise because the College has a good many illiquid alternative investments, such as venture capital, private equity, real estate, and energy funds. Year-end reports for many of those funds weren't yet available when the Bulletin went to press.

In calculating how much endowment income to use for the operating budget, Kenyon uses a formula that depends only partly on the endowment's market value and that takes a three-year average of that value. For every $1 million that the average changes, the budget impact comes to only $12,000. Thus, said Nelson, "even though there has been a significant market correction, the impact on the budget is manageable."

In recent years, the College's endowment performance has been in the top decile of all endowments surveyed annually by the National Association of College and University Business Officers.

Annual giving

The Kenyon Fund and the Kenyon Parents Fund don't close out the giving year until June 30. (Note to procrastinating donors: there's still time to give!) As the year advanced, though, it was clear that the tough economy was affecting both funds.

"When the economic news of last fall rolled out, a significant group of our donors paused, understandably, before making their gifts," explained Sarah Kahrl, vice president for college relations. "We're now seeing those donors and dollars returning."

Last fall, Kenyon Fund totals were lagging as much as 19 percent behind the previous year, but the Fund has climbed back to about 6 percent less, and results continue to improve. A big factor was a drop-off--of more than 30 percent--in matching funds from corporations. Many companies, tightening their own belts, eliminated matching-gift programs. The Parents Fund was down by 5 percent. Donor numbers were down as well.

The results mirror a national trend. A December 2008 survey of 214 institutions revealed that annual gift receipts were lower at more than half of the schools, with 17 percent reporting decreases of more than 10 percent.

For 2008-09, the combined goal of the annual funds is $5 million--of which about $4.8 million figure in the College budget, representing roughly 5 percent of revenues. Striving to meet the challenge, alumni volunteers have been making calls in a new set of phonathons around the country. Members of the Parents Advisory Council, meanwhile, have issued a challenge, pledging to give an additional $28,500 if more than 50 percent of parents give to the Parents Fund. (Last year, 53 percent gave.)

The campaign

"Kenyon people are wonderful." That's how Kahrl summed up the progress of the "We Are Kenyon" campaign in a report to volunteers earlier this year, even as daily headlines painted a picture of economic turmoil. Despite the economic news, donors continue to make significant gifts to the campaign.

The campaign is meeting its milestones on the way toward its goal of $230 million. Between July 2008 and April 1 of this year, total campaign gifts rose from $142 million to more than $157 million. Kahrl expects to hit the $160 million mark by June 30, the end of the fiscal year. Among other achievements, she anticipates that by June's end the College will have raised $50 million in new gifts to financial aid endowment, increasing endowment assets for scholarships by 100 percent since the beginning of the campaign.

Major gifts received recently include $1.25 million from the George B. Storer Foundation to endow the James P. Storer Honors Scholarships, $2.15 million from Kenyon parent John W. Adams P'93,'13 to establish the John W. Adams Summer Program in Socio-Legal Studies, and more than $2 million in new gifts to the new visual arts facilities.


This spring, the College completed two smaller projects: Finn House, the new headquarters of the Kenyon Review; and Lentz House, serving the English Department. But, as of this writing, the two big campus construction projects--buildings for studio art and art history--are on temporary hold. In February, the trustees decided to continue a pause in the projects, for which a good deal of site work is already done. The College will invite new bids for the projects, in the hope that costs have declined in the current economy.

The future

"This year gives us particular reasons to be very proud of Kenyon College and to be optimistic as we look to the future," said Nugent. "We are weathering this financial storm well, in part because of our long, ingrained fiscal prudence. But, perhaps even more than that, what is clearly at the heart of the College's financial well-being is the fact that a Kenyon education is very highly valued by our current students and families, our alumni and donors, and the public.

Nugent added: "The quality and depth of our applicant pool, the strength of the faculty who come to the College, the continuing success of our annual funds and capital campaign--all of these contribute to our financial strength, and all of these are themselves grounded in the understanding that what we offer to our students at Kenyon is an educational experience that is distinctive and valuable."

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