Update: Haverford & The Economy
Dear Fellow Members of the Haverford Community,
As we begin the budget process for fiscal year 2010-11, I'd like to take a moment to update you on Haverford's financial situation.
First, I want to reiterate our appreciation for the community's support and hard work in identifying expense reductions that resulted in a balanced budget for the current 2009-10 year. Thanks to you, we were able to minimize the impact of significant endowment losses by reducing endowment spending by an amount that was proportionally equal to the decline in last year's market value. In short, we“took our medicine” all at once, and that has helped the endowment to bounce back (up to ~$360 million) while avoiding what many other schools are now facing: the prospect of continued substantial budget cuts. We also are in a strong liquidity position, i.e., we have ample cash reserves to meet our operating and endowment needs.
We accomplished this without taking on new debt as did some institutions. Indeed, Standard & Poor's recently reaffirmed our AA debt rating, stating it expected that“Haverford will continue to demonstrate impressive demand, maintain sufficient financial resources for a AA rating, and generate balanced operations while keeping its endowment draw at an acceptable level.”
In short, we are operationally sound, and the Board of Managers, President Emerson and I thank you for making that possible.
Looking ahead, we must remain mindful of ensuring our long-term financial health, and so we are investigating several possible formulas that could be used to determine our endowment spending rate for the coming year and beyond. While the current spending formula has served us well for many years, the Board prudently and deliberately overrode its prescription for the current year and is exploring if another approach might be warranted. Members of the Finance and Investment Committees of the Board are being very helpful in this exploration.
In the next several months the Administrative Advisory Committee and senior staff will be working with individual offices and departments as we craft an operating budget for 2010-11. The lingering effects of the recession are likely to slow the recovery of our primary sources of revenue, and we again ask for your support in controlling expenditures. We will have additional updates on the budget situation later this year and early in the next.
G. Richard Wynn
Vice President & Treasurer