- What does the current downturn in the economy mean for Wesleyan?
- What is Wesleyan doing in response to the economic downturn?
- Who decides what program cuts or service reductions will be made?
- Is there a hiring freeze in place at Wesleyan?
- Are layoffs contemplated?
- How does this affect compensation?
- Does Wesleyan have resources set aside to provide flexibility in an economic downturn?
- Wesleyan has $503 million in endowment. Why don’t we “borrow” from the endowment to solve our current financial challenges?
- Does Wesleyan’s recent endowment performance suggest questionable investment management?
- What does the termination of the Commonfund Short Term Fund mean to Wesleyan?
- Will facilities projects continue?
- Will there be changes to our employee health, retirement and other benefit plans?
- As the economy recovers, will Wesleyan continue its cost reduction efforts?
- Will Wesleyan continue to pursue the curricular initiatives outlined by President Roth?
- How will the current economic situation affect Wesleyan’s financial aid policies?
- How can Wesleyan assist families whose personal financial circumstances have changed?
1. What does the current downturn in the economy mean for Wesleyan?
Recent events in the financial markets and accompanying declines in the stock markets have reduced the support that the operating budget receives from Wesleyan’s endowment. If an extended economic slowdown occurs, it is likely to have an impact on charitable giving. In such a case, two of three primary sources of revenue at Wesleyan might decline and fall short of targets. The third major source of revenue, student charges, cannot be increased to the level necessary to cover expected revenue shortfalls.
2. What is Wesleyan doing in response to the economic downturn?
We continue to look for ways to reduce expenditures across the institution. The Cabinet and senior managers have examined their operating budgets for both short– and long–term savings. Wesleyan will also delay construction and capital spending projects. This is a serious economic downturn and we must explore all options to right size the budget.
3. Who decides what program cuts or service reductions will be made?
Ultimately, these decisions will be made by the President in consultation with the Board of Trustees, Cabinet and appropriate advisory groups.
4. Is there a hiring freeze in place at Wesleyan?
We continue to review all positions currently open, determining which need to be filled immediately, and which can be put on hold for the time being.
5. Are layoffs contemplated?
Reductions in staffing will happen through normal employee attrition and reorganizations, as well as the new Voluntary Separation Program. If additional budget reductions are needed, staffing levels will be reviewed.
6. How does this affect compensation?
As previously announced, 2009/10 salary levels will be frozen at 2008/09 levels. In addition, the bonus pool for staff has been eliminated.
7. Does Wesleyan have resources set aside to provide flexibility in an economic downturn?
Yes. Wesleyan has one–time reserves to assist with any shortfall. Reserves are not a permanent solution to a systemic downturn in revenue, but they can provide some temporary flexibility. We will evaluate other means to address our financial shortfall in the longer term.
8. Wesleyan has $503 million in endowment. Why don’t we “borrow” from the endowment to solve our current financial challenges?
Wesleyan has $503 million in endowment. Why don’t we ‘borrow’ from the endowment to solve our current financial challenges?
9. Does Wesleyan’s recent endowment performance suggest questionable investment management?
No, endowment performance has compared favorably to our benchmarks. In FY2007, our endowment return was 19 percent. Last year, our endowment decreased 4 percent.
10. What does the termination of the Commonfund Short Term Fund mean to Wesleyan?
Wesleyan is one of many colleges and universities that participate in the Commonfund Short Term Fund. Schools use the fund for short–term investments. Our cash flow strategy, together with the Fund’s ongoing liquidation and distribution plan, will provide adequate liquidity to cover expenses throughout the year.
11. Will facilities projects continue?
Yes, but only if projects are funded, such as the Allbritton Center for the Study of Public Life in Davenport. The Molecular and Life Sciences Building project will be delayed until additional funds are received or our endowment grows to generate borrowing capacity. We plan to make investments in Hall–Atwater and Shanklin as our financial situation permits. We will also reevaluate all major maintenance projects and only emergency projects will be completed.
12. Will there be changes to our employee health, retirement and other benefit plans?
Apart from routine increases in employee contributions, we do not expect any significant changes. This may change based on the severity and length of the downturn.
13. As the economy recovers, will Wesleyan continue its cost reduction efforts?
Yes. Wesleyan’s expenditures have increased over the last decade. We believe it is important to review our expenditures to reduce expenses and focus our resources on priorities. Even before the current financial crisis, Wesleyan’s expenditures were heavily supported by the annual fund at the expense of increasing the endowment.
14. Will Wesleyan continue to pursue the curricular initiatives outlined by President Roth?
Yes, we will continue to explore opportunities for innovation and new initiatives even as we have to realign our current priorities and programs.
15. How will the current economic situation affect Wesleyan’s financial aid policies?
Wesleyan is committed to ensuring access regardless of a students’ ability pay. The financial aid grant budget is one of the largest yearly expenditures. We are reviewing our policies to ensure that our grant aid dollars are used as effectively as possible to maintain our commitment to access.
16. How can Wesleyan assist families whose personal financial circumstances have changed?
Families may wish to explore various financing options specifically designed for education. A good starting point is http://www.wesleyan.edu/finaid/finance.html Borrowers with good credit will find a variety of alternative loans available with attractive repayment terms. Please feel free to contact the Financial Aid Office at 860-685-2800 or finaid@wesleyan.edu to discuss options.
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