Message from the President
November 20, 2008
Dear Members of the Holy Cross Community,
I am writing to update you on the College’s progress in our continued assessment of current financial conditions.
During this time of economic uncertainty and turmoil, communication is very important. I am pleased to tell you that there is a new resource on the Web site of the President’s Office with frequently asked questions about the College’s response to current economic conditions. We will be letting alumni, parents, and friends know about this site, and updating it regularly.
One of the most difficult elements of the current financial crisis is the great uncertainty about how long and how deep the downturn will be, both in the economy and in the financial markets, and how great an impact it will have on individuals and institutions. That creates challenges for us in our own planning and budgeting. We are looking at various scenarios to ensure that we can respond to any foreseeable conditions.
There are several areas where we expect the current economic situation could affect us, including the following:
- Financial Aid. We expect that the biggest impact for the College will be on families’ ability and willingness to pay for a Holy Cross education. Admissions, enrollment and financial aid are all being carefully scrutinized; and we will make adjustments as necessary. We are also setting aside reserves and building flexibility into next year’s budget to meet increased financial needs for our students and their families.
- Admissions and Retention. Current students and their families seem as committed to Holy Cross as ever; and interest in admissions for the Class of 2013, including early admissions, appears to be strong. However, it is still very early. What happens here will depend in part on what we can do in financial aid.
- Short-term investments. With short-term interest rates very low, we are getting much less income from our cash reserves.
- Endowment. Endowment returns were down by a modest amount at the end of the last fiscal year (June 30), which means that the amount available for spending next year will be somewhat less than originally expected. It is very likely that the drop will be much greater in the current year, which will have more serious implications for fiscal year 2011 and beyond. Most of our peers in higher education are seeing this as well.
- Fundraising. The impact on our annual giving program – which is essential to meet the ongoing needs of the College – is also uncertain. Our development staff and volunteers are making every effort to protect the fund and ensure that it achieves its goal
- Liquidity. Like hundreds of other colleges and universities, we had substantial cash reserves invested in the Commonfund, which were suddenly frozen last month. We have received more than half of those back and have adequate supplies of cash from other sources to cover our needs.
I can assure you that because of conservative budgeting and planning and careful financial management, we remain in a healthy position and are well situated to deal with these challenges. We will continue our commitment to provide our students with the high quality education and formation that brought them to Holy Cross in the first place and for which their families are making great financial sacrifices to keep them here.
Nevertheless it will be necessary to make some adjustments. Although we do not currently see the need to institute a freeze on hiring or capital projects, as some institutions have, it is likely that we will have to delay some planned major construction and hold off on filling some vacant positions. It is also evident that there will not be room in next year’s budget for new programs and initiatives that would require additional funding; and most operating budgets are likely to be held at current levels. We will inform you of other adjustments as they are deemed necessary.
Going forward, I will continue to keep you informed of financial developments and our own position and responses.
Many people around the world are suffering from the current financial distress; and it will probably get worse before it turns around. It would be foolish to expect that we would not be affected, especially if we are to continue our commitment to our students and their families, as well as the communities we serve. We can come through this as strong as ever if we focus even more intently on the College’s fundamental mission, our strategic priorities, and our commitment to provide the highest quality education for our students and support their integral development, while keeping Holy Cross affordable and accessible for qualified students from every background.
Michael C. McFarland, S.J.
President