This year, we’ve editorialized on the urgent need for mental health services and staff wage increases, highlighting vast funding gaps in areas that should be the college’s top priorities. Meanwhile, Middlebury is touting the unprecedented growth of its $1.5 billion dollar endowment, and the college has announced plans to draw only $55 million from the endowment this year. At 3.67% of the total endowment, this draw is $6 million less than the withdrawal last fiscal year.
To receive a school-wide email advertising our massive endowment growth when there has been no consequential action to put money into the areas that need it most feels frustrating at best and demoralizing at worst. To our community, and particularly those who do not understand the intricacies of donor-restricted funds, this messaging seems hypocritical and insensitive. In light of the college’s announcement, we want to take this opportunity to ask the college to finance its values today rather than defaulting to austerity.
First, we ask that the Board of Trustees temporarily adjust the cap on the endowment draw from an average of roughly 5% to 7%. This adjustment could make a massive difference in the quality of life for community members, and we believe that this amount would still maintain the longevity of the endowment. A temporary spending adjustment of around 7% is in line with the annualized ten-year return of 7.4% as of 2018 and, in our opinion, would still ensure adequate financial funds for future generations, even with the possibility of a future period of declining growth and adjusting for some inflation. And, this spending is necessary to address funding inadequacies in key areas of the college.
During the 2001-02 school year, the college voted to temporarily increase the spending cap on the endowment to a high of 7.1% over the course of seven years to finance several building projects, such as Ross Commons, Atwater Commons, BiHall, the new library and athletic facilities. If the college can temporarily draw more from the endowment to fund building projects, then the college can most definitely draw from its endowment to support its students and staff.
In a Q&A posted on the Middlebury College website, the college claimed that “the option to raise spending from the endowment above the 5 percent ceiling once again represents a lever of last resort, taken only after measures to control costs have proven to be insufficient to balance our budget.” While we understand the benefits of a balanced budget for financial sustainability, staff wages, mental health services, faculty and students are in dire need of funding. Financial security and prioritizing student and staff needs are not in opposition to each other. Drawing more from the endowment would allow us to both fund these essential needs while reducing our budget deficit.
Many justifications for conservative endowment spending point to the notion that future generations of Middlebury students depend on those funds, and that the college needs to be frugal with their spending during times of growth to compensate for times when the value of the endowment may fall. This is what administrators call intergenerational equity. We acknowledge and support the need to preserve the endowment to fund programs in the future, but drawing an additional 2% temporarily will not drastically erode the future wealth of the endowment given its typical level of return. Drawing these additional funds now is reasonable to address the current crises that the college needs to take care of.
Secondly, our community deserves consistent transparency regarding what endowment funds are being spent and when, especially since it has experienced such unprecedented and unforeseen growth. Though the college reports this information yearly in their audited financial statements, it is not accessible to anyone not well-versed in finance, and yearly endowment updates only scratch the surface. At the time of publication, the endowment overview page on the college website had not been updated since March of 2016. Gatekeeping information about Middlebury’s finances in this way infringes upon the general Middlebury community’s ability to hold the college accountable for its spending priorities.
In an October all-school email about the endowment increase, Vice President for Finance and Administration David Provost stated that “the majority of these funds are being directed back to our students in the form of financial aid, instructional support, and student services support.” However, it remains unclear what form these supports will take or how much is being spent on them. We as students deserve intentional and clear communication regarding how our institution plans to use the additional funds afforded by endowment growth.
There are significant degrees of separation between the student experience and the Board of Trustees, who make decisions about tuition increases and the annual endowment draw. We understand that there are a couple students who advise certain Board committees, but we remain unsure to what degree the Board is aware of the situation on the ground at the college. We want to take a moment in this editorial to specifically address the Board: We’re struggling; our staff and faculty are struggling; and our Middlebury experience is suffering because the institution that has sworn to support us has chosen stinginess instead of support.
It’s also possible that the college cares about growing the endowment to keep up with peer institutions (the endowment at Bowdoin, a school with nearly a thousand fewer students than Middlebury, now stands at 2.72 billion) but we hope that the college’s pride is never prioritized over our experience. And for students who require immediate mental health resources or staff who can barely support their families, it isn’t just about their experience, but their survival as well.
The college could, on the other hand, look to some other schools for inspiration regarding how to use their endowment growth to their community’s advantage. Smith College, for example, opted to eliminate all student loans in exchange for grants. The chair of their Board of Trustees noted how “this is a bold and significant investment for Smith, one that reflects the college’s commitment to its students and their futures.”
All in all, Middlebury has the ability to pay staff adequate wages — wages that could save staff from having to seek out a second or third source of income. The college has the ability to give raises to professors. And it has the ability to reform financial aid and mental health programs for students. But in order for Middlebury to do so, it needs to begin to prioritize the well-being of those who currently live and work at the college — even if it means drawing more from the endowment.