‘Nova adjusts endowment, financial aid

Kathryn Drew

Talk of the recent economictroubles has been buzzing all overthe world lately, and Villanova is noexception.

In these difficult times, the Universityis employing a conservativeapproach when it comes to theschool’s budget. The investmentcommittee, which includes twofaculty members as well as VicePresident of Administration andFinance Ken Valosky, constantlykeeps a long-term view.

“We don’t panic in down markets,and we don’t celebrate in goodtimes,” Valosky said.

Handling the endowment involvesthree major components,according to Valosky. First, thecommittee pays close attention toasset allocation, making sure that allthe University’s assets are investedwisely. Secondly, the selection ofmanagers chosen to oversee theseassets is critical to ensuring carefulmonitoring of the University’sfunds. Lastly, and most critical tothese times, the University employsan endowment spending rate whendrawing from its resources.The endowment spending ratesmoothes the impact of changes inthe market, making the impressionof the economic crisis on the University’sassets far less serious thanif another method was employed,according to Valosky. Each December,the endowment spending rateis calculated by taking the averagemarket value of the endowment overthat last 12 quarters. Five percent ofthis number is allowed for spendingby the University. This money isused to finance necessities, such asscholarships, general operations andcapital needs.

There has been a drop in thevalue of the endowment, but dueto the endowment spending ratemethod, the effects of the decreasewill be virtually non-existent, accordingto Valosky.

This fiscal policy allows Villanova’sendowment to absorb mostof the shock from sporadic marketchanges.

“Endowment support to theUniversity’s budget is anticipatedto increase over the upcoming fiscalyear,” Valosky said.

The University is also encouragingvarious departments to assesstheir individual budgets in an effortto minimize costs and unnecessaryspending.

Due to the way the endowmentis handled by the Administration,there is little cause to worry aboutthe state of the University’s assets.The concern throughout the Administrationis geared more towardhow these difficult times will haveindirect effects on the Villanova community.

Most pressing is the impacton the Villanova families because themain source of money for the budgetcomes from tuition and fees.The economic crisis has comedown hard on individual families.In response, the Administration hastaken a closer look at what impactthe market changes have had onfamily investments and credit, accordingto Valosky.

The Administration plans torevamp financial aid policies andemploy more moderate tuitionincreases. Of the more than $61million the University budgets forfull-time undergraduate financialaid presently, $41 million of that isawarded to undergraduates primarilyon the basis of need.

Administrators are constantly incommunication with each other toprovide for the Villanova students.The administration expects thatVillanova families already have goodcredit and will therefore, continue todo so. Students with concerns are encouraged to meet with financialaid advisors.

“We feel very confident that wecan continue to assist studentsdirectly impacted by the financialcrisis through our financial aid programs,”said Stephen Merritt, deanof enrollment management.

He said the Administration works hard toensure that no student leaves theUniversity for monetary reasonsunless absolutely necessary.In terms of enrollment interest,so far there has been no discernabledisruption in number of studentsexpressing interest in enrolling asfreshmen for the fall 2009 term.While too early to predict this year’sfinal application levels, Merritt saidthe University is confident that theinterest expressed thus far willtranslate into a competitive andqualified Class of 2013.

Also, the graduate program atVillanova is enjoying an influx ofapplicants. Graduate programs arecounter-cyclical to the economy. Asthe markets falter, graduate schoolapplications soar.

The economic downturn will alsoinevitably have an effect on employmentat the University, as the majorityof costs come from salaries andwages. The Administration plans toformalize a review process for openfaculty and staff positions but notinstitute a hiring freeze, accordingto Valosky.

Some effects of the economicproblems are unavoidable, evenwith an excellent fiscal policy. Withthe rise of utility and food costs, itis impossible for the budget to avoidall the pressures associated with themarket issues.

Also, short-term investmentincome is significantly lower thanusual because of the severe dips inthe market, according to Valosky.The University has a smallamount of long-term debt, which isvariable, on which the rates reachedas high as 7 percent in the last year.However, in the last week alone,rates have dropped below 2 percent,which is favorable.

The duration of the recession isa major issue because the longer itlasts, the greater the potential forlong-term impact. Administratorsare taking every precaution to makesure the future of the University issecure. Despite several concerns,the Administration stresses thatlong-term focus is of utmost importance.Right now, administratorsare satisfied with the liquidity ofthe University’s assets, but continueto monitor market conditions daily,according to Valosky. The Universityintends to use reserves to deal withthe economic problems, which maydelay anticipated projects such asthe University’s Strategic and CampusMaster Plans.

Valosky said that the Administrationis working tirelessly to makesure the shocks of the current timeshit the campus with minimal forceand that the economic outlook of theUniversity remains positive.”We have always lived within ourmeans, and we have prided our selfon that,” Merritt said.