In the wake of an economic downturn that has affected the economy nationwide, Mills College’s endowment has plummeted. But officials say the institution is secure and going forward will only have to make minor cutbacks to its overall budget.
But Mills remains strong compared to other universities, according to President Janet Holmgren and Jim Andrasick, a current trustee and member of the Board’s finance committee.
“In this environment, everything is relative.” Andrasick said. “Compared to other institutions similar to Mills, the College is holding its own.”
Holmgren said the College’s financial situation remains secure.
“We are remarkably free of debt,” she said.
According to LaDene Diamond, Vice President for Finance and Administration and Treasurer, Mills has approximately $35 million in bond debt though it’s undergone $100 million in construction projects in the last 10 years.
Along with relatively low debt, Mills has committed itself to intense fund raising efforts from alumnae and major donors.
“We have certainly built up our endowment in the last 20 years,” Holmgren said. “We have had very generous gifts from so many people. In the last campaign, we raised over $130 million and we had 11 thousand donors.”
Diamond said in an email to the Campanil that the endowment has decreased from $233 million at the end of the 2008 fiscal year to its current value of $176 million. In December 2008 the endowment was at a low of $155 million while it jumped to $210 million at the end of the 2009 fiscal year.
The College also depends on bequest gifts, which are donations Mills receives through the wills of the deceased. Holmgren said a study conducted by the College revealed that its bequests have been fairly consistent over the last decade, varying year to year from $5 to $7 million.
“You can’t count on bequests because … as we say in the business, you don’t know when a bequest will mature,” Holmgren said. “But we know these gifts are in the pipeline for Mills.”
Diamond said while the average is $5 million a year, it “includes several very large bequests, so from year to year the amount is not consistent” Diamond said.
In a report released March 19, Moody’s Investors Service downgraded its rating for the College to Baa1 from A3. The rankings are part of the company’s index that measures a company’s credit risk and likelihood of default if it wants to borrow money.
The report said “The downgrade is driven by the College’s continued weak operating performance, with multiple years of deficit operations.”
Moody’s took into account the College’s larger than average number of bequest gifts last year, but said those couldn’t be counted on.
“The part of that rating that was not correct was that concept that we were spending beyond our means, because an institution has flexibility in terms of how they choose to spread their restricted gifts over time,” Holmgren said.
She also said Moody’s has used fluctuating enrollments as a factor in its downgrades.
Though graduate enrollment increased, undergraduate enrollment has declined slightly this year compared to last. Fall 2008 saw 973 students while last fall the headcount was 926.
Andrasick said balancing the budget is very important.
“We have to balance the budget each and every year,” Andrasick said. “We do have to watch every dollar coming in and going out.”
Holmgren said Mills will slow faculty hiring and decrease the size of next year’s operating budget. She said officials are looking at places to cut though she wouldn’t give specifics.
“We expect to trim a relatively small percentage, about three percent, of our overall expense budget,” she said.
Holmgren also said she did not expect the College to exercise any layoffs or other personnel-related cuts.
Andrasick and Holmgren both said financial aid will not be affected by future budget cuts.
“I would say certainly as a goal, the College puts great importance on maintaining, if not increasing, the financial aid available to students,” he said.
Holmgren said she is committed to ensuring the College’s next president will take over a fiscally sound institution. “I want to hand Mills over in a very strong position financially to the next president,” she said. “It would have been our hope to start this $15 million student center project, but I think, while we want to be shovel-ready, we need to think about how we can make do for a little while before we embark upon another major project.”
According to Holmgren, the College’s primary goal is to remain committed to academic excellence.
“We do not want to cut into our retention efforts. We do not want to cut into our quality of education,” she said.
Overall, Holmgren said, “We have weathered this crisis well, and we will continue to weather it well, but we have to be fairly frugal.”
— Alixandra Greenman contributed to this report.