---

BY IAN YARETT

In print | November 8, 2007

On Tuesday night, Student Council hosted a discussion of the college’s financial structure with President Al Bloom and Vice President for Finances and Treasurer Suzanne Welsh. Bloom and Welsh explained various elements of college finances to a large audience in Science Center 101.

Bloom started the discussion with a brief presentation, followed by another presentation by Welsh. Afterward, the floor was opened to questions from the audience, with Student Council President Peter Gardner ’08 and Financial Policy Representative Sarah Roberts ’08 asking the questions that were sent to Student Council beforehand.

Bloom opened the discussion, describing it as a “wonderful opportunity” and then asking how it is possible that he has to spend 50 percent of his time fundraising, as president of a college with a $1.49 billion endowment and a $45,000 tuition. After his introduction, he went on to describe Swarthmore’s three major revenue sources: tuition, the endowment, which has been built by gifts over the years, and the annual fund, which consists of non-endowed funds given directly to the college.

While the tuition funds are used for expenses such as room and board, financial aid and faculty, the endowment and gifts are used to fund other necessities, such as staff salaries, equipment, programs, the library, legal fees and the health center.

Bloom described the budget as extremely tight when it comes to funding new things, with no more than $100,000 of leeway each year. The total cost of each student’s education per year is $78,427, with only about $30,000 brought in annually per student on average. “The college has been and will continually be dependent on philanthropy,” Bloom said.

Welsh described the timeline of the budget, explaining that most elements of the budget stay relatively constant from year to year. In October, the rolling 5-year budget projection is updated, and then in December, departments submit their requested budgets. The budget is finally approved at the February meeting of the Board of Managers. Both Welsh and Bloom emphasized that capital campaigns are really the only way to fund major new things.

Welsh also explained that there is a 4.25 percent use of the endowment every year, but that it is limited by a number of factors. Since much of the endowment is invested in stocks, which can increase or decrease in value, the budget can’t be based on how well the budget does in a given year. Welsh said that the college works to avoid being put in a position where budget cuts could be necessary.

According to Welsh, transparency in terms of the endowment investment is limited because the college hires firms to handle the investment of various portions of the endowment, and that these firms tend to require confidentiality to maintain their competitive edge. Hiring firms like this, Welsh said, is essential to maintaining the highest possible return on the endowment.

When asked if students would be able to see a detailed budget for a department if they had an idea they thought should be added, Bloom explained that the best course of action would be to go to the appropriate department, the budget committee or the planning committee. Bloom explained that college will not provide information on the specific budgets of departments, for example, because there is worry that people looking at the figures would not have the knowledge to fully comprehend them, and could misinterpret their significance. The details could potentially be used as “political weapons,” or used in “insidious comparisons.”

Issues surrounding financial aid were also discussed, especially the potential for eliminating the loan component of aid, as Princeton University has done. At Swarthmore, where 50 percent of students are on financial said, that change would cost $50 million in endowment. Bloom emphasized that this is something that has both benefits and costs and has to be evaluated fully.

Marc Engel ’09 said that he attended the event wearing his “activist hat,” and was generally pleased with the discussion.

“I thought it was good for the activist community to show that we are sensitive to these issues, but we still want what we want,” he said.

However, Engel was concerned that the event was set up to “explain why they can’t do what we want them to do,” suggesting that it would have been better to approach the discussion in terms of working with the budget as is or looking at how it could be tweaked to accomplish the initiatives campus activists are pushing for.

Dean of Students Jim Larimore,

who attended Tuesday’s discussion, said that “people were impressed by the turnout, and the variety of questions students asked.” Larimore also emphasized the importance of philanthropy. “Whether someone is able to give $25 or $25 million, it all matters to someone,” he said, citing students who receive funding paid for by gifts to the college for summer internships as an example.According to Student Council Vice President Sam Asarnow ‘08, the initiative to bring about a discussion on the college’s financial structure began last spring, spearheaded primarily by former Student Council members Joella Fink ‘07 and Eleanor Joseph ’07. "We thought that students didn’t have a solid sense of how the endowment is spent," he said.

Gardner said that he thought the discussion was successful and well attended. “I thought that there was a gap in information between what the administration knows and does and what the students know, though I don’t think this is deliberate on anyone’s part,” he said. “put in people’s minds a different side of the debate - not that it wasn’t there before - but not vocally expressed.”

Gardner also said that he hoped this discussion helped to point out how major a factor philanthropy is in terms of funding for the college. “Today’s students are tomorrow’s alums,” he said. “The discussion was important from a development point of view as well.”

Roberts agreed that the discussion was successful. “Many people had mixed feelings about the way the school makes decisions, on things like socially responsible investing, for example, but I think everyone was glad to learn more — everyone’s glad it happened,” she said.

“We are considering holding a second round, focused primarily on financial aid, with [Dean of Admissions and Financial Aid] Jim Bock,” Asarnow said. “If there is student interest, we will plan this with Jim Bock.”

“President Bloom and Sue Welsh have been behind this the whole way — this has been really important to them, too,” Asarnow said.

In interviews with The Phoenix, Bloom and Welsh explained further explored some of the points made at Tuesday’s discussion.

Bloom said that he has been wanting to hold a discussion on the financial structure of the college for some time to satisfy students’ intellectual fascination with the college budget, as well as to get across the major role of philanthropy and how institutions like Swarthmore survive even though costs are much higher than tuition.

“At the last RA dinner, I stated talking about these issues, and I was pleased to see how interested students were,” he said. Bloom said that beforehand, he was confident that the information presented at the meeting would be well received.

Bloom also expressed hope for future discussions like this one. “It would be wonderful to begin a tradition which had precedence with periodic meetings with students on topics of mutual concern,” he said.

According to Bloom, issues like this have been discussed on a much smaller scale at Kohlberg fireside chats, but he decided with Student Council to make this one a larger forum, changing both the name and the venue.

Bloom said that he hoped students would take away several major understandings from Tuesday’s discussion — including an “overall view of how the college is financed, why despite our sizable tuition and endowment we all still have to live under financial constrains and how imperative philanthropy has been and will continue to be to the college.”

“I would hope that my office is seen as very approachable — whatever opportunities I have to show that it is will help to create a greater readiness to use that approachability,” Bloom said. “If students have suggestions, ideas or just want to get to know the president, they would have to make an appointment, but I would appreciate them coming to see me.”

“If a student has an idea that requires more understanding than can be taken from the data that is available, they should take the initiative to ask,” Bloom said. “If a student is serious about understanding in detail, the college will do its best to make that information available — though not everything can be released.”

While Welsh confirmed that Tuesday’s discussion was the most wide-ranging forum on the college’s finances that the administration has held, she and other administrators would be happy to do this again on the same or other topics. “We want to encourage this — it is really important for students to understand the financial structure [of the college].”

“It is important to understand the role of philanthropy and to discuss priorities — we welcome student input.”

Welsh said that she and Bloom were pleased with student turnout at Tuesday’s discussion. “We were also pleased to get such thoughtful questions and dialogue going.”

According to Welsh, the original idea for the discussion on financial structure came up last spring, though the scheduling did not work out until this fall, when Student Council continued planning the event with administrators.

“We’re willing to share quite a bit — we don’t want to give the impression that everything is closed and non-transparent,” she said.

Welsh stressed that there are four student members on the college budget committee, and that the Student Council president and vice-president, Peter Gardner and Sam Asarnow, observe the Board of Managers meetings and are privy to all the budget information that is discussed.

While Welsh said that the college can talk in general terms about the budget and financial structure, details such as departmental budgets are kept confidential for several reasons. “Budgets are important to people [who manage them] — they reflect their authority and accountability,” she said. “People compete to get more resources in their area … There is more information we can give than what was discussed last night, but we won’t get into departmental budgets.”

However, Welsh noted that departments are free to disclose information on their budgets if they choose to do so, though she would not be able to disclose such information.

Welsh acknowledged that public institutions are required to be more open with regard to their financial information, and even publish salaries. “I’ve never worked in a public institution — there is a different decision making structure,” she said. “Our structure is probably more efficient … We would have to explore this question — would better decisions be made with a more public disclosure of detail? We don’t think so, otherwise we would be exploring that.”

---

« RETURN TO NEWS

« PREV ARTICLE | NEXT ARTICLE »