Letter to the Union family
Message on the Economy - December 2008
Dec. 9, 2008
As you well know, news of the economic crises in the United States and abroad has dominated the media. Similarly, the economic situation has dominated conversations at work and at home as people worry about the effects on their personal lives. In the face of all this, it is not surprising that I am frequently asked "How is Union doing?" The answer is: We are doing well, enjoying a period of growing institutional momentum, but preparing for the inevitable effects of the economic downturn on the College.
We have been heartened by the strong showing of support we have received from the Union community. At this fall's Family Weekend/Homecoming, we saw a 20 percent increase in attendance over the previous year, and the enthusiasm among alumni, parents and current students was palpable. For the past two ReUnions, we set records for attendance, and the ReUnion dinners both years were "sold out." We continue to see dramatic increases in attendance at events we have held in major cities around the country.
The Class of 2012, which joined us in September, was the most selective in over two decades. We received more than 5,000 applications for the 565 places in the class. It is also the most diverse class in our history (17percent of the class are from historically underrepresented groups and 4 percent are international).
All this is good news and we are clearly enjoying a great deal of institutional momentum at this point in our history. Nevertheless, Union College is by no means isolated from the effects of the economic downturn, and this has commanded a great deal of our time and attention in recent months. At the September meeting of the Executive Committee of the Board of Trustees, we agreed to undertake an analysis of potential stress points. Our Finance and Administration staff has been carefully monitoring the effects of the current situation on College resources, such as the declining value of the endowment (and thus, importantly, endowment income). Our Admissions and Financial Aid staff has been considering the likely impact on future enrollment patterns and the financial aid needs of families. Our College Relations staff has been considering the potential effects on fundraising for the Capital Campaign and the Annual Fund. We will be discussing all this with the Finance Committee of the Board in December and recommending immediate steps that will protect us against the near-term effects of the economic downturn as well as ensure Union's continued financial well-being in future years.
Our stress analysis reveals that Union's resources have been well managed. Our endowment has performed better than most. While we too have realized losses, we have consistently outperformed the S&P and composite index in 2008 year-to-date. October and November were difficult months but early analysis indicates that we continue to outperform the indices. Furthermore, we did not have any investments in the Common Fund (which has caused problems for other institutions) and our outstanding debt is primarily in fixed interest rate instruments.
Our analysis also reveals that Union continues to hold a strong position in the educational marketplace. Our first deadline for early decision applications for the Class of 2013 was Nov. 15. We saw a marked increase over last year's early decision requests (which itself saw increases over previous years), and our analysis indicates that the group is academically strong.
The stress analysis also reveals, however, that we face financial challenges: The State of New York has already cut Bundy (direct institutional) aid, and additional cuts have been proposed to help reduce the state's budget deficit; the declining value of our endowment will undoubtedly reduce the stream of income that subsidizes the actual costs of educating students; changing family assets and situations will likely lead to an increased need for aid; and, we are facing increased costs just to maintain employee health and dental benefits.
Accordingly, we have and will be taking action to 1) identify opportunities for cost-savings, 2) control and cut expenditures, and 3) seek continued support from our friends and supporters. We have taken advantage of declining oil prices and realized significant savings over planned expenditures for this year and next year. We are also in conversation with other institutions about the possibilities of leveraging our combined purchasing power and seeking efficiencies through partnerships. We have already placed several current job searches on hold and will carefully analyze all future searches to determine if they can be similarly postponed. We will reach out to our supporters, reminding them of the importance of their gifts to the College, especially in these challenging times.
I want to assure you that, while we look for opportunities to cut costs, we will not jeopardize the quality of the Union experience or compromise in any way the health and safety of our community. And, we will continue to support members of the Union community as well as be mindful of and responsive to the challenges faced by families who have entrusted their sons and daughters to our care.
The bottom line is that, despite the economic downturn, Union remains strong. We have remarkably talented students, faculty, staff, administrators and Board members who are dedicated to seeing Union thrive. We have a distinctive mission (better defined and articulated than ever before, thanks to our strategic plan) that puts us in a good position in the educational marketplace. With your help and support we will continue to move ahead and make a difference.