Letter to Alumnae - Wellesley and the Economic Situation
President H. Kim Bottomly
November 24, 2008

I recently sent a message to the campus community to address concerns about the impact of the economic uncertainty on Wellesley College. I know this is a matter of interest to many of you, and I wanted to let you know how the College is addressing the situation.

In recent weeks a number of universities and colleges have announced cuts in spending, hiring freezes and the halting of building projects. Because of our relatively strong financial position, Wellesley College can take the time to carefully plan the budget cuts we will need to make over the next few weeks and months as we strive to minimize the effect on our community of these global financial problems which, by every indication, will be facing us for some time to come.

A significant proportion of the revenue in the College's operating budget comes from the endowment, so downturns in the financial markets do affect us. To help ensure a stable and predictable income stream from the endowment to support our operating costs, our spending rule smooths endowment earnings over several years to mitigate the effect of any one year's endowment results. It is this wise practice that allows us time to plan in this difficult period.

Our endowment includes investments that have been affected by the recent market volatility. We need to tighten our belt now to prepare for the coming impact on our operating budget. We have been modeling the impact of the endowment returns on our operating budget. All predictions indicate a substantial negative impact on the operating budget for the next several years. The advantage of our spending policy is that we will be able to be thoughtful in any steps we take, rather than reactive. It also means, of course, that as the market recovers, the positive impact on the budget will be felt only gradually, and we will need to be prepared for that as well.

I know that families of current and prospective students are also concerned about whether their ability to afford Wellesley might be jeopardized. I have sent a letter to families of current students to assure them of the college's ongoing commitment to meeting 100 percent of each student's demonstrated need. As always, we are prepared to work individually with families and to extend help to those whose changed circumstances have reduced their ability to pay.

These are uncertain economic times, and we will be diligent in monitoring the situation and in making budget reductions as appropriate. Despite the economic pressures, I am confident that we will continue to manage our resources strategically and in accord with our institutional priorities.

Communication is especially important during uncertain times, and I will continue to keep the entire community informed in the weeks and months ahead. To facilitate this, I am dedicating the announcements section of the President's Web site to regular communication with alumnae and parents. I encourage you to visit the President's Web site for updates and announcements.

Thank you, as always, for your abiding interest in and support of Wellesley.

H. Kim Bottomly
President
Wellesley College