A Message from President
Bloom to the Swarthmore Community

12/10/2008

As you are all aware our nation and world are facing the most dramatic decline in financial assets in recent times. Unfortunately the College has not been immune from the effects of this decline.

Swarthmore has benefited from a continuing tradition of generous philanthropy and has over the years enjoyed exceptional investment success. The College has held prudently to a conservative spending rate on its endowment during years of excellent return so that it would be well positioned in years of disappointing performance. It has also maintained a 15 percent allocation of the endowment to U.S. Treasury securities to support the budget and to avoid having to sell equities during periods of market weakness. This history and these measures have placed the College in a relatively strong position today.

Nevertheless, the almost 30 percent decline in the endowment from its June 30 value of $1.4 billion has been much steeper than anyone anticipated. If the endowment remains at its current level or declines further and we continue to spend at our current level, we would soon start to erode the financial foundation of the College's future. Moreover, until a turnaround takes place we can expect a reduction in philanthropic support and an increase in the cost of meeting the demonstrated financial need of our students. These conditions, coupled with the distinct possibility of a protracted recession ahead and uncertainty over when an eventual financial turnaround may take place, make it essential to plan for, and move prudently toward, a significantly more constrained budgetary environment.

This past weekend the Board of Managers discussed the situation fully. We have together decided on a sequence of measured courses of action.

• Effective immediately, the College will pull back from all non-essential construction work, refrain from initiating any new programs, and stringently evaluate any faculty or staff hiring.
• In developing the annual budget for 2009-10 to be submitted to the Board of Managers in February, we will shape recommendations on enrollment, tuition and fees, and compensation in ways sensitive to the financial environment and set guidelines on spending across departments that ensure tighter management of our resources.
• Over the coming semester we will develop a contingency plan for more significant reductions in the budget, which the College will begin to implement if by this time next year the College's financial situation has not improved.

The College will adhere fully to its current financial aid policies for all students presently enrolled as well as for those admitted for the Class of 2013.

It is very sobering to consider that this community, which makes such careful, constructive, and creative use of its resources, will have to adapt to a more constrained financial environment. But in these very exceptional times, we must take care to conserve for the future the resources that past generations of Swarthmoreans have so carefully conserved for us. And, as president, I must ask you to give as generously as you can to the Annual Fund this year to help meet the cost of our recent commitment to loan-free financial aid awards and to cover the increase we expect in financial need.

I am confident that by acting together, and by maintaining educational quality and regard for the people who make up this remarkable community as our priorities, we will weather this environment with the distinctive excellence of this college undiminished.