The COVID-19 pandemic has made business anything but usual at Carleton.
Offices throughout the college are reshuffling their priorities as a nearly empty campus and volatile stock market pose new financial challenges. Interviews with administrators in the Business and Finance Division of the college, the Registrar, Off-Campus Studies (OCS), and Residential Life reveal a series of unforeseen operating adjustments that officials are rushing to address in the coming weeks.
Financial losses anticipated
According to Vice President and Treasurer Fred Rogers, the college anticipates a gross loss of roughly $3.5 million in room and board income for the first five weeks of spring term alone. This figure is an estimate and does not take into account potential savings from reduced room and board operations, such as limited Dining Services facilities and hours.
It’s too soon so say whether the endowment will take a meaningful hit. The college’s endowment is designed to support the operating budget even in the event of a market downturn, meaning that the amount of money from the endowment that’s used for the college’s regular operating expenses is pretty consistent year-to-year, Chief Investment Officer Kelsey Deshler explained. And when gifts come in, the college relies even less on the endowment to fund its operations, she added.
In a note to the Board of Trustees, Deshler estimates that “recent losses are in line with the limited level of public market risk the endowment has been managing.” The endowment’s conservative asset allocation puts less than 40 percent of its weight on stocks and a growing percentage on sophisticated risk management strategies, like hedging, which will help to preserve capital throughout the downturn. Hedging strategies are not correlated to the market, which means that they can help investors make money even in the midst of market volatility.
In the most recent fiscal year, which ended June 30, 2019, the endowment was valued at $892.2 million and provided 27 percent of the college’s operating budget, or $42.5 million.
Registrar Emy Farley told the Carletonian that about 80 students have petitioned to graduate early. Of these, approximately 50 percent had motioned for early graduation before it was announced that the first half of Spring Term would be virtual. Farley expects this number to increase somewhat as students finalize plans, but not above average: “The percentage of early graduates fluctuates every year, but so far this number is fitting the average.” Farley additionally noted that the requirements students must meet to successfully petition have not changed.
As Off-Campus Studies (OCS) Director Helena Kaufman stated, 80 Carleton students also had plans to study abroad cancelled. Rogers explained that tuition payments of these students go back to the college, assuming that they remain enrolled. Kaufman agreed, but added that only 85% of OCS fees were able to be redirected as such. She told the Carletonian that “there were some non-refundable deposits, separation salary costs, etc.”
In lieu of a typical Spring Term, the college will have fewer expenses than it normally would. Many buildings on campus have had their hours severely limited, such as the Sayles-Hill Campus Center, or been closed altogether. However, the college also has experienced decreased income. Rogers does not expect that these numbers will balance out: “that is, we’re going to lose more income than money we save. We’ll experience a net loss.” Enrollment for Spring Term will not be confirmed until the end of second week, delaying quantitative budget estimates. Rogers told the Carletonian that these estimates will continue to develop through the fiscal year.
What it’s like on campus
The number of students currently on campus is close to 245, and the majority of those students are planning to remain on campus for the beginning half of spring term, Director of Residential Life Andrea Robinson told the Carletonian.
Students on campus are required to be on a 19-meal plan with $75 in Dining Dollars. The only dining facilities that are open are Burton and Sayles Café.
College employees now have access to two different forms of paid leave in light of the COVID-19 pandemic. Employees who might have been exposed to the virus and are in self-quarantine for 14 days will not lose pay or accrued leave time, and employees with active cases of COVID-19 are eligible for a different type of paid sick leave than what’s normally offered for non-COVID-19 illnesses.
Rogers told the Carletonian that “we have not laid anybody off at the college,” but Bon Appétit is another story. According to Rogers, Bon Appétit laid off a number of Dining Services staff over spring break, but the details of the layoffs remain unclear.
Finally, Rogers expressed optimism, despite the financial challenges ahead: “The most encouraging thing that I have seen is the can-do, go-with-the-flow attitude across the whole faculty and staff.”
This is a developing story.