Ricky Ochilo, staff writer
The financial crisis in the U.S. has affected major industries, organizations and households alike. Given the decline in family incomes and an unemployment rate that is now 7.6 percent, there have been declines in institutional support and resulting measures have followed to cushion the negative shifts.
Warren Wilson College has not fallen victim to the grave economic crisis that has drastically hit major institutions across America. In his January report, Sandy Pfeiffer, president of Warren Wilson College, noted that many colleges and universities across America had taken serious measures anticipating major changes in their operations given the economic disaster.
“There have been pay freezes, temporary furloughs, operating budget cuts, canceled searches, reduction in retirement contributions, increased class sizes, and lay-offs,” Pfeiffer said. Some colleges have had to use money from their endowments to ease and support the net losses of their budgets in an attempt to address negative shifts.
Jonathan Ehrlich, vice president for administration and finance, explained that as early as last autumn the Presidential Advisory Council (PAC) had been looking for ways to effectively respond to the fluctuating economic conditions. Ehrlich mentioned that budget managers at the College were asked to be a little parsimonious in their budget needs but still allow continued operations.
He added that the College is committed to save capital while ensuring that investments are made to strengthen activities that support the College’s purpose. However, despite the measures the college has taken to limit spending there are still potential problems that could result. Pfeiffer explained the College could see enrollment decline given that Warren Wilson is a primarily tuition driven college.
With declining household incomes, there is a resulting need to increase financial aid. A big part of student scholarships comes from the annual Phonathon calling event. Phonathon helps the College raise money by soliciting alumni donations. It can be assumed that the growing financial dilemma may weaken the potential for alumni to donate.
Miranda Hipple, Director of Annual Giving commented that “the current economic climate is making people think carefully about their spending and giving. Even if one cannot give as generously as before, a goal of Phonathon is participation at all levels as we reach out to WWC’s alumni and friends.”
If enrollment declines given constraints placed on families to pay for student tuition there will be a resulting decline in the College’s operating capital. Likewise, this will require increased financial aid, which the college cannot meet if enrollment falls.
As a result, Pfeiffer has maintained that he will be working with PAC to figure out ways in which the College can cut costs to keep tuition affordable and strengthen financial aid. The cost cutting measures undertaken are aimed at increasing the College’s budget to cushion negative declines and economic strains in the long run, maintain affordable tuition by trying to keep increases to tuition low and secure financial aid for students in an attempt to attract more students from different financial backgrounds.
According to Ehrlich, the College continues to function within its balanced budget. He explained that the only drawback the college has met financially is the resulting decline in its money held in banks. The Federal Reserve cut interest rates to between 0 and 0.25 percent. It is hoped that the cuts will limit inflationary trends and fix the troubled economy while addressing the volatile credit markets.With the dollar weakening and wages falling, the College should be even more wary and prepared for major constraints in its budget operations and ability to maintain student retention.