Friday October 17, 2008

'Wise and Careful Stewards'

UD is on sound financial footing but must tread carefully through these difficult economic times, the president reported to the board of trustees.

The University of Dayton remains "in solid shape financially" but like most universities is taking a hit from falling financial markets and must carefully navigate through difficult economic times, Daniel J. Curran, president, told the board of trustees today.

"You can almost hear the voice of Father (William Joseph) Chaminade: 'Read the signs of the times,'" Curran said. "We're facing significant challenges, and we have to be wise and be careful stewards of the University's finances. We will evaluate borrowing plans as we go forward. In terms of our overall finances, we'll be conservative."

After posting a nearly 20 percent gain in 2007, the value of UD's endowment fell 9 percent last year and is down another 18 percent since the beginning of the fiscal year in July. It currently stands at $313 million.

"We've been through down times before and are optimistic that the market will rebound again," said Thomas Burkhardt, vice president of finance and administrative services, noting that during this decade, UD experienced back-to-back negative returns in 2001 and 2002 after a double-digit gain in 2000. "We are long-term investors, and we believe in the long-term vitality of investment markets."

In recent months, UD refinanced auction-rate securities and managed around a situation at Commonfund where the University invested short-term cash. UD had $8 million in the Commonfund when a trustee resigned, temporarily freezing the assets. Since then, like other universities, UD has been able to withdraw 47 percent of the funds and expects full recovery over the next year, Burkhardt said.

"The University has other significant liquid investment accounts and will continue to closely monitor cash and liquidity markets," he said.

Two banks have pulled out of the private student loan business — Key Bank and Wachovia — but UD's financial aid office has not yet seen any difficulties for families accessing credit. "We're very optimistic about being able to find financing options for our students," said Sundar Kumarasamy, vice president for enrollment management.

Curran said UD will take a number of steps to ensure the University's financial footing:

  • Endowment spending will be reduced to 5 percent, or approximately $1.5 million, beginning this year.
  • Planning will continue on the $16 million renovation of Stuart Hall, slated to begin next summer, but the trustees will not be asked to approve the project until financing is secured.
  • A proposed expansion of the Immaculate Conception Chapel will begin when 70 percent of the funds are raised from donors. Architectural concepts have not yet been finalized.
  • All new initiatives will be carefully evaluated in light of the current financial climate, and UD will continue to look for ways to reduce expenses.

Despite the distressed economy, the University of Dayton continues to experience success in raising philanthropic dollars and meeting enrollment goals. Last year, UD attracted $40 million in gift commitments — nearly triple the 2006 amount — and has raised $6 million toward a $60 million goal for this year. On the heels of its best enrollment year since the Vietnam era, campus visits by prospective students and families are up 7 percent over last year at this time.

"We're having a very healthy start," Kumarasamy said. "The early indications — campus visits and applications submitted or started — are very positive."