By Matt Day

A year after the stock market began its free fall at beginning of the financial crisis, there are signs that Macalester has weathered the storm as well as any liberal arts college in the country. Though college-wide budget cuts were made, student services haven’t been dramatically affected. Widespread layoffs were avoided entirely. The financial aid budget increased, and the endowment is on track to outperform that of most colleges nationwide.

Administration officials say conservative budgets in recent years and some wise investing at the height of the crisis have kept Macalester in a sound financial position as the market shows signs of a slow recovery.

“So far so good,” treasurer David Wheaton said. “In a broad sense, we’re pleased with how things have happened so far.”

The college endowment’s value was estimated at $546 million in June. That figure represents a decline of a little more than 13 percent from the previous year.

Chief Investment Officer Craig Aase ’70 called the result “a painful number,” but said it was good enough to land Macalester’s endowment performance among the top 25 percent of liberal arts colleges. “That’s some comfort in what has been a very difficult year.”

Wheaton went a step further, saying Aase’s estimate was “probably conservative.”

Wheaton said Macalester’s endowment performance was the best he had seen in an informal survey of 35 liberal arts colleges with large endowments.

“We’re not finding anyone with a better return,” he said, cautioning, however, that it was too early for a final judgment.

By August 31, the last date for which accurate data is available, the endowment had risen to an estimated $575 million.

Despite the relatively positive outlook for Macalester’s finances, budget constraints are here to stay, in part because of the formula that determines the annual endowment payout.

The endowment pays five percent of its total value into Macalester’s operating budget each year, a figure calculated by averaging its value during the past four years. As the good years of 2006 and 2007 start to leave the formula and the numbers from the financial crisis begin to play a bigger role, Wheaton says the payout likely won’t increase.

“We know that the revenue stream from a third of our income is going to go more or less flat for about five years,” Wheaton said.

With college expenses almost guaranteed to rise, especially with built-in increases in staff and faculty benefits, the college may have to continue budget cuts and raise tuition and fees.

Rising tuition costs are the norm at colleges and universities nationwide, and Wheaton said there is no reason to believe that will stop now.

“Tuition will rise,” he said. “We’ll continue see an upward trend there.”

Macalester scaled back its tuition increase last year, opting to raise the comprehensive fee by about 4 percent compared to the previous year’s rise of 7.3 percent. Wheaton said he expected another relatively modest increase this year.

Any new cuts will be discussed during the budgeting process this fall. The Board of Trustees approves tuition changes at its January meeting, and typically signs off on the budget in March.

Fundraising is another potential source of increased revenue that could help prevent serious cuts. Tommy Bonner, who oversees the college’s fundraising apparatus, said that for the one-year period ending in June, Macalester had raised 22 percent less than the previous year.

Though the more than $14 million dollars raised in gifts and pledges was good by Macalester’s historical standards, it represented a drop off that Wheaton and Bonner attribute to the poor economy.

“Certainly the spring was tough going,” Bonner said. “During the late summer and early fall we are beginning to see increased activity and more optimism among our donors.”

The tuition revenue from the 566-strong freshman class could also play a significant role in budgeting for next year. The 2009-10 budget was developed on the assumption of a first-year class of 480 students.

The board’s finance committee will decide what to do with the unexpected funds – which will most likely be in the millions – a decision Wheaton says they will probably make at their spring meeting.

Director of Financial Aid Brian Lindeman ’89 said his office was able to handle the large freshman class with the help of a 12 percent increase in the financial aid budget.

“Last year at this time we were looking at the historic drop in consumer confidence and job loss headlines that were impossible to ignore,” Lindeman said. This year, however, he said he thinks the economy is in stable enough condition to merit a smaller increase.

Lindeman said he understands that despite the increased financial aid total this year, Macalester isn’t able to meet every student’s needs.

“We have had a lot of families with serious challenges,” he said. “We try to respond with additional financial aid. I know there are times when our response isn’t adequate. But our success rate is pretty good.”

This summer the Financial Aid Office announced in an e-mail to students that because of the large incoming class, they did not anticipate being able to accommodate on-campus work increases or any on-campus work for students who didn’t have need-based financial aid, and Lindeman said that will probably remain college policy for the rest of the year.

“We want to make sure that students who have a need based package are able to realize the amount of the award,” Lindeman said. “That’s always been the case — a priority to need-based work. We expect students who have a need-based opportunity to take advantage of it more this year, and earn a higher percentage of that award.