Finances / Pomona and the Economic Downturn
The Downside

In early January, as the economic downturn deepened, PCM sat down with Pomona President David Oxtoby to talk about the impact of this global event on the College’s plans and expectations.

PCM: How deeply has Pomona been affected by the economic downturn?

Oxtoby: Clearly, these are painful times for all of us, individuals and institutions alike. The scale of this event is unprecedented in the modern era, and its effects are still reverberating through our economy. Like our peers, we’ve seen a substantial decline in our endowment since last summer. In our case, for the current fiscal year it was down about 25 percent through the end of December.

PCM: How will the losses in the endowment affect Pomona’s normal operations and future plans?

Oxtoby: In the long term, even at these declining levels, our endowment provides a measure of security and confidence. Thanks to the support of our alumni, parents and friends and the conservative stewardship of our resources over the years, our endowment puts us in a strong position to weather this storm without compromising the quality of the education that we offer. That is something a lot of institutions can’t say. In the short term, however, it is clear that we can’t expect to go on with business as usual. The flipside of our endowment strength is that Pomona is very endowment-dependent— more so than many of our peers. Returns from the endowment fund more than 40 percent of our budget each year, so this is obviously going to affect us in significant ways, at least for the next few years.

PCM: A number of colleges have already announced layoffs. Will Pomona’s faculty or staff be affected?

Oxtoby: We’re not laying anyone off at this stage, but we are looking at staff openings as they occur and deciding if there are ways we might consolidate or manage with fewer staff. We’re not automatically filling staff positions when we have openings, and any decision to replace a staff member will need my approval. We do have some faculty and staff searches that were already well under way, and those are going forward.

PCM: What other steps is the College taking to reduce costs?

Oxtoby: We’ve always tried to use our resources wisely, but the current situation will require sacrifices on everyone’s part. We’ve already announced that there will be no increases in departmental budgets for the coming year. Beyond that, every vice president is looking at ways to reduce spending while keeping our top priorities in mind. We’ve also begun contingency planning so that if we need to make cuts over the next few years, we can carry them out in a reasoned and well-prioritized way. And of course, we’re in continuing discussions with our Board of Trustees about all of these plans.

PCM: Are there any programs or projects that are off the table when it comes to budget cuts?

Oxtoby: We’ve been very clear about our commitment to financial aid and need-blind admissions, which means providing full aid and having a policy of not requiring our financial aid recipients to take out loans in order to attend. We can’t imagine that changing. It’s a commitment to our students and to access and affordability, which seems more important than anything else right now. In fact, it’s possible that there might be more students applying for aid or needing more aid than in the past. We want to be ready for that possibility, so that if the demand for aid goes up, we’ll be able to meet it.

PCM: What does the downturn mean for Pomona’s Strategic Plan?

Oxtoby: We have a lot of great ideas in our Strategic Plan, including some things we’d love to do right now. In the past, the strong performance of our endowment has sometimes permitted us to launch new projects even before we actually had obtained new funding for them. We are no longer in a position to do that. In the future, no new initiative will be undertaken until the funding is in hand. One example is the summer experience program for students; we’re raising money for that and as the funds come in we can gradually introduce the program.

PCM: Will there be any changes in plans for campus renovations?

Oxtoby: Thanks to a recent cycle of renovations, we have far less deferred maintenance than most colleges. Some capital projects will need to go forward, either because there is already restricted funding in hand for them or for other reasons. For instance, the planned renovation of the Norton-Clark residence hall this summer will go ahead in part because there are needs related to earthquake safety. However, some other future projects, such as the Seeley Mudd Science Library renovation, are on hold during this period of uncertainty.

PCM: Is there anything else the College family should know about the outlook for Pomona College during this financial crisis?

Oxtoby: It’s important for everyone to understand that these are extraordinary times. The nation has already seen financial and corporate giants—true household names—falling by the wayside or teetering on the brink of extinction. No institution can expect to come through times like these unaffected. Some may not even survive—others will have to change in significant ways in order to survive. Our goal for Pomona must be to endure these times without losing our essential character or compromising our highest priorities—the quality and affordability of the education we offer— and to emerge stronger than ever, still able to say that our students are truly receiving the finest liberal arts education in the world.