Volume CXXXIII, Number 3 September 21, 2001 f

Finances weather storm
ALISON L. McCONNELL
Sports Editor

As America faces a depressed stock market and general economic slowdown, one wonders to what degree Bowdoin will be affected. A conversation with College Treasurer Kent Chabotar revealed that, while the College won't be shutting down any time soon, it is taking some steps to stay above the economy's fluctuations.

Kent Chabotar, Treasurer of the College. (Liesl Finn, Bowdoin Orient)

"I wouldn't count it as a crisis," Chabotar said. "We've been preparing for economic uncertainty for about two years, [and] have been sensitive to it."
Bowdoin's current status is one of concern, "a sort of watchful waiting," Chabotar said.

"We're not battening down the hatches or heading for the basement. We're just being prudent." He added that the College is lucky to have "an incredibly generous alumni body and a pretty healthy endowment" to keep it above difficult times.

That endowment, estimated at about $450 million, acts as a buffer in times of economic instability. The College's portfolio is managed chiefly by the trustees, "who are all experts," Chabotar said.

"Twenty-three percent of our budget is endowment," he added. "The concern, obviously, is that 23 percent is shaky."

The nose-diving stock market, which dropped significantly since Monday, reflects a national state of uncertainty after last week's terrorist attacks. The losses affect the endowment, which is invested in a variety of places such as stocks, bonds, real estate, venture capital, and private equity

Chabotar said that he is also focused on the recession's possible effects on another area of Bowdoin's finances: "We're concerned about family ability to pay, average family contribution, and therefore, financial aid," he said. "Tuition goes up every year."

The current economy is not without some benefits, however.

"Inflation is low, so that means our costs are growing more slowly," Chabotar said. Additionally, much as it seems that diving stock prices would affect alumni giving, the treasurer said that he wasn't overly concerned. "[Economic problems] didn't affect [giving] last year-I think we came close to breaking a record; we were way over target," he said.

The College appears to possess enough stability get through this period of uncertainty. "I'm pretty optimistic," the Treasurer said. "The nice part about having endowment is that it makes you a little more immune to these swings in the market."

Chabotar acknowledged that there could be more serious decisions in the College's future if the economy sinks further. "If the market swings too much, even a rock starts to wobble a bit," he said.

In the event of a drastic turndown, no programs or positions would be fully removed. "If it started to get really bad, we would start to defer or postpone things, for example, building projects," he said. "The second thing...is to cut spending budgets-for travel and that kind of expense.

"The third thing we'd do would be to increase our endowment spending rate a bit," he continued. That rate is calculated based upon a 12-quarter market value average, and determines how much of Bowdoin's endowment is spent in the budget.

Spending additional funds is something Chabotar would to avoid. "In my mind, that's the last thing we want to do," he said. "We have to worry about different generations of alumni, students, and staff. If we increase endowment spending, it hurts the future."

For obvious reasons, the College would prefer to increase its endowment rather than spend it.

In order to give itself some extra breathing room, Chabotar said that the College is looking to cut $1.4 million out of the budget over the next two years. "We haven't gotten clearance from the trustees yet, but that's our plan right now," he said.

He added that gift-raising efforts would likely be doubled in an attempt to offset some of the waning economy's effects.

Chabotar also indicated that Bowdoin is planning a capital campaign in the near future. "The last campaign had endowment and financial aid as a goal," he said. "This next, campaign, probably in two or three years, will have even a bigger goal for endowment."

All of this planning is being done with a futuristic outlook, the Treasurer said. "We have to balance today's students and faculty with tomorrow's."