BMC Q&A: Treasurer and Chief Financial Officer John Griffith

Posted October 28th, 2010 at 2:23 pm.

In an effort to keep the community informed about what’s happening at Bryn Mawr, College Communications has launched a new Q&A column. The column will run about once a month and feature various members of the president’s cabinet and other College officials. This week’s column features Treasurer and Chief Financial Officer John Griffith.

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When you talk to people about the budget or the college’s finances, what usually surprises them?

In the last 10 years, instruction spending has outpaced all other expense increases. Since education is our reason for being, that shouldn’t come as a surprise. But there’s a widespread perception among many working in higher education that all campuses are beset by bloated administrations that continue to grow while academic departments get cut back. I can’t speak for anyplace else, but that’s certainly not the case at Bryn Mawr. In fact, administrative costs have very slightly decreased in the last decade.

Why has the college invested so heavily in instruction spending?

Bryn Mawr’s budget must be aligned with our institutional priorities — that is, keeping our core academic program strong and supporting and retaining the highest-quality students and faculty.

There was a time not too long ago where our faculty salaries weren’t where they should have been, and we looked at that and decided we needed to  bring those salaries up to a level that reflected the importance of the academic experience and our commitment  to academic excellence.

We’ve also spent a good deal on repair and restoration projects in recent years.

We are not where we need to be in either area, but we have focused on these issues and have made considerable progress.

You mention institutional priorities, what do you see those being as we move forward?

Our core mission will always be to provide our students a world-class education, and we’re going to continue to reduce administrative costs.

But if Bryn Mawr is to remain competitive — at the undergraduate and graduate levels and as an institution renowned for its teacher-scholars — we must have the capacity to be nimble and innovative.

The college is going to have to continue to make strategic decisions about the allocation of resources. Even as we reduce spending in some areas, we must invest in new programs that will further our mission and attract top quality students.

This more strategic approach to the allocation of resources and the College’s mission isn’t anything new. It’s been going on for some time, beginning with the Task Force on Balancing Mission and Resources under President Vickers.

The College has three revenue streams — tuition, charitable gifts, and income from the endowment. The economic downturn has put constraints on all three areas, requiring that we be even more strategic in our decisions to bring expenses in line with decreased revenue.

An increased focus on attracting students is imperative, and it’s not just a concern for the admissions office.  Everyone in our community (faculty, staff, students, and alums) needs to do what they can to make Bryn Mawr more competitive.

Speaking of the downturn, the stock market has recovered somewhat since the height of the recession, which is good for the endowment.  What’s your biggest concern right now about how the sluggish economy will impact Bryn Mawr?

For the foreseeable future the economy looks flat at best with significant volatility. The endowment is diversified, and, barring another serious downturn, will continue to make money for the College.  My biggest concern is how the economy affects parents’ ability to pay for their children to attend Bryn Mawr and our net tuition.

Student revenue accounts for 52 percent of our operating budget. A lot of students and parents are still not doing well financially, and the college has to manage its financial-aid budget. There’s already tremendous competition for the students who meet Bryn Mawr’s standards, and it’s just going to get tougher.

This is where we get back to the importance of being able to innovate and to make sure we’re meeting the needs of today’s students.

But if the endowment is doing OK, why not just spend more of that?

We’re currently spending about five percent of the endowment annually, which is about as high as we’d want to go. If we were to increase it any more we’d really lose our purchasing power in the future. Endowment spending has to be a balance of your current need and the needs of future generations. We were spending at 5.8 percent during the recession of 2002, which was too much, and we’ve become very sensitive to not overspending.

Forbes magazine recently noted that Bryn Mawr is one of only four colleges or universities nationwide, and the only private institution, to receive an upgrade in its bond rating this year. What’s that mean and why is it important?

Over the last five years we were much more conservative than our peers in terms of taking on debt. So when the downturn occurred in the economy our financial resources suffered much less than others. Some institutions lost about 30 percent of their financial resources and we effectively lost only about 10 percent. The net effect is that we have a much stronger balance sheet than most schools as this point.

Our debt increased by 20 percent over the past 5 years, but our peers’ debt increased by 80 percent.  They are now paying for that growth.

In addition to yourself, who are the people most involved with making budget decisions for the college? What’s the process by which each year’s budget is drafted and approved?

There’s a college budget committee that works closely with the cabinet and the board of trustees finance committee. It’s a collaborative process, and those three groups are the key players when it comes to figuring out and approving the budget.

What is important to a successful budget process is to focus on a few priorities and fund them well.  

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