In a letter sent to 33,000 members of the Vanderbilt community Wednesday afternoon, Chancellor Nicholas Zeppos announced that the school - despite its suffering endowment - is "indeed even stronger financially and bonded collectively to continue our mission and serve Vanderbilt." It came just hours after The Tennessean published an article online describing a dire economic situation for the university.
Vice Chancellor for Academic of Affairs and Provost Richard McCarty, though, said there was no need for the "sensationalized report."
The employee benefits, the debt-free initiative and several current construction projects will persist, he explained. What will be affected, though, are construction projects not yet underway. Projects like the College Halls initiative and the expansion of the Monroe Carell Jr. Children's Hospital will be put on hold indefinitely.
Debt-free initiative remains underway
Both McCarty and Vice Chancellor of Public Affairs Beth Fortune said it is not clear if the loss of endowment funds will affect merit-based scholarships, but they both stressed that the debt-free initiative, the program implemented to subsidize tuition for students financially unable to attend Vanderbilt announced this fall, will remain a priority. According to McCarty, Vanderbilt is about halfway to its fundraising goal.
"The chancellor believes now more than ever it's important to go forward with that initiative because the best and brightest students in the country have access to a Vanderbilt education regardless of their financial situation, and almost half the money has been raised for that," Fortune said.
"We don't want our students to graduate and be so loaded down with debt that they can't make career decisions that they're really interested in and that may make this a better society to live in," McCarty said.
Doug Christiansen, associate provost for enrollment and dean of admissions, said the initiative was started in 2000, after the university watched the need-based debt of students continue to increase each year.
"The average debt of our seniors graduating last year was slightly over $21,000," Christiansen said.
It was the intent of the initiative to reduce that debt, and the administration had planned on announcing the program in October even before the severe financial situation, Christiansen said.
"I think it was just a great resolve by our chancellor and by our provost and the board that the commitment to access was there so if we have to rework and do some belt-tightening in our areas it's much more important that access for people to get an education," Christiansen said.
"The guiding principle of everything we're doing right now is to preserve financial aid," McCarty said.
College Halls project at a standstill
The plan to demolish Kissam Quadrangle and construct three college halls in its place, which was intended to begin as early as the summer of 2010, will be put on hold. McCarty said although the current economic situation is not the right time to take on additional significant costs, the university remains committed to following through with this plan.
"The point is we're a well-managed university and we are true to our employees, faculty and staff, and we're committed to our students, and we're not going to be so over-extended that we can't keep our commitments," McCarty said.
But construction of the parking garage in Blair, the critical care tower at the hospital, the 100 Oaks Mall medical center and the current renovation of Peabody campus will continue. The second phase of renovation of the football stadium will also carry on, due to the contributions of a donor and not university funds.
Reporting in The Tennessean
McCarty said he had certain issues with the online The Tennessean article that was published Wednesday afternoon. In the article, McCarty was quoted as describing Vanderbilt's financial situation as "catastrophic" and a "nightmare." McCarty said he was misquoted by a reporter who sat in on a meeting with the faculty of the College of Arts and Science without identifying herself.
"Our endowment may be down for accounting for the year 2008 by as much as 30 percent ... We anticipate that it will be considerably less than 30 percent, but we have to be prudent in planning for next year and the following years," McCarty said in response to the amount printed in The Tennessean.
The article has since been updated to account for these errors.
Troubles making payroll
A major issue addressed in The Tennessean article was Vanderbilt's difficulty making payroll in October. On Sept. 29, 2008, the day before payday, the university was notified that its investments in the Wachovia Bank's Common Fund were frozen. The Common Fund is an investment pool consisting of funds from hundreds of colleges and universities. According to McCarty, Vanderbilt invested approximately $470 million in the Common Fund, which is equal to five months of payroll.
Unable to access that money, Vanderbilt struggled to find the $100 million required to make the monthly payroll for its 22,000 employees. McCarty said while other schools in the same predicament were forced to dip into their endowment fund, Vanderbilt was able to make payroll without doing so.
"That was a situation that came on us very, very suddenly, and it was a one-time event. And as Chancellor Zeppos mentioned, many other universities found themselves in the same situation so we reacted quickly and managed through it, and it is no longer an issue," Fortune said when asked about why students were not informed of Vanderbilt's earlier struggle to make payroll.
Exactly by how much the endowment has declined is yet undetermined. According to McCarty, some of the assets have not been valued yet.
"We expect that the endowment's performance will be in line with or better than our peer institutions, " Fortune said.
"We're making adjustments day-by-day to preserve the quality of the academic and scholarly programs of Vanderbilt and the patient care," McCarty said. "It comes down to safety and security of students. That's a priority."
ALSO BY SYDNEY WILMER
Hannah Twillman contributed reporting to this article.
Click here to hear a podcast of Sydney Wilmer's exclusive interview with Provost McCarty.
