Smith focuses on financial sustainability in wake of congress’s new tax plan
Kira Barrett ’18
President Kathleen McCartney sent an email on Jan. 22 to the Smith community regarding the college’s financial sustainability initiative. In the email, McCartney addressed four major concerns.
Despite the healthy growth of financial markets, analysts anticipate that returns from Smith’s endowment will not be as plentiful as it has been in previous years.
“This means we won’t be able to draw as much from the endowment each year. Because the endowment is a significant source of revenue for us, we will have to learn to rely on it less,” McCartney wrote.
McCartney highlighted the college’s concerns regarding the steady rise of financial costs of higher education. According to the college’s official website, the current tuition at Smith totals $69,064 per year. Smith predicts that this number will increase to $72,214 for the 2018-19 academic year.
McCartney also emphasized the importance of investing in Smith’s “strategic plan.” Its initiatives include a Financial Aid Study, a Study Group on Climate Change and the construction of new Neilson Library.
The Committee on Mission and Priorities (CMP) began to devise the Smith College “strategic plan” back in 2015. It was received well by the New England Association of Schools and Colleges (NEASC). In her email, McCartney noted that the committee’s few criticisms of the “strategic plan” were directed at “outdated data systems” which “still involve labor-intensive processes.”
Congress’s new tax plan will “impose an unprecedented burden on our endowment earnings,” wrote McCartney. According to Benjamin Wermund at Politico, the tax plan would cause higher education to be even more expensive than it currently is, primarily affecting lower and middle class students and families.
Boston College’s Philip Altbach told Wermund that “it’s part of an anti-higher education general feeling” that has been steadily developing in the United States in recent years. This new tax plan is one of the leading factors that have caused Smith to reassess its financial tactics.
McCartney continued to write in her email that Smith will “face a budget gap exceeding $10 million by the close of the fiscal year 2022” if the college does not alter its financial practices. It is currently estimated that Smith will have to pay over $1 million as endowment tax for 2018. Consequently, McCartney stressed that financial prudence is necessary.
Later in her email, McCartney outlined the college’s “four core principles.” They are: “Prioritize the academic mission,” “Ensure access to a Smith education,” “Plan for intergenerational equity, so that future generations of Smith students will experience an education equal to what we offer today” and “Commit to continuous improvement by investing in our ‘strategic plan.’”
McCartney ended her email by emphasizing the important role that Smith plays in the world of higher education. “Smith alone cannot bend the cost curve in higher education, but we can continue to do what we have done throughout our history: question the status quo, optimize the potential of face-to-face and place-based education, and put student learning at the forefront of every decision we make,” wrote McCartney.