The financial crisis has shaken many aspects of the economy to the point of near-collapse, but Georgetown’s administration should be applauded for recognizing the crisis early in 2008 and making intelligent decisions that have allowed the school to maintain stability and decrease the crisis’ negative impact on major university priorities.
When the economic crisis came to light early last fall, Georgetown took several steps to improve its financial situation. First, the university restructured its debt to make it more sustainable in the long term. Second, the university increased the liquidity of its endowment, so an adequate level of capital would be accessible in the face of unpredictable operating costs. Although the endowment still decreased by twenty-two percent from July 1, 2008 to June 30, 2009, the University’s position is improved from six months ago. During the same period, the operating budget was twelve million dollars in deficit, which, like its shrinking endowment, is comparable to other colleges.
The University was unfortunately forced to delay completion of its new science center, part of a much-needed effort to improve Georgetown’s competitiveness in the sciences. Considering how constricted credit markets have been during the crisis, the planned additional $50 million in debt—plus the extra ten to twelve million in annual operating costs for the building—would have significantly weakened Georgetown’s long-term position.
Although the University froze all staff and faculty salaries until January 1, 2010, it has not laid off any employees during the crisis, unlike some of its peers. The security of employees’ jobs indicates that the university has responded well to the crisis, despite the disappointment of stagnant salaries.
Perhaps most importantly, Georgetown recognizes that families have been hit just as hard by the financial crisis as anyone else. Despite the hit to its endowment, the University has managed its finances well enough to sustain its financial aid policy and limit tuition increases as much as possible. This past year the tuition increased by only 2.8 percent, the lowest rate in decades. To help students pay tuition, Georgetown raised financial aid funds by 18 percent. A major planned fundraising campaign aims to raise $500 to $600 million in capital to sustain financial aid.
Georgetown’s decisions during the economic crisis have been a welcome change for a school with a history of less-than-spectacular financial management. The administration recognized the severity of the crisis early, and responded intelligently to maintain the quality of its core programs.
