Can the College spend its “Board Reserve Endowment” rather than decrease operating expenses in the year and years ahead?
The College’s Board Reserve Endowment is part of the College’s overall endowment investments and the largest component of the College’s unrestricted endowment. As such, it has declined in value by more than 24 percent between June 30, 2008 and December 31, 2008. The decline in value of all endowment investments put the College in the position where it is close to being out of compliance with credit covenants that are based on financial ratios, especially those focused on the College’s unrestricted resources. The spending of the Board Reserve Endowment, the issuance of any new long-term debt by the College, or the further decline in the market value of the endowment would cause the College to be out of compliance with its credit covenants. The expenditure of the Board Reserve Endowment would also decrease the amount of endowment income available to support the FY 2009-2010 operating budget and future operating budgets.
