Vassar College Annual Report 2016/17

Annual Report 2016/17

From the Chair of the Board of Trustees

2016/17: The Year in Review

While times of transition can be among the most challenging that any institution faces, they also present opportunity. The fiscal year that ended June 30, 2017, was just such a period for Vassar – and, as the report that follows this letter demonstrates, the College made excellent use of that time, emerging even stronger and better prepared for the future.

When Catharine Hill completed 10 successful years as President of Vassar in August 2016, we were fortunate to have in place both people and processes to ensure a smooth transition and a successful year for the College.

Three examples in particular deserve special mention.

First, the Board of Trustees named a seasoned veteran, Dean of the Faculty Jonathan Chenette, as the College’s Interim President for the 2016/2017 academic year. We all owe Dean Chenette our gratitude for his tireless and steady leadership during that period.

The 2016/17 fiscal and academic year was a period that saw significant change and progress at Vassar, from the President’s Office to the classrooms and the residence halls. While some of these changes were more immediately evident than others, all will have a profound

Second, the Board appointed a Presidential Search Committee of trustees, faculty and students, under the leadership of Geraldine Laybourne ’69, P’93 and Tony Friscia ’78, P’15, that was charged with the important task of finding Vassar’s 11th President. After conducting a nationwide search, and researching and interviewing an impressive group of candidates, in January 2017 the Search Committee unanimously recommended to the Board that Elizabeth Howe Bradley be named Vassar’s next President.

The Board in turn unanimously elected her, and President Bradley took office on July 1, 2017.

Finally, the Board, through its Investments Committee, ably headed by Henry Johnson ’88 and working closely with Acting Vice President for Finance and Administration Stephen Dahnert, continued to provide superb oversight of the College’s endowment. The results for 2016/2017 were especially noteworthy: for the first time in Vassar’s history, the endowment, which provides nearly one-third of the College’s operational funding, stood above $1 billion at the end of the fiscal year. This was made possible by investment strategies that yielded an investment return of 12.5 percent. The Investments Committee also took the important step of deciding to outsource the management of the endowment to its existing investment advisor, Hall Capital Partners, whose work will continue to be overseen by the Committee.

The above examples are described in greater detail in the following report, and are part of a much broader picture to which Vassar faculty, students, administration, staff and alumnae/i contribute, ensuring our College’s continued excellence.

As the 2017/2018 fiscal year comes to a close, I will complete my own service of 12 years as Chair of the Board of Trustees (and 22 years as a Trustee).

It has been an extraordinary honor to participate in the leadership of this remarkable institution, and to see Vassar continue to grow and prosper, as I am sure it will continue to do in the future.

William A. Plapinger ’74, P’10 Chair, Board of Trustees

effect on the College in the years to come.

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New Leadership for the College

On January 10, 2017, the Board of Trustees unanimously elected Elizabeth Howe Bradley as the 11th president of Vassar College, in the culmination of an eight-month national search to find a successor to President Catharine Hill, who had stepped down in August 2016 after a decade of service as Vassar’s 10th president.

President Bradley was unanimously recommended to the Board of Trustees by the Presidential Search Committee, which had reviewed almost 200 candidates. Pursuant to the College’s rules of Governance, that committee consisted of seven trustees – co-chairs Tony Friscia ’78 P’15 and Geraldine Laybourne ’69 P’93, Karen Herskovitz ckman '88, Maryellen Cattani Herringer '65, Philip N. Jefferson '83, Susan Zadek Mandel '78, and William A. Plapinger ’74; five faculty members – Teresa A. Garrett, Associate Professor of Chemistry, Jamie Kelly, Associate Professor of Philosophy, Mia Mask, Professor of Film, Peipei Qiu, Professor of Chinese and Japanese, and Paul Ruud, Professor of Economics; and two students, Conor Flanagan '17 and Ellie Winter '18. Art D. Rodriguez, Dean of Admission and Financial Aid, and Missie Rennie Taylor ’68, President of the Alumnae and Alumni of Vassar College, served as advisors, and John Feroe, Professor of Mathematics and Statistics, served as secretary to the committee.

President Bradley’s election came in the wake of a remarkable 20-year career as a noted scholar and teacher at Yale University. Having earned a PhD from Yale and an MBA from the University of Chicago after graduating magna cum laude from Harvard with a focus on economics and art history, she has published more than 300 peer-reviewed papers and three books, including The American Health Care Paradox: Why Spending More Is Getting Us Less. She will also hold a joint appointment at

Vassar as Professor of Political Science and Professor of Science, Technology, and Society.

As Head of Branford College, a residential college that is an integral part of Yale University, Elizabeth Bradley was responsible for the social and intellectual life of 450 undergraduate students, living on campus with her family, including her husband John Bradley, who also has joined Vassar as the Executive Director of the Vassar Urban Education Initiative. Simultaneously, as the Brady-Johnson Professor of Grand Strategy at Yale, she headed a university-wide, interdisciplinary initiative, primarily for undergraduates, whose goal was to develop students’ capacity to lead in addressing pressing global challenges. In addition, as the founder and Faculty Director of Yale’s Global Health Leadership Institute, she was at the forefront of improving health care in the United States and through projects in Asia, Europe and Africa, where she was instrumental in helping to transform Ethiopia’s health care system.

Elizabeth Bradley began her service as President of Vassar on July 1, 2017, and was inaugurated in a ceremony rich with the College’s traditions on September 24, 2017.

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A New Direction for the Curriculum

VIEW is intended “to create the time, opportunity, and mental space for exploring new ideas and for engaging the talents and passions of both students and faculty.”

It does so by rebalancing the College’s curriculum in order to allow students more avenues for earning academic credits through a wide variety of opportunities for close work with faculty, in addition to the traditional classroom experience.

The most significant change in Vassar’s curriculum in several decades was ratified on October 5, 2016, when the College’s faculty overwhelmingly voted to adopt a new curricular plan, with implementation to begin in the 2018-2019 academic year. The new curriculum is known as Vassar Intensive Experiential Work (VIEW).

These opportunities, called Intensives, include such offerings as community-based learning projects, mentored research projects or artistic productions, immersive studies during periods outside the usual academic calendar, study trips, and rapid-response courses (to cite one pertinent example: in the 2016/17 academic year, a Vassar course on the worldwide refugee crisis led directly to the creation of a regional organization dedicated to assisting with refugee resettlement in the Mid-Hudson Valley).

The advent of VIEW serves to acknowledge an already existing reality, that much of learning today takes place outside the classroom setting. The incorporation of this into Vassar’s official curricular policy more closely reflects the character of academics at a 21st-century liberal arts school. Among the projected benefits for students, faculty,

and the College as a whole are the development and strengthening of educational practices that require close contact between students and faculty – which always has been a fundamental characteristic of a Vassar education – as well as an increase in the College’s already considerable educational engagement off campus with the community and the world. Another key benefit of VIEW is the enhanced opportunity it will provide Vassar faculty to engage with the variety of learning styles of the College’s increasingly diverse student body.

According to Jonathan Chenette, who was a driving force for the new curriculum as the College’s Dean of the Faculty, “The idea of reducing overall classroom work while encouraging further individualized study is something that Maria Mitchell, for instance, surely would recognize and approve. We are excited about the potential for these offerings to be dynamic sites for student and faculty creativity, community engagement, global learning, out-of-class mentorship, and ‘go to the source’ discovery in the best Vassar tradition.”

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(L to R) Lisa Brawley, Wendy Maragh Taylor, Candice Swift

A Renewed Commitment to Community

In late March 2017, Vassar announced a $1.6 million, fouryear initiative – “Engaged Pluralism: Belonging and Thriving at Vassar College,” supported in part by an $800,000 grant from the Andrew W. Mellon Foundation – to advance the College’s mission as a more inclusive and affirming learning community for its highly diverse student body.

“Engaged Pluralism” is defined as “the challenge and imperative of engaging across all manner of social difference, viewing those differences not as problems to be overcome but as essential components of a strong community where all members have the opportunity to thrive.”

Vassar will conduct a comprehensive review of its institutional culture and organizational structure in order to identify and address practices and habits that act as barriers to all students’ ability to thrive. The focus of the initiative will be on enhancing equity and student success through climate assessment and infrastructural realignment, campus-wide capacity-building, and curricular and pedagogical innovation, as well as on strengthening programs that foster a sense of belonging within the institution and that empower students to thrive.

The Engaged Pluralism Initiative, which will be in place for nine semesters, commenced in fall 2017 under the direction of Candice M. Lowe-Swift, Associate Professor of Anthropology. In announcing the initiative, Interim President Jonathan Chenette said, “Diversity at Vassar has certainly enriched the educational experience of all of our students, and we have developed a variety of new programs to support student success. As a result, graduation rates across different demographics are approximately the same.

“Nonetheless, not all of our students are similarly positioned to thrive in their Vassar educations and in their post-Vassar lives, take full advantage of the resources available to them at Vassar, or feel a similar sense of belonging. Through this initiative we aim to understand more fully what it means to belong to and thrive in a diverse community, which aspects of our living and learning environment most contribute to student success, and how we can develop and coordinate programs and support systems that enable all of our students to experience a sense of belonging and that provide them with the opportunity to thrive.”

In pursuit of these goals, the project is intended to help Vassar attract, retain and strengthen a diverse and mutually supportive community of students, faculty and staff, while supporting the academic excellence of all Vassar students, better preparing them for citizenship in an increasingly interconnected world.

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VASSAR ANNUAL REPORT 2016/17

VASSAR ANNUAL REPORT 2016/17

Robust Returns for the Endowment

Financial Report for 2016/17 Financial results for Vassar College in the fiscal year that ended June 30, 2017 were quite positive. Global equity markets provided strong returns which drove robust returns for pooled College assets, particularly the endowment. Operations produced a balanced budget for the fiscal year, in part the result of tight management by the administration. Table 1 portrays some of the key measures of Vassar’s operations, assets and liabilities over the last decade, providing context for the 2016/17 year in review from a financial perspective.

Table 1: Key Financial/Operating Indicators

2006/07 2011/12 2016/17

Endowment Market Value

$ 869.1 mm

$ 804.9 mm

$ 1,002.6 mm

Endowment Per Student

$ 365,475

$ 339,620

$ 422,557

Value of Debt

$ 125.5 mm

$ 169.3 mm

$ 247.8 mm

Total Private Gifts Received

$ 30.8 mm

$ 36.8 mm

$ 40.5 mm

Comprehensive Fee for Attendance

$ 41,700

$ 55,135

$ 65,490

Average Cost of Educating Each Student

$ 62,692

$ 69,400

$ 74,354

Vassar-funded Student Grant Aid

$ 26.3 mm

$ 53.9 mm

$ 64.2 mm

Percent of Students with Vassar Grants

47%

61%

59%

Undergraduate enrollment (avg FTE)

2,378

2,370

2,373

Student-Faculty Ratio (Fall)

8.2

7.9

8.1

The College’s long-term investment pool, in which endowed funds are invested, earned a total return of 12.5% in the 2016/17 fiscal year, compared to a return of -1.5% in 2015/16. The College’s reliance upon these capital assets to support operations requires a steady draw from the funds. For the 2016/17 fiscal year, this draw was $50.6 million or 5.5% of the pool’s market value at the beginning of the fiscal year.

Library Volumes

Vassar’s financial statements for the fiscal year ended June 30, 2017 have been audited by KPMG, and appear on the College’s website. A digital copy of the statements is available from the Finance and Administration web page at: http://financeandadministration.vassar.edu/documents/index.html

930,661

995,578

1,096,541

Applications for Admission

6,393

7,908

7,746

Percent of Applicants Offered Admission

28.6%

22.8%

23.8%

Yield on Admission Offers

37.2%

36.5%

34.0%

Graduation Rate (6 yr)

93.1%

90.7%

91.1%

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VASSAR ANNUAL REPORT 2016/17

VASSAR ANNUAL REPORT 2016/17

1.3%

8.3%

Operating Results There were 2,373 full-time-equivalent students enrolled on campus and an average of 125 full-time equivalent students enrolled in study abroad each semester. Overall, net operating revenue increased by 2% compared to the prior year, while operating expenses increased by about 4%.

Figure 1 depicts the sources of operating revenue, with 55% of net operating revenue provided by tuition, room, board, and other fees paid by students and their families, about flat to last year. Another 30% was provided by investment return on endowment, down slightly from last year, while private gifts and grants provided 8%. Federal and State grants for student financial aid, academic programming, and faculty research provided only 1% of total revenue, and the remaining 5% came from fee-for-service activities, summer programs, nursery school tuition and miscellaneous other sources. In the years immediately following the adoption of need-blind admissions and aid policies just prior to the major recession that began in the spring of 2008, the share of revenue provided by student charges declined. Over the last few years net student revenue has returned to growth and is expected to grow slowly over time.

Figure 2 breaks down the $185.7 million recorded as operating expense in the 2016/17 statement of activities by program, with employment and plant operating costs distributed to each programmatic area. The current year allocation of expenditures is generally consistent with the

Compensation continues to be the single largest type of expenditure at the College, illustrating the labor-intensive nature of the small class and intensive faculty focus on teaching that is Vassar’s hallmark. Vassar strives to maintain highly competitive salaries, wages, and benefits, to attract and retain skilled individuals in all aspects of operations, as well as the outstanding faculty who are central to the College’s academic mission. Thus, over 62% of annual operating costs in 2016/17 was devoted to compensation.

Endowment support

55.2%

Gifts

•• •• ••

Instruction

Figure 2: Expenses

by Program 2016/17 10.9%

Government grants Other revenue

12.2%

21.2%

•• •• •

Net tuition / room / board

Figure 1: Sources of Revenue 2016/17

29.9%

prior year. About 56% of expenses are dedicated to the academic enterprise (instruction, research, and academic support). As a residential college, Vassar also expends 12% of operating resources on auxiliary enterprises including residence hall and campus dining operations, and 11% on student services (admissions, student health services, counseling, athletics, and career services). Central administrative operations – such as accounting services, communications, fundraising, security services, information technology support, and other central costs – accounted for approximately 21% of total expenditure in 2016/17.

5.3%

42.0%

Research

Academic support Student services

Institutional support Auxiliary enterprises

11.4% 2.3%

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VASSAR ANNUAL REPORT 2016/17

1%

Financial Assets: Long-term Investments and Short Term Liquidity

10%

The endowed funds of the College are invested primarily through a unified pool of investments under the supervision of the Investments Committee of the Board of Trustees. Vassar’s long-term objective is to earn a total return (income and appreciation of principal) equal to the average annual appropriation to support current activities (targeted at 5% on average) plus long-term inflation of 2 to 3% per year to preserve the purchasing power of the endowment over time.

The College’s strategy has been to remain fully diversified in its core endowment investments (Figure 3), a strategy that has served Vassar particularly well in the last decade given the high levels of volatility in some asset classes.

Nevertheless, the College has not been immune to the effects of the falling markets such as during the 2008/09 fiscal year, as is evident in Figure 4, illustrating the change in endowment market value over the past twenty years.

2%

•• •• •• •

Cash

Figure 3: Asset Allocation Target

Fixed Income Equities

Alternatives

30%

Hybrid

Private Equity Real Assets

30%

one-, three-, five-, and ten-year time periods, compared to the Vassar composite portfolio benchmark.

$1000 $800 $600 $400

$200

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

$-

2000

In addition to the long-term investment of the endowment and deferred gift assets, the College also manages operating cash reserves and funds held in advance of investment in the physical plant. These financial assets are invested at low risk, primarily to maintain the principal value of the funds prior to use and ensure liquidity. The balances in these vehicles fluctuated over the course of the fiscal year, ending at $15.2 million on June 30, fairly typical for the College’s short-term liquidity.

$1.200

1999

On June 30, 2017, the market value of the endowment had risen to $1.002 billion, the result of an investment return, net of fees to investment managers, of 12.5% for the fiscal year, appropriations for current use of $50.6 million, and gifts and additions of $17.9 million. The total return of 12.5% exceeded the weighted benchmark return of 12.3%, which incorporates the returns available in the asset classes represented in the Vassar portfolio. Table 2 summarizes the performance of the endowment over

Table 1: Endowment Market Value (June 30)

1998

Support from endowment is vital to Vassar’s operations, with annual income from endowment providing approximately 30% of annual operating funds. Over the past 20 years, the endowment provided nearly $792 million in distributions for College operations while also growing significantly, from a market value of nearly $473 million on June 30, 1997, to just over $1 billion today. These figures underscore the tremendous value that endowment provides to Vassar, both now and in perpetuity.

The College also acts as trustee for deferred gifts and contracts that are invested to provide income streams to beneficiaries during their lifetimes, with the remainder passing to the College as a charitable donation. The investment pool devoted to deferred gifts totaled $24.1 million as of June 30, 2017. These assets are managed separately from the endowment under contract with Kaspick & Company, a leading provider of deferred giving services. The total program of deferred giving assets earned an aggregate return of 11.3% in the fiscal year ended June 30, 2017, although returns varied for participants depending upon the objectives of each trust or contract. Over the past ten years, Kaspick’s stewardship of Vassar’s trust assets has earned a total return of 5.0% per year on the total pool of deferred giving assets.

1997

14

15%

12%

15

VASSAR ANNUAL REPORT 2016/17

During the 2016/17 fiscal year, a total of $22.3 million was invested in facilities, campus improvements, equipment, and collections, including approximately $2.1 million in computer technology.

Financial Support from Alumnae/i and Friends Vassar recorded $45 million in outright gifts and pledges from alumnae/i, parents, friends, and private foundations during 2016/17, compared to $21 million recorded in 2015/16. Private gifts and grants for operating purposes amounted to $14 million, a portion of which is temporarily restricted for future use, while private gifts and grants for non-operating or capital purposes came in at about $30.5 million, of which $15 million was restricted by donors for endowment creation, and the remainder temporarily restricted for investment in facilities or equipment and the creation of deferred gifts. The College also received artwork valued at $2.4 million and added to the outstanding collection of the Frances Lehman Loeb Art Center.

Generous donations from alumnae/i, families, and friends provide invaluable assistance in maintaining Vassar’s historic and distinctive campus.

Debt and Credit Rating

Physical Assets: Facilities, the Campus, Equipment and Collections

On June 30, 2017, the College had $247.8 million in debt outstanding, all in general obligation tax-exempt revenue bonds, issued through either the Dormitory Authority of the State of New York or the Dutchess County Local Development Corporation. Interest rates on these bonds range between 4% and 5%. Vassar’s credit ratings are Aa3 from Moody’s and AA- from Standard & Poor’s.

During the 2016/17 fiscal year, a total of $22.3 million was invested in facilities, campus improvements, equipment, and collections, including $2.8 million in library acquisitions and approximately $2.1 million in computer technology to support the campus network and academic computing. The College also benefits from generous donations from alumnae/i, families, and friends who provide invaluable assistance in maintaining Vassar’s historic and distinctive campus. Highlights of work in 2016/17 include renovation of the student dining facility in Students’ Building to support improvements in the dining plan, and restoration of the President’s House. Additionally, important infrastructure work was completed to campus roadways and sidewalks, utility distribution, and central heating plant.

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2016-2017 Vassar College Board of Trustees

Karen Herskovitz Ackman ’88 Jamshed J. Bharucha ’78 Jason F. Blum ’91 Beth Burnam ’77, P ’10 Mark Burstein ’84 Darys Estrella ’92 Linda A. Fairstein ’69 Richard Feitler ’85 Anthony J. Friscia ’78, P’15 Jeffrey A. Goldstein ’77, P’12 Lorna Bade Goodman ’63, P’88

Heather Sturt Haaga ’72 Maryellen Cattani Herringer ’65 President Catharine Bond Hill Huang Hung ’84 Philip N. Jefferson ’83 Henry P. Johnson ’88 Lisa Kudrow ’85 Geraldine Bond Laybourne ’69, P’93 Susan Zadek Mandel ’78 Kenneth W. Miles ’07 Tanya M. Odom ’92

Carol S. Ostrow ’77, P’09, P’15 Tamar Smith Pichette ’86 Chair William A. Plapinger ’74, P’10 Kathy Zillweger Putnam ’75 Richard W. Roberts ’74 Eve E. Slater ’67 Karen Strain Smythe ’82 Milbrey (Missie) Rennie Taylor ’68 Debra Fagel Treyz ’74 Jill Troy Werner ’71 Christianna Wood ’81

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