by Emily Bary, Editor in Chief
Vice President for Finance and Administration Ben Hammond seems to be adjusting well to his new role at Wellesley, where he sits on the Sustainability Committee, interacts regularly with faculty and students and tells his young daughters how much they’ll enjoy traying down Severance Green in the winter.
Hammond is no stranger to some of the issues he’s dealing with now at the College, having served in the same role at Mt. Holyoke and worked on a capital campaign at Princeton that resembles a grander version of Wellesley 2025, yet he insists he’s still getting to know the intricacies of Wellesley.
“I want to make sure that I take the time to understand Wellesley as an institution that is unique and distinct from the previous schools I’ve worked at, since I don’t have a lot of history here,” he said. “Many faculty and staff have that history and remember what my predecessor three VPs prior to me said or did. I’m very committed to Wellesley’s values, but at the same time know that it’s important to keep an eye on the forces that are increasingly affecting us from the outside world.”
He said that a key challenge that all liberal arts schools face is finding a way to keep a balanced budget while maintaining campus buildings, paying faculty and staff and covering the general “costs of doing business.”
One of his major responsibilities for the foreseeable future is to make sure the Wellesley 2025 campus renewal project is implemented successfully, meaning that the project stays on schedule and within its budget.
“Usually when things go wrong with major facilities projects like this, something takes longer than expected or takes more money than expected, or the project doesn’t end up accomplishing all that it was supposed to,” he said. “I’m trying to minimize the risks of this happening.”
He said he intends to talk with members of the community to keep them updated on Wellesley 2025, including the scope of work that the Trustees approved in April 2013 and how the College will implement each specific project as the plan progresses over the next decade. He also intends to touch base with them on whether they feel that projects have been successful.
Hammond is also working with Provost Andy Shennan to rebalance the operating budget so that there is money set aside for regular building renovations.
“Just like homeowners save and put aside money for capital projects like replacing the roof or the furnace, colleges have to do the same,” he said. “We’ve set aside some of what we need to each year, but not yet enough. We need to set aside money in our operating budget for things that aren’t immediately due, so that when they do come due, we have the funds that are needed available.”
Wellesley’s $1.579 billion endowment kicks in a significant amount of money to the operating budget, about 41 percent of Wellesley’s $193 million operating budget of expenses last year. Hammond said colleges with large endowments and colleges that are very dependent on their endowments tend to face challenges when financial markets decline significantly, as they did in 2008. Wellesley is similarly exposed, but it does have holdings in its endowment that aren’t directly tied to stock market performance. Wellesley’s ability to borrow money for Wellesley 2025 is also affected by the value of its endowment.
“One of the funding sources for Wellesley 2025 is debt issued by the College. Investors consider many factors in determining whether to lend the College money for capital projects, but one key metric they look at is the size of the endowment. So in general, the bigger the endowment, the more you can borrow to fund capital projects,” he said.
Wellesley borrowed $90 million in 2012 for Wellesley 2025 projects.
Net student charges like tuition and room and board made up about 40 percent, or just over $70 million, of the College’s operating budget of expenses last year. Tuition has increased by 3.5 percent in each of the last two years, and rising tuition costs that outstrip inflation are a hot topic across the country.
“It’s a challenge because we know we need revenue to rebalance our budget, and we’re proud that we are need blind and meet the full demonstrated need of admitted students,” Hammond said. “There’s a lot of pressure in the outside world to keep tuition more in line with inflation, and since inflation is low, a lot of people wonder why colleges are raising tuition so much.” Inflation has been running at about 2 percent.
Hammond sits on the Budgetary Advisory Committee, which every year makes a recommendation to the Board of Trustees about tuition increases, though the Board has the final say.
He will also sit in as the Board of Trustees hears a proposal from Fossil Free Wellesley on Wednesday Oct. 23, when the group urges the Board to divest from fossil fuel companies. Hammond said that sustainability has always been an important issue for him, ever since he headed his residence hall’s recycling program when he was in college over 20 years ago. He is now on Wellesley’s Sustainability Committee.
“We have to think about what the best way is to take care of the planet,” he said. “Divestment is something that students at a lot of campuses have been looking into, though it poses challenges for the way Wellesley and other colleges manage their endowments. My sense is that students are interested in better understanding how the endowment works as they consider what divestment would mean for Wellesley.”
Wellesley uses outside investment firms to manage the funds in its endowment, and these managers typically invest in funds that have a broad range of holdings, including stocks and bonds. Hammond said that it is difficult to tell fund managers not to invest an organization’s funds in a specific company or industry, because these funds typically pool Wellesley’s money with those of other investors which impose no restrictions. If Wellesley decided to divest, it might have to withdraw money from some managers with strong records because those managers wouldn’t be willing to run a separate account free of fossil-fuel investments just for Wellesley.
Hammond and Chief Investment Officer Debby Kuenstner ’80 plan to come to Senate on Monday, Oct. 28 at 6 p.m. to explain to interested students some of the technical elements of running a college endowment.