A Financial Future For All of Us

A Financial Future for All of Us: Honoring Middlebury’s Values

The coronavirus pandemic has disrupted the lives of hundreds of millions of people across the globe, causing death, sickness, stress, and isolation. The parallel economic impact has likewise been enormous, as businesses have shut down some have chosen to furlough or fire their workers which has, in turn, led to massive increases in unemployment and economic hardships.

Middlebury has not been immune to the consequences of the virus. Some faculty, staff, and students have fallen ill, we’ve lost loved ones, and our work lives have been quickly disrupted and transformed. At the College, there will be greater expenses than revenues this fiscal year and a projected deficit in the tens of millions of dollars next year. What is the best way to deal with this crisis? The Middlebury chapter of the American Association of University Professors (AAUP) believes that the solutions we should adopt should reflect the values the College has long espoused in its public statements and deeds.

One place to view the College’s values is through the people it chooses as recipients of honorary degrees. Each Commencement ceremony sees trustees present to the president individuals whose aspirations and achievements are meant to serve as role models for our graduating seniors. In 1996, Middlebury conferred an honorary Doctor of Humane Letters on Aaron Feuerstein. Mr. Feuerstein was the owner of Malden Mills, the producer of Polartec fleece. The company’s factory was destroyed by the largest industrial fire in Massachusetts. He could have collected the insurance money and retired to a comfortable life, leaving his former employees scrambling to find other jobs. Instead, Mr. Feuerstein vowed not only to rebuild the plant, but to continue to pay all his employees their wages and benefits during the construction process.

Could Middlebury follow Mr. Feuerstein’s example, one it so visibly honored, as it works through a temporary period of disruption caused by the virus? We believe that it can and that it should. Here’s how.

The AAUP Plan: Stop Endowment Hoarding and Create Real Transparency and Faculty Governance Now

There are adequate funds in Middlebury’s endowment to get us through a 12 to 18-month period without firing staff and reducing the compensation—salaries, healthcare, sabbatical leaves, parental leaves, etc.—of those who work here. The small additional draw down from the endowment would have little long-term negative impact on the institution while providing much needed support for its loyal employees.

There is no principle of financial management, no wisdom of corporate governance, or tenet of economics that would argue against an increased draw from the endowment in the face of a once-in-a-lifetime pandemic.

Yet, all the models Senior Administration is sharing with faculty groups only allow for a 5% draw from the endowment. In reality, we have the ability to use at least 20% of the endowment to confront this crisis. This includes unrestricted funds, the Trustee-designated funds, and funds designated for capital building projects.

Increasing the amount we draw from the endowment to at least 7% would allow us to maintain current compensation levels while weathering the crisis. We propose the College pursue this path instead of widespread austerity.

The so-called “five percent rule,” which has its origins in the laudable desire to preserve intergenerational equity, should itself be reconsidered. There is no ethical reason the current generation of Middlebury students, staff and faculty should bear all of the burdens. In fact, Middlebury has used up to 7.1% of the endowment as recently as 2001/02. Further, the particular choice of five percent, which delineates “surplus” from “deficit,” is itself a matter of some debate: intended to preserve the real value of endowments, there is evidence that it has allowed institutions to “endowment hoard,” and at least one New York Times op-ed has called for an eight percent rule which, if adopted, would transform the conversation on our campus. In this moment of extraordinary upheaval, we must utilize the resources we have to support the extraordinary education we offer here at Middlebury.

The budget challenges we now confront are not a choice between prudent finance and community values. Rather, we believe that the College must choose a financial path forward that honors the commitments it has made to faculty, staff, and students, and to the values it so often endorses in public.

To help ensure that happens, we propose the creation of a collective bargaining process that will allow faculty and staff to negotiate with the administration over compensation and the financial future of the College. A democratic workplace means we must elect a body that is trained and committed to this specific bargaining task during this unique time. We need faculty advocates with a seat at the table who are treated as equals, not merely an advisory board. Such a bargaining committee would have full access to the College’s financial planning resources, and would be able to consult with the larger faculty and staff before big decisions are set in stone. We suggest that the AAUP seed such an organization, as it does at over 500 colleges across the country.

We are concerned about more than compensation, but the well-being of the institution and its future reputation. If faculty compensation is cut—as proposed in all of Senior Leadership’s projections, including the best-case scenario where students return in the fall—faculty will be forced to recalibrate their time and energies. Already, there is precarity among our community members who are supporting their families on one salary or who are living dual lives in order to maintain careers alongside their academic partners. Less money will translate to lower productivity because, necessarily, faculty will find alternative ways to generate income, such as freelance work, to pay their rent, mortgages, and support their families.

All of this means that our students will get less: fewer faculty with engaged research agendas; less faculty time and energy; and fewer faculty who feel they are being treated fairly by an institution that claims to put education first. The administration talks of “the Middlebury Way,” and relies on the rhetoric of “family” as they ask us to sacrifice for our jobs. This line of reasoning uses our own best intentions against us even as it obscures the reality that Middlebury is a nonprofit entity that has generated nearly a billion dollars in a sheltered endowment. We must ask: what is this money for if not to secure the well-being of the workers and students who make up the Middlebury community?

Middlebury’s Future Gets Decided Now
What we do now will define the future reality of working at the College. Research in the American Economic Review shows that when endowments experience negative shocks, hiring and benefits are taken away. When endowments experience positive shocks, these are not returned.* We need full transparency and collaboration between our stated financial planners and the faculty and staff. To make decisions while only informing a small portion of the faculty and staff—some of whom were appointed by the administration or elected for unrelated committees—undermines faculty governance. Decisions about capital improvements, real estate acquisitions, or even “brokering” a dorm building in Monterey CA, should not be made without the entire faculty being able to see the actual long-term costs of such projects.

As a community, we must ask ourselves what we value most—and act accordingly. Our AAUP chapter believes that high-quality education and maintaining our fair compensation for labor should be our primary concerns. We need a financial plan that reflects our mission and will rise to the occasion, not set us back a decade. We look forward to implementing such a plan alongside our faculty, staff, and administrative colleagues, one that utilizes our endowment responsibly and ethically, to ensure a vibrant future for the College and those who work and learn here.

*Jeffrey R. Brown, et al. “How University Endowments Respond to Market Shocks: Evidence and Implications,” American Economic Review, Vo. 104, No. 3, March 2014. 

This statement was sent to members of the administration as well as the Board of Trustees with the following signatures:

Rachael Miyung Joo, American Studies
Marybeth E. Nevins, Anthropology
Ellen Oxfeld, Anthropology

Michael Sheridan, Anthropology
Peter Matthews, Economics
Andrea Robbett, Economics
Tanya Byker, Economics
Julia Berazneva, Economics
Jeffrey Carpenter, Economics
Carolyn Craven, Economics
Akhil Rao, Economics
Tara L. Affolter, Education Studies
Antonia Losano, English & American Literature

Yumna Siddiqi, English & American Literature
Marion Wells, English & American Literature

Rebecca Kneale Gould, Environmental Studies
Erin J. Davis, Film & Media Studies
David Miranda-Hardy, Film & Media Culture
William Poulin-Deltour, French & Francophone Studies
Laurie Essig, Gender, Sexuality & Feminist Studies
Hemangini Gupta, Gender, Sexuality & Feminist Studies
Catharine Wright, Gender, Sexuality & Feminist Studies and Writing Program
Carly Thomsen, Gender, Sexuality & Feminist Studies

Natalie Eppelsheimer, German
Florence A. Feiereisen, German
Guntram H. Herb, Geograpy

Tamar Mayer, Geography
Carrie Anderson, History of Art & Architecture
Edward A. Vazquez, History of Art & Architecture
Febe Armanios, History
Maggie Clinton, History
Darién J. Davis, History
Joyce Mao, History
Jacob Tropp, History
Max Ward, History
Linda White, Japanese Studies

Enrique Garcia, Luso-Hispanic Studies
Gloria Estela González Zenteno, Luso-Hispanic Studies
Patricia Saldarriaga, Luso-Hispanic Studies
Luis Hernán Castañeda, Luso-Hispanic Studies

Irina Feldman, Luso-Hispanic Studies
Fernando S. Rocha, Luso-Hispanic Studies
Priscilla S. Bremser, Mathematics
Michael Olinick, Mathematics
Frank Swenton, Mathematics
Kemi Fuentes-George, Political Science
Justin Doran, Religion
Matthew Lawrence, Sociology
Jamie McCallum, Sociology
Linus Owens, Sociology
Rebecca Tiger, Sociology

James Chase Sanchez, Writing & Rhetoric
Hector Vila, Writing & Rhetoric