The nation's continuing economic crisis took center stage at a Sept. 29 faculty town hall meeting held by President John J. DeGioia, who said a university response plan has left Georgetown in good financial shape.

Speaking from the Bunn Intercultural Center auditorium, DeGioia pointed to hope on the horizon when it comes to the “great recession.”

“The combination of what we undertook, and the signs of the increasing stability in our national economy, now allow us to look toward the future,” he said.

Georgetown’s future includes a new capital campaign, which has been in the quiet stage for three years. The Office of Advancement has secured $525 million in commitments already for the campaign, which will focus on investing in financial aid, faculty and some facilities.

“One key part of the campaign, and our first priority, is building upon our 30-year history of providing need-blind admissions and full-need financial aid,” DeGioia said.

To that end, the capital campaign will include the new 1789 Scholarship Imperative, an effort to provide fund raising support for 1,789 undergraduate scholarships over five years.

“Another cornerstone of the campaign will be strengthening the resources and support for faculty,” DeGioia said, noting that senior leaders will work together “to position all three campuses for investment in faculty and research excellence.”

Signs the recession may be easing also means the salary deferments in place since June will end in January
for faculty and staff. The salary pool will be 2.5 percent and raises will take effect on Jan. 1. The next anticipated employee salary increase will be in January 2011, and university leaders will make a decision about whether to return to the typical July increases after that.

Still, the recession does continue to affect Georgetown,the president said. He recapped a five-point plan enacted early during the financial downturn to help insulate Georgetown from the economic storm. The plan included limited tuition increases to ensure access and affordability, delaying employee salary increases, adopting a conservative spending strategy, emphasizing philanthropy for operations and restructuring the university’s debt portfolio.

DeGioia said the plan helped the university hold to $12.5 million in operating cost deficits instead of the projected $40 million for Fiscal Year 2009.

As part of conservative spending, construction halted earlier this year on the new science building. When faced with the recession, Georgetown was neither prepared to borrow the multimillions needed nor take on additional operating costs, DeGioia said.

The university is fundraising, with $25 million raised thus far, and also has applied for a stimulus grant to aid with construction costs.

“We are, by any definition, a shovel-ready project,” DeGioia said, pointing to a condition of applying for stimulus funds.

By mid-winter, administrators expect to know both about the stimulus grant and the philanthropy efforts, and hope to make a decision about how and when to move forward on the science building construction. DeGioia said the building is Georgetown’s highest infrastructure priority.

“The conditions for making a decision include securing either philanthropy or stimulus money in the range of $25-40 million and ensuring we can meet the extra operational costs,” the president said. “If we achieve those things, we can move forward with the project.”

DeGioia also revisited the endowment, which took a hit from the recession and fell by about $100 million from its $1 billion high.The endowment now stands at $940 million, and its performance is in the top quartile of all institutional investors, DeGioia noted.

Georgetown had a lucky break in September 2008 when bond rating agencies raised the university’s rate, which dictates how much interest the university pays on debt. The raised rate came through just two weeks before the financial crisis began in earnest, and the better rating has allowed Georgetown to pay less interest its debts.

“During the past summer, we again went before the rating agencies, and I’m glad to report that, despite the macro-environment, they felt sufficiently comfortable with Georgetown, its management team and student selectivity to reaffirm our Standard & Poors rating of A- and our Moody’s rating of A3,” DeGioia announced.

This comes on the heels of Fiscal Year 2009 proving Georgetown’s best fundraising year. The university raised $186 million in campaign commitments and $182 million in cash. Totals were boosted by the $75 million McDevitt gift to support faculty research, however, “even without the McDevitt gift, we still surpassed the
prior record for cash by $10 million,” DeGioia said.

-- Lauren Burgoon

(September 30, 2009)