The Phoenix has asked me to discuss Rebecca Chopp’s presidency from the perspective of the economics of the College and my interactions with her. Before I get to that, let me briefly say that overall I thought Rebecca did a very good job as president in the time she was here, but I did not appreciate the manner in which she left.
Rebecca came to the College on July 1, 2009 in the immediate aftermath of the Financial Meltdown. Given the decline in value of the endowment, the Board of Managers took the view that there was a $15 million dollar budget gap. An Ad Hoc Financial Planning Group was created to come up with recommendations to close that gap (see http://www.swarthmore.edu/finance-and-investment-office/financial-planning-group). I strongly disagreed with $15 million dollar number and felt the gap was more like $5 million. The substance of our disagreement was that the Board viewed the decline in the endowment as permanent; while I took the view that a substantial part of it was temporary. Acceptance of my $5 million figure would, obviously, have involved far fewer cutbacks.
In September 2009 a meeting was held with interested faculty and the Board’s Investment Committee, with Rebecca in attendance, at which I presented my analysis. One never knows what impact any one individual’s comments have on institutional decisions made by large numbers of people, but when the Planning Group issued its report in December 2009, it only proposed closing a $8 million gap, of which $1 million in cuts were delayed. I credit Rebecca with steering a middle course between the “deficit hawks” on the Board and the needs of the College. Unlike many in the financial community, she did not panic: she took what turned out to be the correct view that part of the decline in the endowment was temporary.
My second interaction with Rebecca was over the issue of divestment. The College came up with an estimate that Divestment would cost $200 million over 10 years. I took the view that the cost would be small. Rebecca invited me to her office to discuss why I believed that. I give her a lot of credit for seeking out alternative perspectives. As important, she fully understood where the $200 million figure came from. I asked her, “If the College’s endowment currently contains zero assets in fossil fuel companies, what would the College’s estimate of the cost of divestment be?” She immediately answered, “$200 million, right?” That’s the correct answer, but I think few people understand that the $200 million cost estimate is completely independent of the assets that the College actually holds. So, my final grade for Rebecca Chopp in Economics, A.
Mark Kuperberg is a professor of Economics at Swarthmore College.