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Financial Operating Results and Endowment Report for Fiscal 2020-21

October 25, 2021


Executive Vice President for Finance and Administration and Treasurer David Provost sent the following message to the Middlebury community on Monday, October 25.

Dear Middlebury Community,

I am writing to share Middlebury’s year-over-year financial results, which were discussed with the Board of Trustees on October 22. These results are characterized by two themes: A lower-than-projected deficit and significant investment returns for the fiscal year ending June 30. 

Before we talk about endowment performance, which has been a topic of recent news reports and much conversation in higher education, I think it’s important to provide some context of Middlebury’s overall financial picture and our ongoing efforts to achieve financial sustainability. As we’ve shared before, the institution had a history of overspending in previous years. Since then, we have focused our financial efforts on making Middlebury financially sound, being more inclusive of all constituencies in our deliberations about the budget, and better aligning our finances with our mission and long-term goals. 

Financial Operating Results 

In this past fiscal year, through prudent spending practices and some federal reimbursement, we were able to offset a large portion of the nearly $25 million in lost tuition revenue that we experienced due to the COVID-19 pandemic. That lost tuition was the result of lower-than-usual enrollments and some program cancelations: Middlebury lost $15 million in tuition revenue from our Schools Abroad and Language Schools and $10 million from the undergraduate program.

These losses posed significant challenges to our operations, our instruction, and to our desire to maintain wage and benefit continuity to all our employees. Nevertheless, we were able to minimize their impact through a hiring freeze and overall reductions in spending, ending the year with an operating deficit of $11.9 million—which was better than our projected $18.5 million deficit, but still worse than where we need to be to ensure financial sustainability and reliability for our current and future faculty, staff, and students.  

Endowment Results

Like other higher education institutions, Middlebury experienced significant growth in our endowment this year, with an overall increase of 37.4 percent over the previous year, or $398.3 million. The endowment now stands at $1.5 billion, compared with $1.1 billion in the previous fiscal year. Assets managed by our investment firm, Investure, had an annual return of 38.8 percent.

Middlebury’s growth is primarily due to our ability to invest in private equity, which showed the largest returns. It is also consistent with, yet slightly higher than, the median increase among peer institutions with endowments over $1 billion.

Importantly, the endowment, which has been entrusted to us by our generous donors over generations of giving, is directed primarily toward supporting students and faculty in the form of financial aid and professorships. These gains, assuming they persist, will enable the institution to provide more in the way of both of these in the coming years.  

Deliberations and Next Steps

We are gratified by these results. These gains will ensure that we can spend more on financial aid for our students and continue to provide the high-quality education and instruction that they deserve. The majority of these funds are being directed back to our students in the form of financial aid, instructional support, and student services support. 

With the lessons we’ve learned about financial discipline over the last couple of years—especially the previous one—and with the endowment returns, Middlebury is now positioned better than it ever has been to reach our goal of financial sustainability.  

As we look ahead, we must be thoughtful and deliberate about our immediate next steps with respect to these significant and unforeseen gains. As we build the fiscal year 2023 budget, we will get a better sense of priorities. Given previous years of deficit spending, and higher-than-average endowment spending, we are not making any announcements regarding how we might spend any gains, and will instead spend the next year strategizing on a way forward through conversations with our faculty, staff, and student stakeholders, and with our financial advisors and trustees.

Middlebury’s Process 

The Middlebury endowment supports all of Middlebury’s schools and programs—the undergraduate College, the Middlebury Institute of International Studies at Monterey, Language Schools, Middlebury C.V. Starr Schools Abroad, Bread Loaf School of English, Bread Loaf Writers’ Conferences, and School of the Environment. In fiscal year 2021, we drew $61 million from our endowment to support our operations across the institution. This year’s expected draw will be $55 million.

We use a three-year trailing average to ensure more consistent draws at times of unusual growth or losses, and to ensure consistency of our operations.   

Middlebury’s endowment is managed by Investure, a firm based in Charlottesville, Virginia, that manages the endowments of colleges, universities, and foundations. Investure began managing the Middlebury endowment on May 31, 2005. 

I want to thank our community for engaging in all the efforts that are strengthening Middlebury’s fiscal position, and especially acknowledge the enthusiastic support we receive from our alumni, parents, and friends, whose gifts continually enable the exceptional work of our students, faculty, and staff and the entire Middlebury experience.

Sincerely,

David Provost
Executive Vice President for Finance and Administration and Treasurer