Section: Letter to the Editor

Letter to the editor: Are the College’s investments worth it?

If someone told you in the late 1990s, during the era of President Robert Allen Oden Jr, that Kenyon would embark on an infrastructure investment close to $1 billion, you would probably have said they were joking or delusional.

Kenyon’s current endowment is over $550 million. For historical perspective, Kenyon’s endowment in 1998 was only $93.4 million and it was paying interest on only $19 million of borrowed money.

However, Kenyon will have invested a near-billion dollars if it continues to pay the annual interest on all the money it has borrowed via bonds issued since 1998 — used to help pay for all the new buildings and the renovation of existing ones.

The total investment figure (circa $943 million) assumes that Kenyon will not construct any more new buildings beyond the new dorms that Graham Gund ’63 H’81 has proposed to flank Old Kenyon, and also that it will not borrow more money on top of the $266 million it still owes lenders. These two assumptions are arguably implausible.

In any case, here are the figures based in part on my ability to extract from the annual financial audits for the period of 1999-2021 — the figures for the amount of interest Kenyon paid each year on the money it had borrowed from 1999 to the present. The College did not issue any new bonds this past year.

The figure for the total interest paid for debt servicing for the period 1999-2021 inclusive is $152,680,256 through to June 30, 2021.

The actual cost of new construction and renovation of old buildings — excluding the ongoing West Quad project — was circa $225 million. Reportedly, the original estimated price tag for the West Quad project, including the new buildings in downtown Gambier, was $170 million — with $17 million of that money designated just for the new buildings in the center of Gambier.

Given the mammoth scale of the West Quad project, it is improbable that it can be completed for a mere $153 million. $200 million plus seems a more likely total  than the $170 million estimate for a three-year West Quad project that is now going to take four years to complete.

$225 million plus $200 million plus $152 million already paid for interest on the borrowed money comes to an investment of $577 million at the present time.

Moving forward, Kenyon has to pay almost $64 million more in interest on the debt just for 2020-2026 inclusive. During this time, Gund’s proposal for new dorms will cost at least $100 million, since that is the figure of the anonymous gift, which was likely given by Gund himself.

$577 million plus $64 million and $100 million comes to a $741 million investment in the enhanced campus by 2026.

Assuming no more new construction and no more new borrowing, the balance of interest owed on the current outstanding debt of $266 million will total another $203 million based on the schedule for the outstanding bonds that mature in the 2038-2044 period.

Ergo, $741 million plus $203 million comes to $944 million of invested money from the College’s own financial assets, which includes major gifts tied to new construction and borrowed money, as well as the interest paid and still owed on that debt.

This is to say nothing more about the increased overhead associated with an greatly expanded campus.

Few of the new Gund-inspired and designed buildings generate new revenue. They can easily (if they have not already) become what someone has called “the gifts that keep on taking,” unless each new building has its own separate endowment so as to not burden the annual budget.

Such specific endowments are lacking, it seems, for many, if not almost all, of Kenyon’s new buildings. The Gund Gallery seems to be one exception.

But another, more optimistic, old saying is: “Build It and They Will Come.”

Let us hope this proves true, given the big roll of the dice in the face of the forthcoming Admissions Apocalypse — the severe demographic contraction of the pool of high school seniors, which will begin in 2026 and persist to at least 2040.

 

Peter Dickson  

Class of 1969

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