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Controller's Office
 

ABOUT THE OFFICE

The mission of the Office of the Controller is to account for, report on, and safeguard the financial resources of the institution in a manner that supports the college's mission to provide the finest liberal arts education for women.

We are committed to the following:

Issue accurate and timely financial information

Issue timely and accurate payment to employees, vendors and other service providers of the college

Improve the operations of the Office of the Controller by taking advantage of enhanced technology as it becomes available.

Continue to enhance internal operations by the adoption and implementation of best practices, policies and procedures.


Reports in the media have indicated that, in light of the current situation in the financial markets, many colleges and universities are facing challenges with the liquidity of their short-term investments. As described below, Smith College has sufficient revenues to cover its operating expenses, including payroll, and is fully confident in its ability to carry on its financial transactions in accordance with normal operations.

Two days ago, Smith received notice from Wachovia Bank that the bank had suspended access to a substantial portion of funds invested in the CommonFund for Short Term Investments. Smith's investments in this fund, which reportedly holds more than $9 billion in assets for approximately 1,000 colleges and private schools, total $46.8 million. By this morning we had secured access to 34 percent of our invested balances, and the bank expects that figure to rise to more than 50 percent by calendar year-end. Wachovia's plan is to proceed with an orderly liquidation of the investments, while at the same time the CommonFund is seeking an alternative trustee to take responsibility for the fund.

Smith has two outstanding bond issues for which the college provides "self-liquidity," standing ready to repurchase any bonds if the bank is unable to market them each week. The college must maintain ready access to its short-term invested funds to meet this obligation. In light of Wachovia's action, the finance office has reviewed the college's liquidity to ensure that Smith has sufficient access to cash and short-term investments to meet its requirements. As always, we are prepared to convert longer-term investments to short-term funds as necessary to ensure we comply with our bond obligations.

Wachovia's action has captured media attention because many colleges need access to their investments in the CommonFund's short-term fund to cover salaries and daily operations. Smith's revenues, including normal monthly operating support from the endowment, are sufficient to cover the college's anticipated operating expenses. In addition, the college holds short-term assets outside the CommonFund account, such as endowment investments in U.S. treasuries, that can be converted to cash quickly should the need arise.

Ruth Constantine
Vice President for Finance and Administration
October 1, 2008

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