To the Principia Community,

Chief Financial Officer Howard Berner's memo, below, aptly describes the approach that Principia is taking to handle the turmoil in the world's credit and financial markets. We are very much alert to the challenges such unusual circumstances present. But this is also an opportunity for us all to join together in rejecting mesmeric fears, and in daily affirming for ourselves and all others, including Principia, the true nature of substance. James 1:17, for instance, directly rejects the belief of volatility: "Every good gift and every perfect gift is from above, and cometh down from the Father of lights, with whom is no variableness, neither shadow of turning." So let's remain steady as rocks in a storm!

David Anable, Chief Executive
Jonathan Palmer, College President
Marilyn Wallace, Head of School

The Principia
Interoffice Correspondence

To:             The Principia Community
From:         Howard Berner, Chief Financial Officer
Subject:     Financial Outlook
 
The world belief that substance is in matter and that currencies are an effective measure of real value lies at the heart of the turmoil that has been disrupting world financial and credit markets.  The consequences of excess borrowing by individuals and institutions managed, with surprising suddenness, to shift the focus of thought from the accumulation of wealth to fear of its loss.
 
On a human level, Principia’s dependence on endowment earnings and donor contributions to meet the majority of its expenses means that the past year’s loss in value of financial assets could present us with a greater challenge than that faced by some other educational institutions.
 
However, unlike most educational institutions, Principia has borrowed little, and that debt is long term at a low fixed interest rate.  In addition, Principia’s endowment is well diversified and has not declined in value as much as the stock market has over the past year.  These factors work in our favor.
 
Principia has sufficient liquidity to meet payrolls and other obligations. Scholarships and financial aid that students have been awarded will remain in place, and we will work to minimize any impact of the current volatile situation on Principia’s academic programs.
 
But if, as some are suggesting, it takes several years for full confidence to return to the markets, the earnings from our endowment may not provide as much support as we have become accustomed to in recent years.  We will need to be especially careful with Principia’s expenditures as we work our way forward, since spending in excess of endowment earnings will reduce the principal on which our future earnings depend.
 
Each of us, whether faculty or staff, students, alumni, or friends of Principia can play an important role in supporting the demonstration that supply and demand are always equal in the divine economy.  Your daily prayers are important for Principia and the world.  Working together we will meet this challenge, just as Principia has met similar and much greater challenges over the past 110 years.