first_imgThis letter was sent by University of Vermont President Dan Fogel on October 1, 2008, to the UVM CommunityI am writing to alert you to a situation that is affecting nearly 1,000 higher education institutions nationwide, as reported in the Chronicle of Higher Education and The Washington Post (attached). We learned on Monday from the Commonfund that Wachovia (the trustee bank for Commonfund) had frozen 90% of the assets in its Short Term Fund. UVM invests the majority of its operating cash assets in the Short Term fund, and we immediately withdrew the maximum amount allowed under these new restrictions in order to maximize our ability to access sufficient cash to meet our payroll and other obligations.Yesterday UVM participated in a lengthy conference call with the President of the Commonfund and representatives of many other affected institutions. During the call we were briefed on the redemption requirements and told that an additional 16-19% would be released by the end of the day today (Wednesday). Furthermore, more money is to be made available in increments over the next three months with a cumulative total of 57% to be available by December 29th and a cumulative total of 85% available by December 2010. At this time these assets do not appear to be at risk, but it will take some time before the University can withdraw all of its money. The time frame will be subject to credit market conditions.I want to assure you that UVM will be able to meet its near-term cash flow needs. We are also in the process of negotiating a line of credit with a local bank to cover any potential gaps in cash needs and as insurance should the promised redemption schedule change or not materialize. We are also in the process of investigating alternatives to invest incoming cash somewhere other than in the Commonfund during this time of instability.I expect that you will be hearing reports about this situation in both local and national media over the next several days. We believe that we have a satisfactory and sound plan for dealing with this very fluid situation, but we will be constantly re-evaluating our position based on continuing developments in the markets. Unfortunately, it appears that at least some small institutions may be more adversely affected by these developments.last_img

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