Ithaca College President Tom Rochon says the national credit crisis is the first topic on every college president’s mind.

“There are quite a few impacts,” Rochon said. “Some of them affect colleges and universities in their own operations, and others affect students and families. … It affects the ability of students and families to commit to Ithaca College or to stay at Ithaca College.”

Since the middle of September, the stock market has been falling at record rates. Last week, the Dow Jones dropped more than 700 points for the second time ever. This came after a slew of failures among major financial institutions and a $700 billion rescue plan, signed into law by President Bush on Oct. 2, to minimize the effects.

Because of the national crisis, higher education has been dealing with challenges that some institutions have never faced. According to an Oct. 10 article in The Chronicle of Higher Education, banks are freezing colleges’ accounts, public institutions are discussing raising tuitions and private schools are considering dipping into endowment funds to combat concerns about students being able to get loans.

Carl Sgrecci, vice president of finance and administration at the college, said about 65.5 percent of the college’s operating budget comes from tuition and approximately 28.4 percent from auxiliary services, which he described as primarily room and board. This means that more than 90 percent of the budget comes from students and their families.

Endowment and investment income provides about 3.8 percent of the total budget — about $7.2 million in the current year’s budget, Sgrecci said. Endowment is the part of an institution’s income that comes from donations.

The endowment, which is invested in stocks, bonds and real estate, generates income that goes into a pool of money used for the college’s operating budget, Sgrecci said.

“Because of what’s happening in the market, it’s not likely that we’re going to be able to hold that level next year,” he said. “When we’re building the budget next year we’re probably going to have to reduce the amount we expect from investment income.”

The issue is further complicated by the college’s debt of nearly $148 million. Sgrecci said the endowment, which hit a plateau during the past year, gives the college the capacity to take out loans.

A lack of liquidity, or an inability to obtain cash when needed, has had an impact on the short-term tax-exempt bond market, Sgrecci said. It has been a marketplace problem but not one for the college, he said.

“People in general, with this economic situation being what it is, have become concerned about the safety of their money,” he said.

Sgrecci said variable-rate bonds are remarketed every week while fixed-rate bonds are not. He said the college’s debt is a mix of variable-rate and fixed-rate debt, partially because variable-rate bonds are generally cheaper to sell.

Bonds are one way to help the college finance buildings because the interest rate is about 4 percent, Sgrecci said.

“Somebody has to buy those bonds and there’s been a general lack of interest in buying those bonds,” Sgrecci said. “So when that happens, in order to keep people attracted to the bonds, the interest rates go up, to entice, if you will, people to buy bonds.”

A few weeks ago, he said the rates jumped from just under 2 percent up to about 8 percent in two weeks.

“In terms of spike in interest rates, we did feel that pinch,” Sgrecci said. “Fortunately, the rates have gone back down. They’re not down to where they could be and where they should be, but they’re a lot better off than they were.”

As a result of the surge on interest rates, the college suffered an additional interest expense of $300,000, Sgrecci said. The college’s total budget, which is about $190 million, includes contingencies for unexpected expenses like this.

“In the overall scheme of things it’s a relatively modest amount of money but painful nonetheless,” he said.

As of Sept. 30, the actual estimate for the endowment portfolios was about $201 million, Sgrecci said, which is a 15 percent decline. Though he said he is sure the amount has gone down further, Sgrecci said the overall market was down about 19 percent.

“There will be less money made available from the endowment in the years ahead unless the market experiences a pretty significant turnaround in a rather short period of time, which I don’t think is likely,” Sgrecci said.

Sgrecci said he expected the college would be able to offer the same amount of financial aid packages that it has in the past. He said the college would look at operating expenses for opportunities to save money in the short term and in the long term, for example spending on non-salary items like travel and choosing not to fill certain position vacancies immediately.

The college is one of 22 independent institutions that belong to the national consortium Associated New American Colleges. Another ANAC school, Quinnipiac University in Hamden, Conn., is dealing with similar financial issues.

“Our endowment has experienced a significant downturn,” said Lynn Bushnell, vice president for public affairs at Quinnipiac, in a statement. “However, unlike many universities, we do not use any portion of our endowment to support our operating budget, so we expect to be able to weather this storm without any reduction of services for our students.”

Rochon said the national crisis has revealed two strengths at the college — investment in the college’s endowment and years of conservative budgeting.

“We’ve had a certain degree of cushion this year,” he said. “Now we’ve eaten up that cushion entirely, but things would be far worse if we had been planning only on a balanced budget because then the first ripple of change would already have caused us to be in a deficit situation, which we can’t have.”