I don’t think that this drop should be ignored or explained away. The school needs to address the changed composition of the rankings and climb back up.
I also think that part of the president’s explanation (below) is nonsense and reverse snobbery.
“Our standardized test scores are lower than the top 10 schools, in part because we use more reliable indicators of success”
US News rankings matter. People pay a lot of attention to them.
A well-credentialed applicant who is focused on prestige and rankings (and there are a lot of people like that) could now omit Davidson from his or her list of schools. I had a family member narrow his list of schools to MIT, Duke and Davidson a while back. If Davidson is now not a top-10 school, picking MIT or Duke and not even considering Davidson is more likely.
(Yes, I know people will respond that you shouldn’t focus on rankings or prestige, but people do.)