I’ve been hearing about this off the record for a few weeks now, but the endowment’s value has plummeted since the beginning of this school year:
McCarty suggested the endowment could decline in value as much as 30 percent, a figure the university revised Wednesday, saying Vanderbilt will mirror the average endowment losses that other U.S. colleges and universities have suffered recently.
The average value of university endowments plunged 23 percent in the last half of 2008, according to a newly released report by the National Association of College and University Business Officers. It’s the worst decline in endowment values since the recession of the 1970s.
In conversations with faculty, McCarty described the university’s investment outlook as “catastrophic” and “a nightmare.”
As the Tennessean mentions, in both the short and long term, this could seriously, seriously stall the massive financial aid loan program announced in the fall. Associate Provost Doug Christiansen told me then that the central funding for the program, which forgives all demonstrated need-based student debt (essentially, “loans” become “grants”), would come from the endowment and $100 million of fundraising over the next two and a half years. To address the latter, the university received an anonymous $20 million donation in the fall, which aided that effort, but the difficulties in raising that kind of money during these financial times will seriously affect that total amount.
Second, Christiansen said the endowment payout would be increased somewhere between one-half and one percent — which, if the endowment has decreased somewhere between 20 and 30 percent within two quarters, with some estimates predicting further economic declines not reaching a plateau until possibly Dec. ‘09, this becomes a serious problem. I still have the audio from talking with Christiansen in October, so I might go over that later this evening.
And, hey there, we’ve just received an email from Chancellor Zeppos. I’ll put the entirety of it in another post and backdate it, but here are the important parts. Regarding the financial aid program, he says:
“Thanks to generous donors, we are already nearly half-way toward the fundraising goal for our ambitious financial aid initiative. Our medical center is performing strong financially even in this challenging period, and though we anticipate negative returns on and a marked decline in our endowment, the decline will be competitive relative to those previously announced by peer institutions.”
Here are, in the Chancellor’s words, the ways and means by which Vandy will cut funding over the next semester / next school year:
- Discretionary spending in travel, entertainment and other areas, including that of the senior executive team, has been reduced substantially and requires prior approval from the highest levels of management.
- A general hiring freeze on staff has been implemented throughout the university and medical center. Exceptions are positions that are directly essential to teaching, patient care and research.
- Searches for tenure-track and tenured faculty during the 2009-2010 academic year will be focused on extraordinary opportunities and on the support for our academic programs within the various schools.
- Many departments and areas throughout the university have been asked to reduce expenses by approximately 5 percent for the remainder of this fiscal year and by an additional 3 to 5 percent for the following year.
- Faculty and staff salary increases will be determined based on specific market information. Given the university’s overall strong competitive wage position, it is possible some salaries will be frozen for the 2009-2010 fiscal year.
- All major construction projects that were not too far along to stop have been put on hold for the next two years. Modest capital projects and repairs that are necessary for safety and the maintenance of current facilities will continue.
Auf wiedersehen, College Halls Initiative. I asked Christiansen about how the financial aid program would affect the College Halls Initiative, he said the two projects were being funded by independent pools of money (and a different Associate Provost, who I did not speak with, handles the building projects). Apparently, the pittance endowment affected her pool of money first. The Sad, Slow Decline of Kissam into Homelessness and Disease continues.
More to come on this rather distressing news.
{ 1 trackback }
{ 0 comments… add one now }