Endowments Down: Where Should colleges Cut

Parents Forum
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<p>I think that's a question each school is going to be asking itself. Some professional schools--law, business, perhaps medicine and dentistry---more or less pay for themselves through tuition revenue and other dedicated revenue streams; presumably they'll be safe. Other programs are so much a part of the school's core academic mission that it's impossible to do without them. It's hard to imagine a liberal arts college---either a stand-alone LAC or the college of liberal arts in a research university---without departments of English, history, math, basic sciences, and the more commonly studied social sciences, for example. Other programs are just such a distinctive "signature" of the school that they're locally sacrosanct and won't be touched. But a lot of schools have eliminated or downsized less popular programs and majors, things like Classics, Rhetoric, various foreign languages. Some may reorganize (and shrink) departments---combining anthropology and sociology, for example, or combining geology and environmental studies into an "earth and environmental studies" department. </p>

<p>Some universities may reorganize and shrink or eliminate entire schools. The University of Minnesota, for example, recently reorganized its 20 schools and colleges into 17, for an estimated cost savings of $3 to $4 million. This involved things like combining the School of Natural Resources with the College of Agriculture into a new College of Food, Agriculture, and Natural Resources, eliminating some duplication of effort at the administrative level and in certain basic courses. More controversially, the University eliminated its General College, which had been a pathway into college for underprepared (and often minority and/or immigrant) students who did not meet the entrance requirements for the University's College of Liberal Arts or other standard academic units. Critics charged the General College effectively "ghettoized" such students in special remedial courses, and its extremely low 20% graduation rate indicated it was failing in its core educational mission, but supporters of the General College insisted that its closure represented a choking off of a pathway to academic success for the 1 in 5 who did graduate, and for others who gained something from the experience even short of graduation. </p>

<p>These are not easy choices, and I'm glad I'm not making them. But I think we'll see a lot of this in the next few years.</p>

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<p>It (GC) also closed an easy path for getting football and basketball players into school and keeping them eligible.</p>

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<p>ID:</p>

<p>Because of the very high growth rates in their endowments over the past few years, many of the wealthier schools have been distributing much less from their endowments than their target rates allows.</p>

<p>Using Yale as an example, the distribution rates were only 3.8% and 3.81% in 2008 and 2007 while the target rate was 5.25%. </p>

<p>Assuming a 30% drop in endowment, it would bring it to about $ 16.1 billion. They would only need to increase their distribution rate to 5.27% just above their target rate to keep the same distribution of $850 million. </p>

<p>Actually the endowment distribution for 2009 and all years after that is going up not down. Under the current policy, distribution is equal to 80% of the prior year's distribution plus 5.25% of the value of the endowment two years prior. This will translate into a $915 million distribution for 2009, a net increase of $65 million. The following years distributions would be as follows:
2010: $970 million.
2011: $945 million.
2012: $925 million.
2013: $910 milion.</p>

<p>So, for all practical purposes, operating budgets will still rise, just not at the same rate as prior years. Budgets cuts are therefore not really cuts at all, just reductions from projected spending levels. In the past few years, a number of these schools had year to year budget increases of more than 20%. That will clearly change.</p>

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<p>More news on college endowments in Wisconsin.</p>

<p>State</a> colleges tighten belts in response to endowment losses - JSOnline</p>

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<p>I see a big typo. Down 22% is not bad this year.</p>