<p>The only ones that have escaped are the ones who managed their windfalls conservatively. Notre Dame did not build on debt and they did not significantly increase their endowment draw when it skyrocketed in the 2000’s. I’m sure there are other examples like ND but I don’t think there are many.</p>
<p>When the University of Michigan’s endowment was skyrocketing in the 2000s they shifted from a 3-year base to a 7-year base for purposes of calculating the endowment payout, which is now set at 5% of the 7-year trailing average of endowment asset values, but subject to a hard cap of 5.3% of current value. As a consequence, endowment payout lagged endowment growth by a wide margin in the boom years (which of course allowed the endowment to grow even faster); and last year’s 20+% loss in endowment value doesn’t even register as a blip in this year’s endowment payout because the cap of 5.3% of current endowment value is still higher than the payout rate of 5% of the 7-year trailing average, which in turn is higher this year than last because even after a 20%+ year-over-year loss, the current endowment value is higher than FY 2003 figure which it replaces in this year’s 7-year average calculation. The University reports they’re now getting a lot of inquiries from other schools who are beginning to look at Michigan’s conservative 7-year trailing average as a model that is much more effective at flattening out market volatility and providing a stable, predictable revenue stream than the traditional 3-year model used by most schools.</p>
<p>[Harvard</a> Arts and Sciences faculty pares deficit | Harvard Magazine](<a href=“http://harvardmagazine.com/breaking-news/fas-pares-deficit]Harvard”>http://harvardmagazine.com/breaking-news/fas-pares-deficit)</p>
<p>Update on Harvard. Clearly, the cutbacks are far from over.</p>
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<p>My academia to English translation skills are poor, so correct me if I’m wrong. Is Harvard University saying here that they want to be come more efficient in the hiring of grad student TAs to teach undergrad courses?</p>
<p>Hmmmmm. I wonder how to interpret that in light of bubbly tour guides at every university proclaiming, “Oh no, Mrs. Cleaver, we don’t have any TAs teaching here. And, I might add, that’s a lovely dress you’re wearing today, Mrs. Cleaver…”</p>
<p>^^No, the full quote is:</p>
<p>“tools to better gauge students’ likely course selections, perhaps some form of preregistration, so hiring of teaching fellows can better, and more economically, be matched to real demand;”</p>
<p>I interpret that to mean they are going to be stingier in passing out teaching fellowships to grad students and hire only what they need and not end up with too many.</p>
<p>since US news bases rankings so heavily on endowment, it seems as though Harvard should fall mightily. </p>
<p>Berkeley should definitely replace Harvard now not just academically, but financially as well.</p>
<p>[Princeton</a> Alumni Weekly: After the crash](<a href=“Issues | Princeton Alumni Weekly”>After the crash | Princeton Alumni Weekly)</p>
<p>Interesting article ramblin. The really tough thing about private equity is that you have to committ to future spending before you get the pay-out from earlier PE investments. Where these endowments have really gotten caught is for a while they were getting $2B+ payout or exits from investments that matched or exceeded $2B in calls from newer funds. The problem is now schools like Princeton with $5.5B in capital call committments are still getting the big calls but they are getting next to nothing on exits from existing investments.</p>
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<p>It’s actually based on expenditures, which mirrors the endowment to some extent. But, since Harvard is still spending as if it had a 36 billion dollar endowment, it’s ranking won’t be affected. </p>
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<p>Eh, yea. Sorry, see above.</p>
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<p>Huh? Even after the recent big drops, Harvard is still a huge number one in terms of endowment. The University of California is not even in the top 10.</p>
<p>[College</a> endowments lose 18.7% on returns - USATODAY.com](<a href=“http://www.usatoday.com/news/education/2010-01-28-endowment28_ST_N.htm]College”>http://www.usatoday.com/news/education/2010-01-28-endowment28_ST_N.htm)</p>
<p>The Dow fell from a high of 13,000+ in the spring of 2008 to around 6,500 in March of last year. It’s only now back to around the 10,000 level. Why is all of this endowment loss so surprising to people?</p>
<p>Prior to the recession, Harvard’s endowment was the largest in the world at about $36 billion; Yale was second-largest at, I believe, around $19 billion. That gap isn’t anywhere close to being closed.</p>
<p>The endowment, qua endowment, gap may not have closed, but neither have the things Harvard and Yale were expecting to accomplish over the space of the next decade. Harvard will probably not close the science and technology gap it has with Stanford, Cornell, and Berkeley. And, Yale probably won’t be closing the “quirky, artsy, creativity” gap it has with Brown, Wesleyan or Vassar. :D</p>
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<p>I think Yale has done a pretty good job of that…any more artsy and creative and they’ll overshadow their true academic mission, imo. I think they’re more focused on building their rep in the sciences, physics, etc.</p>
<p>Compared to H, S, and P, who they perceive as their competition, Yale is by far the more artsy campus.
But they do lose science/math kids to H, S, and P quite often.</p>
<p>[Yale</a> to Cut Capital Spending by 60% After Endowment Losses - BusinessWeek](<a href=“Businessweek - Bloomberg”>Businessweek - Bloomberg)</p>
<p>Information from the $540M bond offering from Yale that is scheduled for this week–just 3 months after their last mega bond offering.</p>
<p>[Dartmouth</a> News - Dartmouth Board of Trustees approves measures to close $100 million budget gap](<a href=“http://www.dartmouth.edu/~news/releases/2010/02/08.html]Dartmouth”>http://www.dartmouth.edu/~news/releases/2010/02/08.html)</p>
<p>Details on Dartmouths planned cuts</p>
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<p>The truth may lie somewhere in between:
[Yale</a> Daily News - With growth, hope to drop the ?Science? from the Hill](<a href=“http://www.yaledailynews.com/news/university-news/2008/02/27/with-growth-hope-to-drop-the-science-from-the-hill/]Yale”>http://www.yaledailynews.com/news/university-news/2008/02/27/with-growth-hope-to-drop-the-science-from-the-hill/)</p>
<p>Thanks, sm74.</p>
<p>Dartmouth is in the unenviable position of trying to keep up with the Ivy League Joneses. My sense from Kim’s town hall a few weeks back and from their continued budget cutting is that they have some serious budget shortfalls to close. If I’m not mistaken, they’ve already lost their AAa bond rating.</p>
<p>They’ve now cut over 10% of their non-faculty workforce. That’s a big number.</p>
<p>[FT.com</a> / Companies / Financial Services - Transcript: View from the Top with Tony James, president of Blackstone](<a href=“Transcript: View from the Top with Tony James, president of Blackstone”>Transcript: View from the Top with Tony James, president of Blackstone)</p>
<p>A lengthy but well done interview with the President of Blackstone-one of the largest and most respected private equity companies. In section 2 he addresses endowments-found it interesting that in response to endowments and liquidity he says “many of them have over 80% committed to illiquid assets…that is not in anyone’s league”. In other words coming from a major promoter of private equity, you are crazy to have 80% of your money tied up with us.</p>
<p>Article in the Haverford/Bryn Mawr Bi-Co News today explaining how Haverford managed to lose an astonishing 36% of its endowment. They panicked about and sold their stocks at the very bottom of the market to ensure liquidity and, therefore, missed all of the market rebound. Ouch.</p>
<p>[The</a> Bi-College News Online Blog Archive Haverford Top in 09 Endowment Losses](<a href=“http://www.biconews.com/?p=23090]The”>http://www.biconews.com/?p=23090)</p>
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<p>That’s a problem with taking on too much risk. You think you can handle the situation if your assets drop in price. The assets do drop in price. And you find out that you can’t really handle the situation. The asset drop has a real impact on your financial situation. A real impact on your ability to run the place.
And it becomes very hard to think clearly. </p>
<p>Another reason to control risk.</p>
<p>I’m not blaming Haverford for selling at the lows. Haverford should not have put itself in a situation where that would have been an option.</p>
<p>And that’s a pretty large debt.</p>