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Yale Plans Belt Tightening : Endowment Falls 25 Percent
| Damn! Looks like Adolph Hitler Campbell is screwed for the Class of 2027... |
Yale University's president sent a letter to faculty and staff Tuesday saying that as a result of the recession, the university's estimated $23 billion endowment fund has lost 25 percent of its value since June, dropping to $17 billion. President Richard C. Levin said the 25 percent loss would have a significant impact on operations, including delaying the start of new construction projects and cutting spending in a variety of areas.
Levin said, however, that Yale would "maintain our commitment to the improvements in financial aid for students in Yale College" meant to support low- and middle-income families that were announced last year. The school will also continue to recruit faculty while being "judicious in authorizing new positions" and filling vacancies, he said.
"It is important to recognize that $17 billion is still a very large endowment," Levin said. "This was where the endowment stood as recently as January 2006. Still, the 25 percent decline we have experienced has a very significant impact on our operations because income from the endowment supports 44 percent of the university's annual expense base of $2.7 billion."
| Universities typically spend 4 to 4.5 percent of an endowment each year. They plan to generate 6 to 7 percent in returns on average, thus allowing the endowment to grow over time while harvesting some of the return to fund current operations. A 25 percent cut in total endowment, therefore, means a similar amount to be cut in the funds provided to operations. That's going to hurt. |
Levin's announcement comes weeks after Harvard University said its $36.9 billion endowment dropped 22 percent and could decline as much as 30 percent by June 30, 2009, the end of the fiscal year. Levin ended his letter urging those with ideas on how to cut costs to e-mail them to suggestions@yale.edu.
| My suggestion? Start drinking heavily... |
Posted by: Pappy 2008-12-18 |
