By Amanda Clifford
The University's endowment suffered a sharp blow over the last year and is currently down 32 percent due to volatile markets and the troubled economy, according to Denis Ransmeier, vice president for Financial Affairs.
On Feb. 29, 2008 the endowment was valued at $98.9 million and one year later, on Feb. 28, 2009, the endowment was valued at $67.2 million, revealing a loss of more than $31 million.
"That number is bad," Ransmeier said. "But it's average. All schools are going down right now. This is a worldwide recession, and there's no place to hide."
Despite the financial hit, Ransmeier said the loss should not have any major impact on students or tuition next year.
Colleges and universities get their operating funds from a variety of sources, including tuition, endowments and annual gifts. Endowments are gifts of money donated to institutions that are invested and, over time, create a source of income for the institution.
About 5 percent of UP's budget is supported by the endowment, which is used in a variety of ways to support the school and its students, according to Ransmeier. UP is a tuition-dependent institution, however, meaning that the majority of the school's budget is supported by tuition rather than the endowment or an annual fund.
Although the University's endowment is comparatively smaller than some large, wealthy universities, like Harvard and Stanford, that get up to 45 percent of their annual budget from their endowments, it plays a vital role to many scholarships, programs, clubs and activities on campus.
Tuition is not directly affected by the endowment, but the funds provided by the endowment and the annual fund are used for certain costs that tuition would otherwise cover. So, although tuition will not increase more than 4.5 percent next year, the University has lost a portion of its annual budget that will have to be made up elsewhere.
The Garaventa Center, whose primary focus is to support and provide opportunities for students to examine the intersection of the Catholic Intellectual Life and American Culture, is one of several programs on campus that is completely funded through the endowment. Another is the well-known Center for Entrepreneurship, which runs the Entrepreneur Scholars Program.
As the endowment continues to fall, programs such as these may be in danger, according to Ransmeier.
"These programs are vital to our core mission and what we do at UP," Ransmeier said. "If things continue to get worse, we would more than likely have to find ways to keep them alive."
The University has already begun trying to find ways to cut back and ease the pain caused by the economic downturn.
While Ransmeier does not foresee any layoffs or furloughs in the near future, the University has implemented a hiring freeze.
"We are not at that stage yet," Ransmeier said. "We do have a hiring freeze going on right now however, and we certainly are not adding any new positions. As positions open up, we are looking at each of them and deciding whether or not it is something we absolutely have to have."
ASUP Vice President Allison Able said the hiring freeze is already impacting the University.
"The hiring freeze is huge," Able said. "There are certain classes that could really use more professors. There is already a crunch for space with classes being full, especially in the sciences and engineering, and with a hiring freeze you have major limitations."
Able also expressed concern about funding for new programs.
"We've had all of these great discussions about diversity and adding a multicultural center to campus, but you need money to support these things," Able said. "If we don't have money, we can't have any of them."
Although the markets may not have done the University's endowment any favors this year, senior Ben Taketa, ASUP treasurer, said now is the perfect time to invest. This year, ASUP has plans to start an endowment of its own that will, in the future, provide money for student activities and programs.
"One of my favorite investment philosophies by Warren Buffett states, 'Be fearful when others are greedy and greedy when others are fearful,'" Taketa said. "People are fearful right now. It is the perfect time to be investing. Endowments are long-term investments and by investing this money now, we will see a positive benefit for every dollar we put in over time. Every student will benefit, and we have to look at that."
The National Association of College and University Business Officers Endowment Study, an annual study based on responses from more than 785 colleges and universities around the country, revealed that UP is not the only university taking a hit from the unstable markets.
The study found that endowments fell in overall value by an estimated average of 22.9 percent, which translates to an estimated decline of $94.5 billion in market value for the institutions in the survey.
More than a quarter of the institutions that responded to the survey said they planned to draw less money from their endowments this year than they had expected to spend.
"We are just as well positioned as anybody to ride this thing through," Ransmeier said. "The University is a well-run, lean institution with little waste. But at the same time, there is not a large margin for error here."
