A trend among U.S. universities reveals trouble, according to a study released by the Commonfund Institute, a nonprofit group that polled 629 educational endowments on results. Endowments at several schools lost nearly one fourth of the value.
In addition, a report released by the Council for Aid to Education states charitable donations to colleges and universities fell 11.9 percent in 2009, to $24.85 billion, the largest ever recorded decline in a single year. However, officials have said it's in better shape than the numbers indicate.
Both reports indicate the overall unhealthiness of endowments can be related to the recession that has plagued the American economy. However, the endowment crisis has not been relegated to institutions that serve mainstream Americans. The top 20 institutions in the nation saw their endowments plummet a staggering 11.8 percent.
However, university officials have said they're in better shape than the numbers indicate.Vice Chancellor for Treasury Services Gary Anderson said A&M should be unscathed for now.
"This year, we're fine," Anderson said. "Next year, we should be in good shape. Only if there's a prolonged downward market will there be decreases that are significant."
According to the study, The University of Texas System's endowment, one of the largest in the country, fell from $16.2 billion in 2008 to $12.2 billion in 2009.
Texas A&M System's endowment dropped from $6.7 billion in 2008 to $5.1 billion in 2009. Like other major universities nationwide, UT and A&M spend 4 to 5 percent of their endowments each year.
"I believe the situation will be an issue only if tuition rates increase as a direct result," said sophomore industrial engineering major Fabian Hernandez.
Sophomore civil engineering major Rachel Poulin shared his concern.
"Tuition increases are the worst thing that could possibly happen to students right now because it will prevent students from being able to afford college," she said.
While the decrease in endowment may cause alarm, college officials are urging students and parents not to panic. Interest earned from these endowments usually accounts for little of a university's actual operating budget.
Universities have a tendency to judge the performance of their endowments over the course of several years. While the universities across the nation may have lost an average of 18.7 percent of their endowments in 2009, that number shrinks significantly to just 2.3 percent when the last three years are taken into consideration.
"No matter how good we think we are, we've got to reset our expense line," said Kevin Hegarty, vice president and chief financial officer at UT Austin.
Many financial advisers at universities across the state are claiming permanent changes may emerge from the declines. Rice University has halted salary increases for individuals making less than $60,000 per year and has also cut back on heating and cooling costs during adverse weather conditions.
Top 5 fundraising universities 1. Stanford University ($640.11 million) 2. Harvard University ($601.64 million) 3. Cornell University ($446.75 million) 4. University of Pennsylvania ($439.77 million) 5. Johns Hopkins University ($433.39 million)
