Colleges in Dire Financial Straits

[mamselle]

That's pretty funny, dismalist.

A serious answer comes from Cornell.. There's still a healthy dollop of "we're not really rich", but it also has details.

I am now confused about how endowed positions work. From the article:

"If endowment spending drops a lot, the University is up a creek. [For example], if I am a professor whose salary is covered by endowment spending, and endowment spending drops, the University has to come up with salary money elsewhere," Ehrenberg said. "Rather than have wild fluctuations in endowments, it is better to have a smooth path."

Are they saying that an endowed professor's salary is not covered in perpetuity by the original gift (and its growth, compound interest and all) but depenbds on new annual endowment giving?
How can this be?

I haven't served on an endowment committee, but it is my understanding that the value of the endowment isn't taken at one point in time. Rather, the draw rate is applied to a moving average of the endowment's value. So if the value of the endowment dips, this pulls down the 6 or 12 month moving average of the endowment, even if the endowment "rebounds" in a future month. I believe there are restrictions on how much a school can draw from an endowment in terms of being fiscally responsible and sustainable. So if your draw rate is 4 or 5%, and the endowment balance dips due to a dip in the stock market, the 4 or 5% you can withdraw nets you a smaller absolute dollar amount.

This is my guess. I could be wrong. I agree with you though. I did not think that endowed positions were based on 'soft money'.

The confusion might be between two different things that can be endowed: the school, or a particular faculty position.

1. A named faculty endowment, usually called the "NNN Chair of SSStudies" is separate, and I believe is supposed to be kept apart from, any money the university might spend otherwise. Those might also vary in value, but they're (usually/often/always...I believe it depends) administered differently from the university's own endowment.

And there may or may not be fairly strict rules for the ways the funds in the professorial endowment can be directed. They're often earmarked beyond the named chair to go for something consistent with study in that particular field if the school folds, or the department doesn't want that type of work being done anymore, etc. The school doesn't just automatically get that money.

2. The endowment for a school, non-profit, or other organization, has more moving parts, usually. There are usually (in most endowments I know about) separate kitties called "Restricted" and "Unrestricted" funds. The Restricted funds are not supposed to be tapped. They're tied up in longer-term investments and are expected to bring greater yield, and you have to go through a lot of paperwork to pry any money out of them (Or you should...).

The "Unrestricted" funds are a bit easier to get at, although any entity that's consistently snacking on its endowment without raising funds to re-supply those funds is cannibalizing its future..."eating seed corn," as they say. The return from depleted Unrestricted funds will be smaller, so the income is not really enhanced overall by spending them.

I'm sure there are many many more nuances to this, but that describes my understanding, based on the groups I've worked for or work for now.

M.

[Parasaurolophus]

Rockford University is eliminating its majors in French, Classics, Latin, and Philosophy, and its minors in French and Greek, but will add new majors in Accounting and Criminal Justice.

Apparently the cuts are unrelated to COVID.

[spork]

Rockford University is eliminating its majors in French, Classics, Latin, and Philosophy, and its minors in French and Greek, but will add new majors in Accounting and Criminal Justice.

Apparently the cuts are unrelated to COVID.

I suspect Rockford is having enrollment problems. Its graduate FTE was nearly 800 before the 2008 recession and it was down to 175 in 2018. Undergrad FTE increased during the same period, but who knows what's happened over the last couple years.

[Wahoo Redux]

I'm amazed anyone still had a major in Latin.

What a shame.

[Hibush]

Rockford University is eliminating its majors in French, Classics, Latin, and Philosophy, and its minors in French and Greek, but will add new majors in Accounting and Criminal Justice.

Apparently the cuts are unrelated to COVID.

There will always be demand for accountants, so you can see why they would look at that relative to Latin etc. But how competitive is Rockford going to be?

For prospective accountants who can get out of Rockford for a bit, UofI has a top-notch program at a very reasonable cost. There are some other solid ones in Chicago. If Rockford is trying to compete for commuters against the local community college, the prospective accountants would likely get the green eyeshades on and look at the cost difference.

[polly_mer]

Rockford hasn't been competitive for years.  It's another place that has outlived its original mission and probably won't successfully find a new mission since they're starting years too late.

[nebo113]

https://www.edmit.me/collegefinancialhealth

[sockknitter]

My public institution is expecting a 15-20% reduction in our state budget allocation. We haven't yet received word on how the administration plans to deal with this blow, but I am very worried about furloughs. Our state has done its best to drag its feet on paying out unemployment and we have been living solely on my income since mid March.

We also haven't received enrollment projections yet. We are freezing tuition hikes and just announced free in-state tuition for incoming freshmen, but I doubt it will be enough to entice many who are considering taking a gap year. Our area has low wages and many of our students are not only the first in their families to pursue degrees, but also contribute to the household income.

[polly_mer]

https://www.edmit.me/collegefinancialhealth

Yes, we discussed that at length on a separate thread when it first became public.

[polly_mer]

Marlboro campus will be open in the fall as a new school.

[Hibush]

Marlboro campus will be open in the fall as a new school.

The new colleges business model is to admit students who can't pay but require a lot of special services. They also propose a low-residency program for students who are not quite college ready. What could go wrong with that? /s

[apl68]

Henderson State University has talked the state into giving them $825,000 in rainy-day funds to keep them from having to immediately furlough staff.


https://www.arkansasonline.com/news/2020/may/28/state-committee-approves-sending-henderson-state-u/


They've worked hard for it.  Previous articles have detailed the hoops they've had to jump through to convince the state that they really needed the money and would put it to good use.

[polly_mer]

Marlboro campus will be open in the fall as a new school.

The new colleges business model is to admit students who can't pay but require a lot of special services. They also propose a low-residency program for students who are not quite college ready. What could go wrong with that? /s

Also in that vein, bring in people who aren't a good match for full residency due to care-taking and other responsibilities and do it for two weeks at a time multiple times per year.

Yep, because nothing says support of a complicated life with care-taking responsibilities like extended travel.

[Hibush]

Marlboro campus will be open in the fall as a new school.

The new colleges business model is to admit students who can't pay but require a lot of special services. They also propose a low-residency program for students who are not quite college ready. What could go wrong with that? /s

Also in that vein, bring in people who aren't a good match for full residency due to care-taking and other responsibilities and do it for two weeks at a time multiple times per year.

Yep, because nothing says support of a complicated life with care-taking responsibilities like extended travel.

Maybe it takes a career in charter schools to come up with this kind of out-of-the-box thinking.

[polly_mer]

Marlboro campus will be open in the fall as a new school.

The new colleges business model is to admit students who can't pay but require a lot of special services. They also propose a low-residency program for students who are not quite college ready. What could go wrong with that? /s

Also in that vein, bring in people who aren't a good match for full residency due to care-taking and other responsibilities and do it for two weeks at a time multiple times per year.

Yep, because nothing says support of a complicated life with care-taking responsibilities like extended travel.

Maybe it takes a career in charter schools to come up with this kind of out-of-the-box thinking.

I assume this is another case of do-gooders wanting to help without grokking why the problems are hard and that money alone is not sufficient.