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Yes, the endowment may have taken a plunge in recent months, but you may have noticed the news was largely lacking in stories about spending cuts around Columbia. Contrast that with our friends in places such as New Haven, Princeton, Ithaca, and (especially) Cambridge, all of whom knew long ago that cuts were on the way.
Now, the New York Times reports that, despite a 22 percent hit on the endowment, Columbia’s budget will increase spending 0.4 percent. That’s still a decline after adjusting for inflation, technically, but, as the Times puts it, the amount is “is essentially flat and avoids the severe cuts faced by its peers.”
How is Columbia making it through relatively intact? According to the Times, “Columbia does not rely on its endowment nearly as much as its peers do; about 13 percent of its annual operating expenses are met with income from its endowment, which was valued at $7.1 billion on June 30 last year.” By contrast, Princeton has relied on its endowment for 45 percent of expenses. This is not to say that cost-cutting has been non-existent, “but mostly the university has slowed the pace of hiring, creating panels to screen all appointments. Many of Columbia’s schools are not raising faculty and staff salaries for next year.” As a result, Columbia has maitained its AAA credit rating, something that institutions like Dartmouth have been unable to do. Turns out all those years of a struggling endowment did have an upside.
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19 Comments
@Alum08 It’s actually funny – Narv got GRILLED by the USenate’s Budget Cmte. on why he was too conservative – we’re all kicking ourselves for being mean, haha
@former uSenator A real problem with the notion of having the U Senate push for more oversight is that few, if any, members of the U Senate know a damn thing about investing or finance (save a few Econ, Engineering or Business professors and maybe the 2 B-School students that sit on the student cmte – although they dont know as much as they think they do)
I would much rather trust oversight of the University’s finances to a random bunch of people on the street than an academic panel dominated by liberal arts professors and resume-building undergraduate students.
Considering that Yale is laying off people, deferring projects and tightening budgets severely because of the endowment fall, one could say that regardless of their ability to grow their endowment, their financial acumen, especially as it relates to long-term planning, is not as good as it seems at first blush.
@correction 2 the aforementioned reports can be found here: http://www.columbia.edu/cu/opir/abstract/endowment.html
don’t expect one for the fiscal year ending in 2 weeks until December or January.
@correction Columbia published an annual report, but as 08 points out, its impossible to read unless you’ve got a bg in financial statement analysis (I’m assuming). Even more fun: if you look through the report, you won’t find a number resembling the number used to describe the endowment publicly (e.g. this number http://www.columbia.edu/cu/opir/abstract/endowment.html). But the real pain is that even though the Fiscal Year for most universities ends on June 30, the report often doesnt come out until sometime late winter. Most of our peers announce their financial status MUCH earlier, to an almost embarassing extent. While the merits of treating our financial status like a public corporation is debateable (i.e. Columbia’s endowment may be run like a hedge fund, but it’s long term purpose means we shouldnt freak out over quarterly fluctuations), there’s no denying that we’re ridiculously opaque. Then again, what did you expect?
@Alum08 Yeah, that’s 14th St/8th Ave.
FYI, guys, Narv Narvekar (who runs the hedge fund that holds the endowment money, otherwise known as the Columbia Investment Mgmt. Corp., CIMC) has been forced to be conservative on investing.
In other words, the BIGGEST reason why Columbia’s endowment hasn’t suffered as much as other schools is that it didn’t invest in any of the toxic assets. Narv hasn’t been allowed to invest in them (not that I would think he would want to), but because of his limitations (and a pretty damn good job of working within them), he’s achieved ~20% return the past few years (excluding this year).
All in all, we have a pretty smart guy running our endowment, which is a nice silver lining to everything else that goes on because of the administration.
@Counter Narv is a really nice guy but while he was getting 20% returns on a $6B endowment Yale was getting about a 30% return on a $23B endowment. Do some quick math…
Columbia’s transparency on its endowment issues has been horrendous. Where presidents of other Ivy Institutions give out the quarterly earnings to the university as a matter of public record (even though the numbers are usually 2 quarters delayed) Lee Bollinger has said that “even if I had the quarterly numbers I wouldn’t give them out.”
Columbia also has no annual report whereas Harvard and Yale have 30+ page analysis reports
http://www.yale.edu/investments/
http://vpf-web.harvard.edu/annualfinancial/
http://www.hmc.harvard.edu/
Also take note that the Columbia Advisory Committee on Socially Responsible Investing (ACSRI) is a hindrance on larger returns because it tries to prevent investment in certain companies including Phillip Morris and Chevron for completely nonsensical reasons.
The issue isn’t Narv Narvekar. He’s competent. The issue is Columbia’s administration and red-tape organizations like ACSRI
@Alum08 Well, yeah, 20% on $6B versus 30% on 23B is a huge gap, but at least it’s a start.
I also agree with how the administration has been handling this. I could defend it by saying how much information can really be public, but what’s frustrating is that the annual report that CU does is a confidential doc known as the “Budge Book.” I went through it once, and yeah, lots of the info could be made public.
Yeah, SRI is trying to do an honorable thing through its divestments, but I just wonder how CIMC is going to alter its investment strategy if the proposal passes (or did it pass already?)
The USenate needs to clamp down harder on the Trustees and Anne Sullivan regarding making a public annual report. The one that gets sent out by the administration (don’t have a link, sorry) is pretty vague; segments of the “Budget Book” would be much smarter.
@Alum The manager of Yale’s endowment is by far the best in the business. That Columbia’s endowment earns a lower return than Yale’s does not mean it is run badly. Using the Yale guy as the standard is like measuring basketball players against Michael Jordan.
@Senior Credited, but the comparison, however invidious it may be, needs to be made since we are in competition with Yale in a real sense (for professors, for graduate students). But I agree with your general point–our endowment guy has got skillz.
@picture Is that tom otterness, in some subway station somewhere?
@looks like 14th st/8th ave
@Regardless of the total budget,there are quiet layoffs going on throughout the university in a way that there definitely weren’t a year ago.
@hey there and you improperly quoted, since the whole comment is a quote. thanks for playing
@huh? didn’t he say “but”?
@lol not yay… it means they make operating revenue off of us retard more so then other ivy leagues
@right... I doubt Columbia makes up the >2 billion from our tuition money, but from your atrocious writing I doubt you even go here.
@Mmmm... #2 may be a train wreck. However, that doesn’t forgive your comma splice. Let ye who is grammatically infallible cast the first Strunk & White.
@Strunk & White V. WORDS AND EXPRESSIONS COMMONLY MISUSED
“However. In the meaning nevertheless, not to come first in its sentence or clause.”
@Yay Columbia!