UC System Endowment Experiences Major Drop
Thursday, January 29, 2009
Category: News > University > Higher Education
As university endowments nationwide feel the pinch of the plummeting stock market, the University of California is facing similar concerns.
The UC system has seen a 20 percent drop in its endowment over the last six months-representing the worst decline since World War II.
"The university and UC Berkeley are suffering along with the rest of the country and universities," said Geoff O'Neill, the UC system's assistant vice president of institutional advancement. "Over the long term, they have performed very well … but the last 18 months have been challenging."
This dramatic decline, much in line with the national trend, follows a 3 percent drop for the entire 2007-08 year, according to data released Tuesday by the National Association of College and University Business Officers.
The university's endowment-valued at $6.2 billion at the time of the survey-ranked 14th among all universities. However, that endowment is distributed among 10 campuses and more than 220,000 students, meaning private universities with similar endowments can spend significantly more per student.
O'Neill said the university may seek new gifts to augment its endowment.
Though students are not yet feeling the consequences of a shrinking endowment, they may soon see less support for libraries and student activities, and even decreased scholarship payout, he said.
"Historically, the state of California, with public institutions, provides a steady stream of funding so there hasn't been the need to develop large endowments," O'Neill said. "Now, public institutions are recognizing they need to raise more funds on a current basis but also funds they can use for the long-term."
The university's private endowments have become increasingly important in light of the recent drop in state funding. Since 2008, Gov. Arnold Schwarzenegger has reduced UC funding by almost $100 million-including mid-year cuts-in an effort to close the widening budget gap.
Although its endowment is already considerably less than those of private universities it competes with, UC is not alone in its financial woes. Harvard University has taken one of the biggest hits, losing $8 billion from its $36.9 billion endowment as of December.
Additionally, Brandeis University announced yesterday that it would be closing its Rose Art Museum and selling works from its modern art collection to raise funds for its endowment.
In addition to the university's general endowment, the Berkeley campus runs its own fund. Officials said the situation is not as dire on the Berkeley campus, in part due to the success of the Campaign for Berkeley, which raises endowment funds for immediate use and the campus's reserves.
"The campaign will definitely help the university to weather the financial storms in the future," said campus spokesperson Jose Rodriguez.
UC Berkeley's endowment was $2.9 billion as of June, including $1.9 billion from the regents' general endowment fund and another $920 million from the UC Berkeley Foundation.
The ongoing Campaign for Berkeley, best known by the wall of faces outside Dwinelle Hall, has raised $1.42 billion.
Rodriguez said donors have been willing to contribute to the campus despite the downturn.
"They recognize that when they give to Berkeley, they're investing in the future of the economy," he said. "They're seeing a connection between a well-educated workforce and students who are supported by financial aid and scholarships ... it's a quality investment."
Rachel Gross is the university news editor. Contact her at [email protected]
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