Falling in line with the national trend, several California universities saw double-digit drops in the market value of their endowments last year, according to a new survey by the National Association of College and University Business Officials.
Nationally, the value of college endowments declined by 23 percent in the fiscal year, which ended in June 2009. Endowments were hit by the "one-two punch" of unprecedented investment losses and drops in charitable giving, the Chronicle of Higher Education reports.
The results come from a national survey based on responses for endowments and related foundations at 842 education institutions in the United States.
Among the Golden State's major players, Stanford University saw a 26.7 percent drop in endowment value last year, to $12.6 billion. The University of California Regents' endowment assets took a 20.6 percent dive, to $4.9 billion, and the University of Southern California plunged 25.6 percent, to $2.7 billion.
Nationally, the losses are some of the ugliest this country's higher education sector has seen.
The average investment return for 2009 was an 18.7 percent loss, the worst in the history of the endowment study, according to the Chronicle of Higher Education.
And in a twist from years past, the richest colleges and universities took the biggest endowment hits, as the Boston Globe reports.
Large, sophisticated endowments fared worse, overall, than smaller funds. The big endowments invested more of their money in hedge funds and other alternative investments, and keep less in cash. Smaller funds, meanwhile, had more of their money in plain-vanilla bonds, which performed better than stocks and more exotic investments, helping those endowments to stave off the worst of the losses.
'It's very unusual to have large endowments underperform small endowments,' said Verne O. Sedlacek, chief executive of Commonfund. 'This is a very unusual outcome.'
Last fall, Stanford's endowment drop meant the private university had to lay off hundreds of employees, freeze salaries and close the physics library.
Meanwhile, the UC's endowment losses continued a pattern that began in early 2008. After losing $1 billion in the first nine months of 2008, UC officials said in November of that year that the losses wouldn't have instant impact because the payout from the endowment is based on a long-term average of the funds' performance, the Chronicle reported.
But they also said that if the trend didn't reverse itself soon, it could start having a more palpable effect – potentially compounding the already dire budgetary times at the UC. Returns from the endowment are used to support programs such as research, faculty chairs, scholarships and fellowships, the Chronicle reported.
You can take a look at a PDF list of all the surveyed colleges and their endowment losses. If you have a Chronicle of Higher Education subscription, you can use the group's searchable database to sort the data by endowment losses, endowment value, or by state. The list includes 73 college and universities in California.
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