Endowments at small Indiana colleges struggle in last decade
INDIANAPOLIS (AP) - Officials overseeing endowments at some of Indiana's smaller colleges and universities have cut back on spending, or are considering doing so, after struggling to increase their funds' size over the past 10 years.
Schools spend a certain amount of their endowments each year, and they expect investment returns to cover that spending and inflation, the Indianapolis Business Journal (http://bit.ly/2mkqq2a) reported. Returns at many schools in Indiana have barely accomplished that or even fallen short over the past decade, prompting administrators to rethink assumptions on spending and investment.
Officials at several Indiana schools say historical spending rates aren't sustainable because many endowments are about the size they were a decade ago.
"In a sense, I guess you could call it a lost decade," said Deanna Risser, the interim vice president for finance at Goshen College, a private school with about 800 students. "Our endowment is about $100 million and was about $100 million 10 years ago."
Some schools have lowered spending rates. Rose-Hulman Institute of Technology cut its spending rate from 5 percent to 4.5 percent two years ago.
Wabash College drew about 6 percent from its endowment last year, according to board member Bill Wheeler, but the school "would like to lower the endowment draw to keep it heading toward 5 percent."
Butler University's vice president of finance and administration, Bruce Arick, said the school is considering cutting its endowment spending for its next school year.
"The 4.5 percent level we are assessing for 2017-18 is a decrease from our current level of 4.9 percent, which has been in place for several years," Arick said in an email. "This decrease is due to significant discussions over the year as we look at future returns."
Since 2007, Butler's endowment increased 7 percent, and DePauw University's climbed 11 percent. Rose-Hulman's declined 7 percent, and Wabash College's dropped 21 percent.
"It's challenging," said Rob Coons, chief administration officer at Rose-Hulman. "We just continue to monitor the market carefully (and) we continue to try to work diligently to try to raise contributions for the endowment."
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Information from: Indianapolis Business Journal, http://www.ibj.com