Endowment dependent schools hit hardest

It's a lesson many gamblers know well. Whoever has the most to spend has the most to lose.

Sizable endowments, in financially solid times, have helped many colleges fund state-of-the-art lecture halls, honorary faculty chairs, new programs and sports facilities that rival those of pro teams.

Then came the recession. And with that and a corresponding rise in student financial aid requests came endowment devaluation.

According the National Association for College and University Business Officers' 2008 endowment study, from 2002 to 2007 college endowments grew by nearly 12 percent annually. They fell by 3 percent in fiscal year 2008.

In a follow-up study, in the first five months of fiscal year 2009, endowments declined by nearly 25 percent.

While virtually every college in the country has been forced to tighten its belt with the economic downturn, schools in the Northwest suburbs that are more reliant on endowment funds may be finding themselves in a tougher position than their tax dollar and tuition dependent peers.

Judson University:

Evident in his fiery sermons and campus speeches, Judson University President Jerry Cain has a flair for the dramatic. True to form, Cain terms the current economy not a downturn or recession, but a "fiscal implosion."

In March, Cain wrote a letter to students, parents and staff about the economic reality the 1,250-student Baptist school in Elgin is facing.

Financial aid requests are on the rise. The college's enrollment numbers have fluctuated a bit.

Judson's 200 staff members will take unpaid days off each month.

Faculty members teaching more classes than typical will not be compensated for the extra workload.

Still, Cain said, things could be worse. He said he was "gratified that unlike so many universities and businesses we have not had to resort to layoffs."

According to university data, 94 percent of Judson's operating budget comes from tuition, room, board and fees.

Still, Cain wrote, "While we do not have a huge endowment (and having a huge endowment is something of a mixed blessing these days), we also do not have a significant debt load."

Judson spokeswoman Mary Dulabaum declined to reveal the size of the school's endowment, but noted it has been devalued by 11.6 percent since last October.

North Central College:

At North Central College in Naperville, which boasts 2,200 students, college spokesman Ted Slowik said the college's $78 million endowment - relatively large for a college of its size - has been devalued by about 30 percent.

Consequently, he said, the college intends to withdraw no additional money from the fund in order to give the investment the possible chance to recoup value as market conditions improve.

However, Slowik said, "the endowment represents only a tiny portion of North Central's revenues," with tuition the major source.

Tuition next year will rise by 3.3 percent, the lowest increase in the college's 30-year history.

Administrators are trying to eliminate some print communications and reduce travel and utility expenses.

No layoffs have occurred, but Slowik said the college will evaluate staffing levels in the fall, after final enrollment figures are known.

"At this point," he said, "anticipated enrollment for 2009-10 looks strong."

Ivy Leagues:

Ivy League schools with staggering endowments have been among the hardest hit.

The Yale Daily News reported last week that the New Haven, Ct., school's projected $100 million budget gap has yielded one of the largest rounds of layoffs in university history, with nearly 100 employees let go this spring.

In recent years, Dartmouth College in New Hampshire spent $1 billion on new facilities and more than doubled its financial aid budget. But with its endowment down $700 million, staff cuts are inevitable. The college needs to slice $60 million from next year's budget.

"I don't think anybody believes there aren't going to be big consequences," said Adam Keller, who oversees Dartmouth's finance and administration. "At the same time, people have begun to think hard what priorities exist for them."

Northern Illinois University:

At less than $100 million even in healthy financial times, Northern Illinois University's endowment is small for a university of its size.

This year, that number's even smaller.

Mallory Simpson, president and CEO of the NIU Foundation, said the value of the college's endowment at the end of 2008 was $31.6 million, a drop of 19.4 percent since the close of the fiscal year on June 30.

Unlike private colleges, Northern, a state school, is not reliant on endowments to fund operating costs.

Instead, the endowment funds scholarships, and scholarship requests are up in difficult financial times, Simpson said.

With less endowment money available,"there's less money to fund scholarships, though we're doing anything we can to minimize disruption to students," Simpson said.

NIU has asked each of its living donors what their preferences would be under what Simpson calls "extreme living circumstances" in order to push out as much money to students as possible.

"It's this tangled web," she said. "The financial crisis and the market crisis impacts a lot of different things. It's all tangled up together."

Daily Herald News Services contributed to this report.