Oh Joy!

I am attempting to write something a little more systematic about investing and all its different types and little forms, but unfortunately my boss is making me do actual work instead of writing my blog.  And the whol ‘systematic’ thing means it requires research instead of me just making stuff up.  So it takes longer.

Anyway, avid reader, while-u-wait, here’s the little compilation/article I had to do as part of my real job.  Enjoy!

            With the recent Senate hearing on endowment spending rates for universities in the fall of 2007, most universities are taking a look at their past spending records and evaluating how a governmentally determined spending rate might affect them, and how their current spending policies affect the tuition of their students.  Institutions with large endowments such as Yale and Harvard have already declared spending increases in the wake of public awareness of the issue, though most institutions have spoken against spending regulations.


            Harvard was one of the first schools to publicly declare itself opposed to such regulation.  However, a tuition assistance plan targeted to provide increased assistance to middle and upper-middle income families announced late last year was regarded as a positive response to the base issue of affordability.  Following Yale’s announcement of an increase in their spending formula, Harvard also determined to raise spending to 5% from 4.3% last year.  This change does not imply a policy shift, and large returns for the endowment could mean that spending does not reach the 5% mark.


Yale announced in early 2008 that it would raise its spending formula to an annual 4.5-6% payout, as well as a 37% increase in spending for this year, including a substantial increase in student aid.  Concerns regarding possible government regulation of spending were not addressed.


Despite these policy and numbers shifts from those universities with the largest endowments, response to new regulations remains lukewarm at best.  Stanford raised its spending rate for the new year from 5% to 5.5% in June of 2007, while Princeton 5% to 5.75% in the fall of 2007.  Both of these increases seem to be attempts to more accurately accommodate investment gains in the overall budget rather than a policy shift.  Duke instituted an increase from below to above 5% spending last spring as a result of good endowment performance, but again this was not a policy shift.  UPenn publicly rebuked governmental controls but also announced a new loan-free financial aid program.  Similar to Harvard’s initial response, this move rejected a higher spending rate while at the same time addressing the underlying issue of affordability.  Northwestern was also opposed to regulation, despite their annual spending of 5%, due to adverse affects regulation might have in the future. 


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