Monthly Archives: January 2009

Universities cut back on spending

Over on NPR’s excellent blog Planet Money, Caitlin Kenney writes that public universities all over the country are struggling to find ways to cut their costs in the face of the economic downturn:

Universities around the country are bracing for massive cuts as states rethink their shrinking budgets. In preparation for expected budget cuts, many are asking their staffs to look for any way to save money. School officials say cutting a university budget is complicated by factors like tenure, which make it harder to lay people off.

Of course, the same problems apply here at Princeton University and the other Ivies– per The Wall Street Journal, earlier this month:

Princeton said its endowment supports 45% of its roughly $1.25 billion budget — far more than most universities, making budget cuts necessary. Dr. Tilghman said the best-compensated employees would have their raises capped at $2,000 and administrative budgets would be reduced by 5%. Princeton said it would scrutinize all new hiring, including new faculty searches and defer new capital projects to save more than $300 million over 10 years.

And it appears the worst is yet to come, with the Journal reporting that “none of the schools gave data on performance to date of their holdings of more exotic and illiquid investments, such as real estate, commodities and private equities. The expected losses in those categories have led to the bigger, full-year loss estimates.”

Question of the day: when will universities make the pilgrimage to Capitol Hill to request a bailout?

The lighter side of investment ethics

In its annual joke issue, The Daily Princetonian reports on the University’s latest international investment:

Following significant endowment losses in 2008, the University will be investing in a joint venture with Somali pirates, Princeton University Investment Company (PRINCO) president Andrew Golden said in an interview Friday.

However, they save the best for last. As seen in Tina Fey’s comedic approach to the Palin-Couric interviews, sometimes the true content requires very little manipulation. Do any of these faux-quotes sound familiar? You be the judge:

The University seems unfazed by what some have called the “questionable ethics” of the investment.

Golden explained that the University performs no regular ethical review of its investments and instead focuses only on maximizing financial returns.

“Fundamentally, the instructions we give to our investment managers is that they should invest with the goal of maximizing return over the long-term,” University Vice President and Secretary Bob Durkee ’69 said. “A strong presumption is that the University as an institution will not take a position or play an active role with respect to external issues of a political, social or moral character.”

Students should not really care about the ethics of the University’s investments, University spokeswoman Cass Cliatt ’96 said.

“Members of the campus community with interest in these issues typically would not need to know whether the University is invested in a Somali pirate band today to know whether they feel the University should be invested in such an organization,” Cliatt said. “If a group of people have a question or concern about something taking place in the world, that belief would exist regardless of whether the University is invested there.”

Golden agreed that interest in ethical investment practices should not stem from knowledge of how the University invests its money, but instead from a broader interest in the world at large. Examining a list of University holdings for the purpose of raising ethical questions would be “the tail wagging the dog,” he said.

“Why would you focus first on those companies we’re invested in as opposed to looking out and thinking ‘what do I care most about in the world?’ ” he explained. “I care more about the engagement of the entire community in social issues, in ways that go far beyond the investment portfolio, especially because the investment portfolio may be a particularly cost-ineffective way of making change.”

New Year's Resolutions

My term as news director here at WPRB is winding down but I thought I would take a moment to go over some of the changes that we’re planning for our coverage in the coming months.

First, the very qualified Nikki Leon, who many of you will recognize as this year’s host and voice of Discourse will be taking over day-to-day operations. Her focus will be on bolstering our culture and arts content and she has some very good ideas for the general future of the department.

Second, the News department will be boosting its emphasis on online and multimedia news. My blog, Off The Air (which was sorely neglected for months on end) has moved off-site and will now focus on enterprise and accountability reporting on and off campus. It will have several contributors and the content will be available here most of the time too.

Overall, we always enjoy hearing from listeners and readers– if you have any suggestions on how we can better serve you in this new year, let us know: news@wprb.com

Best,
Sebastian Jones

The Dispatch Update: Princeton Endowment Drops

By Sebastian Jones
WPRB News

This morning Shirley Tilghman, the President of Princeton University, sent an e-mail to students and staff with an “update on Princeton’s response to the economic downturn”, spelling out some of the losses the university’s endowment has suffered.

According to Tilghman, by late October, “the University’s endowment had declined by 11%, based upon our standard reporting protocols, using information that is the best available as of the reporting date.”

She added that this figure likely “understates the actual economic loss”:

And, of course, financial markets have continued to decline since then. Although we cannot know what the next six months will bring, we believe it is prudent for the University to plan for the possibility that its endowment will have declined by 25% at the end of the fiscal year.

Full e-mail below… Continue reading →