OT? ... Not lately ... America’s Colleges & Universities Awarded $12.5 Billion In Coronavirus Bailout
Yup, we're well up the list.
https://www.forbes.com/sites/adamandrzejewski/2020/05/05/americas-colleges--universities-awarded-125-billion-in-coronavirus-bailout--who-can-get-it-and-how-much/#47473b4c3181https://www.forbes.com/sites/adamandrzejewski/2020/05/05/americas-colleges--universities-awarded-125-billion-in-coronavirus-bailout--who-can-get-it-and-how-much/#47473b4c3181https://www.forbes.com/sites/adamandrzejewski/2020/05/05/americas-colleges--universities-awarded-125-billion-in-coronavirus-bailout--who-can-get-it-and-how-much/#47473b4c3181
Some hi-lites:
Big 10 Conference is #1 – In the battle among the major conferences, the fourteen schools of the Big 10 Conference were allocated the most bailout money ($393 million) – an average of $28 million per institution.
For example, Indiana University (Big 10) has an endowment of $2.4 billion, yet they will receive $24.6 million in bailout monies. Recently, a student journalist failed to convince the university to use their endowment to mitigate student tuition. However, we found the president of the school made $3.5 million (2017-2019) and the IU Foundation employed his wife ($303,641) and daughter ($58,271).
Responding to our request for comment, IU decided to take the bailout and claims their billion dollar endowment can't help out in the crisis because donors earmarked their gifts for other purposes.
The Pacific-12 Conference (Pac-12) was allocated $318 million. The University of Oregon will receive $16.1 million even though the school’s endowment approached $1 billion. The university chancellor earned $738,000 in salary with up to $200,000 in additional bonuses. Before the virus, students had been protesting program cuts and tuition hikes.
The Southeastern Conference (SEC) has fourteen schools and was allocated $280.2 million. The University of Alabama was allocated $20.7 million, despite the fact that the school employs the most highly compensated public employee in the nation. In the last three years, Alabama paid their head football coach Nick Saban a total of $29.2 million.
Responding to our request for comment, The University of Alabama contended that athletics are self supporting.
The fifteen schools of the Atlantic Coast Conference (ACC) collected just $194 million in aid.
Are these the same schools that are still charging tuition for hastily thrown together distance learning programs?
I'm all for massively increasing education funding, at all levels, but what costs are these schools incurring that would necessitate bailouts? I didn't get a tuition rebate and my kids classes shifted online.
In fact, having all the buildings closed is probably saving money.
This is the problem. People are mischaracterizing students asking for partial tuition refunds as asking for free classes. People pay the cost to go to Michigan, NW, or Harvard because of all that the University has to offer. If the school can't offer that (teaching online versus in-person, student groups, events etc) then the schools isn't providing what the consumer signed up for. Yes, the name carries value so we can't compare going to Michigan online versus WGU or whatever the hell else is out there, but the name isn't worth the difference in cost when both are online.
It would be like going on vacation to a 5-star, all-inclusive resort but when you got there 1/2 of the pools were drained, only 2 restaurants were open, and the golf course was being renovated. You still need to pay for staying in the room and having access to some of the amenities, but you should not pay full price for 3/4 of the product originally promised. Students have been refunded housing and meal plan costs, but that's still not a completely 1:1 refund as the service is still degraded (online vs in-person classes and everything else).
Yes, endowments are not for general operations. But it's pretty hard to tell people who are taking out loans to pay for bloated tuition costs that they can't get a little reprieve from Universities with a ton of clout with access to billions of dollars.
It would be like going on vacation to a 5-star, all-inclusive resort but when you got there 1/2 of the pools were drained, only 2 restaurants were open, and the golf course was being renovated.
Respectfully, no. This isn't a fair comparison. This paints it as though universities are guilty of some sort of bait and switch.
A better analogy would be that, halfway through your stay at the inclusive resort, it was hit by a tornado which forced the closure of all of those things.
No university did this intentionally. No university misrepresented itself to its students. Almost all universities forced online got essentially two weeks of prep-work to move entire curricula online, and did the best they could to ensure that students could finish courses, get credit toward degrees, and in the case of final year students, graduate. Most universities have made good on refunding pro-rated fees for things students were no longer able to use.
I'm curious as to what everything thinks they should have done instead.
Sure. Blue algae outbreak in the pools. E Coli in the restaurants. Water main break along the golf course.
Point is, what was originally promised has not been delivered.
Yes, some schools have given back some fees associated with services they cannot deliver, but the basic online vs in-person differences are stark. Through no fault of their own, Universities have seen a massive negative impact. Still, best efforts don't equate equitable reprieve.
I think the argument will be less about refunds for this last 4-6 weeks of winter term and more about what happens in September.
Probably shared too much. :-)
Loss of room and board revenue, loss of tuition (next year), loss of camps, loss of the ability to do research (and therefore grants).
Schools across the nation are facing million dollar budget gaps this semester, and next year is likely going to be the single roughest year for smaller colleges in our lifetimes.
I can't speak for other universities, but U-M can't really shutter a bunch of buildings and stop paying utilities and furlough all the people who maintain them.
In some buildings, faculty continued to need access to their classrooms/labs in order to teach their classes through Winter term. Many research labs still need to be powered, even if researchers aren't in them--and these are scattered throughout campus, not concentrated in one building. Any buildings where collections are stored also need consistent temp/humidity maintained. That's every museum, every library.
Thanks for posting. This is embarassing. No school with an endowment should get a dime. In fact, in this time of crisis they should be required to dip into their endowments to compensate/reimburse students for tuition and even offer free tuition when they come back.
"No school with an endowment should get a dime." Because every school with an endowment should violate the conditions under which the endowment gifts were made?? Get a grip. Or explain where you went to school, that had no limitations on the use of endowment assets.
Wasn't this money to be given to students in financial need given the lockdown?
Edit:
Found this. Explains that 50% was to go to students.
I assume the balance is to pay university workers idled by the school closing. I'm not sure endowment money can be used to pay for service staff at the university. Typically goes to facilities, professors, programs, student aid, etc.
There's a strong argument to be made that higher education is bloated. But that's a discussion for another time. Given the situation, as long as this $$$ is targeted in terms of who benefits, I'm not opposed. Universities are HUGE employment generators for their respective states and communities.
The endowments aren't going to be touched beyond a set spending limit (~ 5% of the total). That's just how that is.
No, I don't think the other 50% can go to pay furloughed workers. The guidance seems to be that it has to be tied to expenses incurred due to the shutdown/shift to remote education. Paying workers is an ongoing expense, and bringing back a furloughed worker is probably stretching the intent.
You could use it for housing expenses that are no longer being paid for by fees (since some student fees were reimbursed)--the CARES act specifically says that's okay-- but other options would be the tech you had to buy for students whose laptops weren't robust enough to online education, hotspots installed for quarantined students, lab supplies/design kits you had to mail to students' homes, additional lecture-capture technology, PPE for staff or students, testing apparatus like temperature sensors, etc.
“The University of Alabama was allocated $20.7 million, despite the fact that the school employs the most highly compensated public employee in the nation. In the last three years, Alabama paid their head football coach Nick Saban a total of $29.2 million.“
Whomever wrote this is a poor journalist. It takes minimal effort to learn that Alabama’s AD is indeed self-sustaining.
It's a Forbes article; I think they almost exclusively hire mediocre journalists paid by number of hits.
The reporter did contact the university and wrote the following directly below the section you quoted.
"Responding to our request for comment, The University of Alabama contended that athletics are self supporting."
"...and claims their billion dollar endowment can't help out in the crisis because donors earmarked their gifts for other purposes."
This is always the excuse about endowments whenever a question about using them pops up. There should be no tuition whatsoever charged by schools that have millions sitting in an endowment, let alone schools that have billions set aside.
This is in essence what happens--see Yale or Harvard. They are tuition free or heavily tuition free on a sliding scale of need. The challenge is there are only a handful of universities with the size of endowments needed to kick off 3-5% that can sustain this.
If you have a 1B endowment, it kicks off $30-50M a year. And while that is allocated into all sorts of little pots (a named professorship, a scholarship fund, conference travel), $40M is basically 6 building renovations, which is a typical summer cost for most universities. The tuition, public funding, research grant indirect, housing, meals, etc. is what pays most salaries.
If you draw down your endowment, future donors are less likely to give, and you hurt your future ability to have free kick off from investments.
Absolutely. Let's say I give U-M an endowed fund to support research for pediatric cancer. I could do lots of things with this money, but I gave it this way because I'm passionate about this cause and I've chosen U-M because I believe they can leverage my investment into effective treatments, maybe even a cure. (this particular example is pretty relevant because about half of U-M's endowment is just for the Michigan Medicine part of the university).
Anyway, now imagine I call up and say "how are things going, what kind of progress has my investment made?" What I hear is "we decided to use your funds to discount tuition for everyone this year. It won't cure cancer and it won't help future generations of students, either, but it went over very well among the student body." Well, that's heartwarming on a certain level, but it's unlikely to inspire my future giving. Or other people's, not from anyone who want to direct their donations to specific priorities.
People give for a certain reason. They get inspired by specific things, like the Marching band or study abroad opportunities or research to solve global issues or outreach to Detroit or scholarships for former foster kids who want to study engineering. They want the university to do more great things or make those great things accessible to more students, and so they designate their money to fund them. They allow the University to do more than what your tuition dollars would fund.
I would like to point out that, in fact, endowments are specifically allocated for certain uses and, legally, schools are limited in how they can spend it. So the incredulousness of the reporter here is a bit obnoxious; they still do have operating costs that need to be covered. Do I wish schools would give back the money if they don't need it? Absolutely. But UM is also looking to suffer over $1B in financial loses this year, and most of the administration took pay cuts. Most schools have tried their best to keep people on payroll or at least receive some of health benefits and the like. This won't put much of a dent in those costs but I'm also not going to begrudge an organization that is the 2nd-largest employer in the state getting some minimal relief.
University use of endowments are such bullshit. The management of them is shady as hell with well-connected advisors all taking their cut. Michigan has a $12.4 billion endowment but it can’t be used for a once in 100 year crisis? It’s BS.
As a high school teacher I'm terrified about the fallout for education. But colleges are best prepared to handle this storm and I can already sense that k-12 education is going to get rocked for years. Teacher enrollment was down 60-70% in the past 5-10 years and now things are going to get even worse. Teacher pay has been stagnant or declined over the past ten years and the insurance costs have skyrocketed while retirement benefits are disappearing completely.
We're relocating back to Michigan this fall and my fiancee just got a high school math teaching position here. I'm still concerned that she won't actually have the job. As in, they'll need to cut somewhere and she's last in even with a master's from Harvard.
I'll be that guy... Why did she get a master's from Harvard to teach high school math?
My father has asked similar questions. She's certainly one of the most qualified high school math teachers I've ever heard of.
She wants to get into education policy. She already has a master's in teaching and minor in math.
We were getting ready to leave Boston last year and this was her only opportunity to go to Harvard and get the credential before being in Michigan for the remainder of our lives (for the most part). She teaches in low income schools and focuses on social justice so she didn't want to leave the classroom and population right away but always wanted to set herself up well for 5 years from now.
Also had some grants in undergrad that needed to be worked off which requires 1 more year of teaching in low income schools.
She has a heart of gold and while I didn't think the degree was a great financial investment as it won't pay dividends for a few years, I don't fault her for going to Harvard and then continuing teaching for a few years.
WTF is wrong with going to Harvard and then teaching math?
We need more people like that. And super qualified and driven people in education will more than make their way financially. I'm a lowly "HS math teacher" and am pushing 80K/year in Michigan with great benefits and not yet 10 years into teaching. Why? Because I'm a HS math teacher (not a MS Phys Ed teacher) that is driven, has ambition and stays on the cutting edge of the field. Education isn't that different from other fields. You bust it and show initiative and you can climb ladders and jump some salary levels.
Let's take Harvard as an example and clear some things up here:
Harvard's endowment is worth $40B; however, the purpose of that endowment (and all university endowments) is to support the overall financial health of the university in perpetuity via structured annual payouts. The vast majority of most university endowments is legally restricted; the principal generally cannot be spent and those funds that can be spent must be used for designated purposes. A university cannot legally re-purpose restricted funds for different needs.
Harvard received $9M in relief funds, but those funds were granted via the Higher Education Emergency Relief Fund via the CARES Act. The relief fund is primarily meant to provide financial relief grants to students. The Paycheck Protection Program (the second fund established by the CARES Act) is a set of loans meant for small businesses, which Harvard never applied for or received.
The Higher Education Emergency Relief Fund is disbursed through the Department of Education and was granted to a long list of colleges and universities around the country. It was established "to provide emergency financial aid grants to students for expenses related to the disruption of campus operations due to coronavirus," according to the Department of Education.
If the endowment is there to “support the overall financial health of the university in perpetuity” I think a good argument can be made that a once in 100 year pandemic which is doing unprecedented damage to University income and budgets is exactly why you have the endowment. It is last resort money to ensure the university can survive in perpetuity. This is not your run of the mill every five- or ten-year recession. If the law says they cannot use it then change the law. Also, are a high percentage of donors really going to complain that a small percentage of their money was used to get the University though this? Are the people who endowed the “insert dead relative name” professorship in the study of Scarabaeinae really going to complain when the alternative is massive layoffs, tuition increases and a general decline in the university’s ability meet its primary educational mission?
No, an endowment is not "last resort money to ensure the university can survive in perpetuity", it exists "to support the overall financial health of the university in perpetuity via structured annual payouts."
As far as changing the law is concerned, you'd have to completely overhaul contract law because 99% of these endowed funds are governed via contractual gift agreements between the individual donors and the university.
Hypotheticals – Could the money be accessed if the university would cease to be a going concern without it? Can it be accessed in bankruptcy? Also, could the university simply ask the donors to use some of the money to help with the current emergency? Do you think they did ask?
Could the money be accessed if the university would cease to be a going concern without it?
I doubt it would ever get to that point - donors would either be understanding enough to allow it or the university would just say "fuck it, we'll deal with the fallout later".
Can it be accessed in bankruptcy?
Not sure on this one - haven't seen a university with a sizable endowment go under.
Could the university simply ask the donors to use some of the money to help with the current emergency?
Yes, absolutely. We're not yet at that point, but it if gets worse I could see it becoming a thing. There are some gifts the university could have spent but decided to invest in the endowment (we call this funds functioning as endowment or FFE). Those funds would be the first to be accessed as technically the university doesn't need donor permission to pull them from the endowment and spend them outright (though I'm not sure how many universities actually use FFE). However, this can cause serious budget problems as they relate to GAAP reporting. The university has already technically recorded the FFE as revenue in prior fiscal years - pulling those funds out and spending them would result in reporting a massive deficit. You'd be better off issuing bonds.
'Merica
But all you poor fucks, grab them bootstraps and yank upward.
Money for public secondary education: $12,000,000,000
Money for for-profit, publicly traded airlines that used the various tax cuts over the last three years to buyback stock, but weren't required to sell it before getting bailed out again: $54,000,000,000.
IMO, no company that bought back stock in the last 36 months should have gotten a nickel until they sold it, and burned through that cash, their reserves, and their other funding/lending options.
So when are students getting reimbursed their tuition for the last half of second semester? Or at least getting a prorated bill.
My money is on never.
32nd of Nevuary. Book it.