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.
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.
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.
I work in FP&A for a top 10 university in the US (you can believe me or not, I really don't care). We've built several scenarios but are budgeting at the moment to not be back until spring 2021 at the earliest.
While I agree there's a great case to be made for paying top dollar here - let's not pretend that $7M is a rounding error. It's actually almost 4% of the entire department's projected operating revenues in FY19.
My first game was Baylor in 1997 with my dad. We had moved to a suburb of Toledo from New Jersey just the year prior and I didn't understand the whole Michigan vs. Ohio State rivalry. I remember my friends at school that first year asking me who I cheered for and having absolutely no idea what to say.
I can still see the train tracks as we crossed them on Hoover - that's about my only memory outside of the stadium. I'm fairly sure the weather was great; we had seats on the visitor's side; about sixty rows up somewhere around the twenty yard line.
We won big that day, 38-3, and the experience was absolutely breath-taking. Over 100,000 people crammed into the stadium to watch a football team play and I remember thinking to myself, "it doesn't get any better than this."
I was a fan from that day forward and by the time November rolled around I knew exactly who I was rooting for.
Fast forward seven-ish years and I find out I've been admitted to my dream school, the University of Michigan. It wasn't even a discussion, I was going to Michigan. I spent four (okay fine, five) of the greatest years of my life there and made some life-long friends. I wouldn't trade any of my time there for anything. In fact, some of those life-long friends and I are renting a house for a game next month so we can enjoy Ann Arbor like we did a decade ago.
None of this would have happened had my dad not decided to take me to that game almost two decades ago.
Also the player has to meet certain criteria to qualify. Namely, there has to be a financial inability for the player or player's family to afford such a policy.
I believe Wisconsin did the same thing for Gordon. The university is allowed to pay for one type of policy where it will pay out if the player experiences a career-ending injury. However, there is another type where the policy will pay out if the player experiences a large drop in draft stock. Im fairly sure the NCAA prohibits universities for paying for this type of policy.
Ah! I can see how it might be taken that way. However, my speculation was on grounds it was with another man. The way the university worded it was super fishy.
Perhaps I'm missing it, but where exactly in this article does it say this relationship was with an adult woman? Seems to me the university was awfully careful in its wording.
Recent Comments
Read that as Milton and absolutely shit myself.
Nice.
Is this what finally topples the Alabama dynasty?
(/s I obviously hope he makes a full and quick recovery)
Absolutely trash headline.
Sigh. This whole thing is extremely on-brand for 2020.
A+ straw man.
Love logging in just to downvote comments like this.
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.
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.
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.
I work in FP&A for a top 10 university in the US (you can believe me or not, I really don't care). We've built several scenarios but are budgeting at the moment to not be back until spring 2021 at the earliest.
I'm not saying it's not worth it - I'm simply pointing out that it's not exactly a rounding error.
And FYI - Holtmann's salary is ~$3M/yr (https://sports.usatoday.com/ncaa/salaries/mens-basketball/coach/) and the OSU athletic department operating revenues are higher than Michigan's (~$205M in FY18 for OSU compared to $187.8M in FY19 for Michigan (projected) https://www.buckeyextra.com/sports/20190123/ohio-state-athletic-department-tops-200-million-in-revenue-expenses).
Michigan's athletic department projected operating revenues for FY19 of $187.8M (https://www.freep.com/story/sports/college/university-michigan/wolverines/2018/06/21/university-michigan-athletic-department-budget-surplus/723536002/).
While I agree there's a great case to be made for paying top dollar here - let's not pretend that $7M is a rounding error. It's actually almost 4% of the entire department's projected operating revenues in FY19.
lol ok Clark Kent
Champions of the west, bro. It's in our fight song!
My first game was Baylor in 1997 with my dad. We had moved to a suburb of Toledo from New Jersey just the year prior and I didn't understand the whole Michigan vs. Ohio State rivalry. I remember my friends at school that first year asking me who I cheered for and having absolutely no idea what to say.
I can still see the train tracks as we crossed them on Hoover - that's about my only memory outside of the stadium. I'm fairly sure the weather was great; we had seats on the visitor's side; about sixty rows up somewhere around the twenty yard line.
We won big that day, 38-3, and the experience was absolutely breath-taking. Over 100,000 people crammed into the stadium to watch a football team play and I remember thinking to myself, "it doesn't get any better than this."
I was a fan from that day forward and by the time November rolled around I knew exactly who I was rooting for.
Fast forward seven-ish years and I find out I've been admitted to my dream school, the University of Michigan. It wasn't even a discussion, I was going to Michigan. I spent four (okay fine, five) of the greatest years of my life there and made some life-long friends. I wouldn't trade any of my time there for anything. In fact, some of those life-long friends and I are renting a house for a game next month so we can enjoy Ann Arbor like we did a decade ago.
None of this would have happened had my dad not decided to take me to that game almost two decades ago.
Macallen 12 - getting married in five weeks and trying to get all the booze out of the house - ha.
How about Harball?
We only play M00N games now.
Worst case scenario: I've already got a "Fire Jim" t-shirt.
I really hope one of these pops up each week they win.
I'm fairly sure that's exactly what I was doing. Oh well, thanks for the help!
Thanks! I still have no idea what I was doing wrong.
Hmmm, the Pretty Posts Sticky doesn't seem to be up to date for embedding YouTube videos (or I'm missing something in the instructions).
Am interested!
WHAT THE FUCK IS GOING ON
Went out with some friends and got subs. Seriously.
It was crazy.
I know how you feel - after spending four years going to games there it's hard to believe it's the same place.
I guess I was a bit late on that - so here's my sign?
Would someone please explain to me who Jeff Hardaway is?
Holy moly! Yeah, that was a bit before my time.
It's sad the most shocking thing about that quote for me was the fact he took golf, fishing, and softball as classes.
This kid has had some pretty bad luck - I wish him the best in the NFL.
I'll predict we round out the conference with Hawaii because we have to get as close as possible to that massive Chinese market.
I couldn't bring myself to watch the whole video. As a fan, I would be livid if our WRs acted like this.
Rolling Rock - only because I'm on a budget. Kinda feels like I'm in college again.
Yeah, they're talking about shutting down Lakeshore Drive. Seems a little extreme to me, but what do I know?
Looks like an ED advertisement.