A new study reports the University’s endowment is doing well in comparison to the endowments of other colleges and universities.
Clocking in at $508.8 million, the University’s endowment and other similar funds shot up 13 spots in the National Association of College and University Business Officers Commonfund Study of Endowments for fiscal year 2009 to become 105th in size, said Vice President for Finance and Associate Treasurer Delanie S. Moler.
Senior Vice President for Finance and Administration Bruce Fehn said the University’s endowment — money the University receives in the form of grants — fared better than others during troubling times.
“Keep in mind that [2008] was a very turbulent year and, in effect, we did less poorly than some other endowments,” he said.
The NACUBO-Commonwealth Study of Endowments 2009 rankings cover 842 endowments and affiliated foundations of U.S. colleges, according to the NACUBO Web site.
University departments receive endowment expenditures in accordance with the University’s spending policy, Fehn said. The policy allows the University to pay an amount not to exceed 4.5 percent of a trailing 13-quarter average of the endowment’s market value, he said.
“On a $500 million balance, approximately $25 million is distributed as income,” Fehn said. “Now $25 million is a nice piece of change, and it’s a resource we’re glad we have, but in terms of the overall University budget, it’s not that significant. The University budget is about $1.9 billion.”
Student aid, student instruction and departmental research account for about 85 percent of endowment expenditures, Moler said.
These expenditures bolster the University’s scholarships, encourage research opportunities, help maintain infrastructure and aid in hiring and retaining faculty, according to the University’s Web site.
Departments use the funds based on the purpose donors designate, Fehn said.
“The endowments come with restrictions. An endowment that’s for an endowed scholarship will always provide support for a scholarship,” he said.
The average spending rate for educational endowments participating in the NCSE study was 4.4 percent, according to its Web site. The NCSE calculated spending rates by dividing endowment dollars spent by the beginning endowment value.
The University has around $800 million in outstanding bonds and other debt, Fehn said.
The debt ratio falls within University policy. The University sustains a strong credit rating with the two main ratings agencies, Moody’s Investors Service and Standard & Poor’s, he said.
The State Commission of Investigation said in a 2007 report that virtually unrestrained borrowing has burdened New Jersey’s public colleges with some of the heaviest long-term debt loads in the nation. Gov. Chris Christie’s subcommittee on education’s January 2010 transition report attributed the debt load to the state’s near elimination of capital support over the last 20 years.
The amount of debt does not impact the University’s NCSE ranking as the study concentrates on the size and returns of the endowment, Moler said.
School of Arts and Sciences junior Jonathan Eng said it was good to hear the endowment’s size ranking had risen.
But Eng said he wasn’t completely sure exactly what the endowment is.
“It doesn’t really affect me,” he said.
School of Arts and Sciences junior Sam Joshi said the overall size of the endowment is more important than the ranking, as it helps determine how much student aid can be dispersed.
“I get student aid directly from Rutgers, so [the endowment] matters,” Joshi said.
School of Environmental and Biological Sciences senior Michael Buccarelli said he plans on contributing to the endowment after he graduates through donations.
“[The University] provided me with a great education,” Buccarelli said. “My dad went here, my brother went here, my little sister goes here now. It’s a good place, and it provides a reasonable price for in-state kids.”
He said the poorer performance of other endowments offered proof that the University is managing its endowment soundly.
“I think people need to take a step back and look at what they invested in,” Buccarelli said.
U. endowment climbs despite economic woes
Published: Monday, February 8, 2010
Updated: Monday, February 8, 2010
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