Euthanasia of the Rentier Watch, Part XIV

From my continuing "euthanasia of the rentier" series on those being hard hit by declining endowment/asset income, an update on the situation at Harvard:

Schools Expect Payout Decline
With Corporation yet to set payout, schools brace for decrease.

In response to guidance from the University, several of Harvard’s schools are planning for a decline in endowment income for the next fiscal year, according to University administrators interviewed this weekend.

Earlier expectations had been for a flat payout—or the same dollar amount in endowment income as last year—a School of Public Health spokesperson wrote in an e-mail.

The Harvard Corporation, the University’s highest governing board, has yet to set next year’s endowment payout rate—a figure generally announced in December—leaving schools to plan their budgets without definitive numbers while decisionmakers attempt to get a better idea of market conditions.

… Harvard officials have projected a 30 percent decrease in the endowment from its June 2008 value of $36.9 billion. Even with a five percent decline in spending, the payout rate would be nearly 5.9 percent—a number that would be the University’s highest in over 20 years.

…In an effort to meet the challenges posed by the financial crisis, Frenk wrote that the University had also issued a directive in December to freeze all salaries for faculty and non-union staff.

….Approximately 35 percent of the University’s operating budget is dependent on income from the endowment, though certain schools rely more heavily on this income stream than others.

More here.

As a related aside, the person who emailed me this offered that a Harvard contact told him that 2008 endowment losses were considerably higher than the 30% figure cited above. If true, and I have no way to substantiate his claim one way or the other (so all cautions apply), that would be staggering stuff.

Related posts:

  1. Euthanasia of the Rentier Watch, Part XXIV
  2. Euthanasia of the Rentier Watch, Colleges/Universities
  3. Initiating the Jane Mendillo Death Watch
  4. Colleges Love Hedge Funds (and Venture Funds, and …)
  5. Harvard: Losses More Like $18-Billion Than $8-Billion?