Bizzare encounter

Lafalum · Bizzare encounter

While walking on campus on saturday I ran into a member of the BOT I knew and asked him outright about the investment portfolio. He rolled his eyes and said the bottom line is they really don't know what the value of the portfolio is, but their sense was, we are not as bad off as others. I asked if we could get out of these (alternative) investments and he said there was no market for them therefore we don't know how much they are worth!! But we are continuing to hire the 35 profs, the new dean and her staff, and we want to continue Weis' new initiatives. When asked about a new campaign , he saw no posibilty of initiating a campaign in this environment.
So, we have a portfolio with which we have no idea what 50% of its value is,and we are continuing to operate, by adding profs and deans, like nothing happened, in an atmosphere we know we can't raise money.
Ask some of the coaches what THEY have been asked to cut!! We are cutting real resources. What's wrong with picture!!
So if money is fungible and the athletic dept is making deep cuts, IF YOU CONTINUE TO GIVE TO YOUR FAVORITE SPORT aren't you indirectly supporting the the salary of the diversity dean?? I don't have an answer but I do have questions???? Isn't it more logical to stop the initiatives until they are funded. 35 new professors at 100k (includes perks and benefits) is 3.5 mio dollars a year when we know the portfolio is down at least 225 mio, which will eventualy throw off at least 11 mio dollars less per year.... and we can't do a campaign!! BIZZARE

TheTruth

The comment about "not being as bad as others" worries me. Did he mean based on percentages or total dollars. If there is no market for these "alternative investments", doesn't it mean they are worthless?

Harvard total loss may be about $18B or about half of their endowment.

I think the BOT needs to re-think the plan to expand the faculty, hire a new dean and the other initiatives. There is no shame in re-thinking a plan in such extraordinary financial times. Everyone else is doing it. I think alumni, faculty and parents would understand.

Lafalum

Lack of a market doesn't mean these assets have nil value. It means the market is illiquid. All that being said you are right if the things you know the value of have gone down and things you don't know the value of can't be sold should we really be going along with expensive initiatives that were concieved in another environment?
The guesstimate I have heard now for the portfolio is close to 500 mio. Having been close to 800mio two years ago when these plans were concieved and the prospect of doing a 400 mio dollar campaign even then was a huge stretch....well I'll let you do the math.
Since this is a sports board what scares me is two years down the road when the portfolio is throwing off 10-15 million dollar less and the new initiatives are adding another 4 mio to expenses, whose ox will be gored? Not the diversity dean, not the 375,000 dollar presidents salary or his BMWs, not the large administrative staffs, not the sabaticals to study some obscure academic question, and certainly not reasonableness in tuition increases!!! We all know where the cuts will come don't we!!

TheTruth

I agree with you Lafalum that the cuts will be expected in the athletic department as well as other administrative departments.

I think moving full tilt with this plan at this time is foolish. I guess now is not a good time to push the football scholarship issue right now.

BTW, how is the Annual Fund performing?

Lafalum

Ok unitil December, I understand in January it went off the proverbial cliff.
Its understandable that the economy would have a delayed reaction. I hear applications are down significantly.