Due to a lackluster economy and stock market decreases, Boston University’s endowment fund has decreased by almost $250 million in the past fiscal year.
“This is not a decline in dollars; it’s a decline in value,” BU spokesman Colin Riley said. “It was one of the most volatile periods in the equity market.”
The endowment fund decreased from $931 million in June 1999 to $664 in June 2000. Riley said the figures do not necessarily indicate a loss.
“No one has lost anything,” he said. “It will grow back.” He added that when the market moves back up, the endowment fund will grow again.
According to an annual survey of 610 colleges and universities conducted by the National Association of College and Business Offices, the average decrease for the nation’s universities was 3.6 percent. BU’s endowment decreased 27.2 percent in the fiscal year.
“That money needs to generate a return over time,” Riley said. “It’s a permanent pool of money.”
Riley said the money in the portfolio does not necessarily indicate any problems within the budget, and a decrease in the amount of the endowment would not mean a deficit budget would need to be run. The total budget is $1.2 billion.
“We haven’t had a deficit in 30 years,” he said.
During the past 20 quarters, the endowment has had an average return of 22.5 percent, Riley said
Riley said the decrease of the endowment portfolio’s value was the main reason for the decrease in the amount.
“We have a very broad portfolio,” he said.
According to Riley, a committee of trustees and a committee of investors invested the endowment. Between the combination of the two committees, there are more than 25 years of tenure.
“These are professional investment managers,” Riley said.
The investment team also decides what funds the money in the endowment will go toward. Most of the endowment money goes toward scholarships and other academic programs of the same nature.
Riley said the “big picture view” indicated a growth in the endowment. He listed the previous endowments over the years and said last year’s was still the second-highest endowment ever for BU.
According to a report in the Boston Business Journal, BU’s endowment loss was the largest of any area college. Other area colleges also saw their endowments decrease by more than 10 percent, but BU was the only one with a decrease greater than 20 percent. The University of Massachusetts at Amherst even saw a 8.2 increase in its endowment.
Harvard University’s endowment, which is the largest in the nation, only decreased 4.7 percent. The total endowment for the year was $18 billion.
Harvard’s endowment also made news recently after a watchdog group discovered some of the school’s endowment had been invested in the Enron Corporation.
Riley said he didn’t know of any ties between BU’s endowment and Enron.
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