Sparked by Mr. Otts’s use of information provided to him by the University as\u00a0reported to the American Association of College and University Business Officers (NACUBO); and by comments made by Trustees\u00a0Greenberg and Benz at last week’s meeting of UofL Trustees raising serious concerns about the endowment; I went to NACUBO’s website myself. \u00a0Summary files for public use are available\u00a0including the market values of the endowments of some 850 of the most important Colleges and Universities in the US and Canada from 1990 to 2015. \u00a0I abstracted these and plotted the market value of UofL’s endowment along with its rank among other institutions in this regard. Spending information or investment yields for individual institutions are not made available to the public, although summary statistics on aggregates in broad categories are available. A static image is presented below, and an interactive version<\/a>\u00a0revealing\u00a0the underlying data is available.<\/p>\n In summary<\/strong>, the amount of our endowment rose progressively from 1990 until around 2007 after which much volatility occurred to the point that the market value of the endowment in 2016 is indeed less than it was 10 years ago in 2006! \u00a0UofL appears to be\u00a0eating its nest egg, and compared to other institutions of higher education, is losing ground in endowment growth.<\/p>\n Some of the volatility in rank in the earlier years may stem from the fact that the number of institutions submitting reports to NACUBO rose from 367 to 568 by the year 2000. However, the number of reports has remained relatively constant in the mid-800s since 2009 during which UofL’s decline in rank continued apace and may be accelerating. I have not itemized the schools that ranked higher than UofL over these years, but the top hundred have what would be expected based on overall reputation. Even at 112 we are in pretty good company.<\/p>\n Another cause of early volatility in endowment rank is that fact that overall, the values of endowments in the earlier years of this graphic were\u00a0considerably lower than today. Just as I have shown for\u00a0UofL’s standing\u00a0in NIH funding for research, when you are starting out in the lower ranks, a good grant or two can result in a large swing in national ranking. So it is with endowments. For example, in 1992, when UofL ranked 119th in its endowment, an increase of $10 million in contributions or investment earnings would have improved UofL’s a rank to 111. \u00a0Conversely, $10 Million less would have dropped our rank to 132! In 2015, a swing of $10 Million would have only resulted in a rise of only two places in rank from 112 to 110. An endowment of $10 Million less would have kept UofL at exactly the same rank of 112th!<\/p>\n Looking at market values and ranks from another perspective, the decline in rank from our high of 87th in 2001, to 112 in 2015 represents a spread in market value of $214 Million in 2015 dollars. To that we must add the unknown impact on our endowment rank of\u00a0the $160 Million decrease in endowment that has been spent or acknowledged as lost in 2016. \u00a0A final accounting has not yet been made public. Extrapolating, our rank in 2016 will likely be around 137th.<\/p>\n Comment<\/strong>. Who would not want to see a fair accounting? Thanks to the determined\u00a0 intervention of a revitalized Board of Trustees at both the University and the Foundation, we may yet get that view! The Governor’s aggressive efforts to undermine the efforts of these Boards at a time when the University and its Medical Center are on their knees<\/a> should be discouraged if not condemned. His actions alone have caused the UofL’s accreditors to place the University on probation<\/a>. In this regard, I encourage my readers to also read a justifiably critical editorial<\/a> in today’s Courier-Journal written by the current President of the UofL’s Student Government and who represents UofL students the Board of Trustees. \u00a0I could not have said it better.<\/p>\n Peter Hasselbacher, MD [Addendum Dec 9, 2016:\u00a0My aging brain forgot that I had seen\u00a0an\u00a0important article by Andrew Wolfson<\/a>\u00a0that brought\u00a0most of these matters relating to the\u00a0University’s endowment to the public’s attention last September 10. \u00a0He covered the recent years much better than I did! \u00a0His article\u00a0made the Foundation so nervous that at Dr. Ramsey’s request, it\u00a0distributed to Foundation\u00a0“friends” a list \u00a0of all the written questions (which I do not have) asked of them by Wolfson together\u00a0with\u00a0their answers.]<\/p>\n![\"uofl-endowment-1900-2016\"](\"http:\/\/www.khpi.org\/blog\/wp-content\/uploads\/2016\/12\/uofl-endowment-1900-2016-575x400.jpg\")
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\nFall in rank in size of endowment.<\/strong>
\nOf course, other institutions have not been sitting on their hands, raising enough in contributions and investment gains such that UofL’s rank in market value of its endowment began to fall continuously\u00a0beginning in 2001 through 2015, from 87th to 112th place. (Numbers from FYU 2016 were not available on the NACUBO website, a year in which UofL’s endowment market value dropped some $160 Million and perhaps more.)<\/p>\n
\nI do not claim that this analysis is the best way to evaluate the financial health of a University or its endowment. Accounting methods are certainly different among the schools and in the same school over time. It does however, offer credence to statements that our endowment has dropped substantially. The fact that our rank has been falling in comparison to other institutions is compatible with spending too much of the principal every year, of bad investments, or worse. \u00a0I personally do not see much evidence of what was claimed to be a successful Billion-dollar fundraising effort. I naively thought that effort was intended to raise our endowment.<\/p>\n
\nEmeritus Professor of Medicine, UofL
\nDecember 8, 2016<\/p>\nShare this:<\/h3>