So I was poking around the Chronicle’s annual survey of endowments. I got to the table (on p. B6 in the print edition) listing endowments and operating budgets. And it occured to me to have a look at one as a share of the other, without yet having any clear sense of what would be gained by doing so. 21 schools reported both data– 20 colleges and universities and one high school, including among them my current employer and the sources of my high school, undergraduate, and graduate degrees, so that I have benefitted from endowments either via massive financial aid or stipends or salaries at almost 1/5 of the institutions listed, which is no doubt part of what piqued my curiosity.
Anyways, after doing the math and squinting at the results, the following things popped out at me.
1) State universities, obviously, have pretty small endowments compared to their operating budgets– both because the culture of endowment-building is relatively new at state universities, and because state governments still fund a share of operating budgets (though a smaller share than they used to). Of the schools on the list, Texas A&M has the smallest budget:endowment ratio, at a hefty .57; UVA was .75, UT .83, and Michigan a very high 1.12 .
2) Universities that are serious grant machines have high budget:endowmnet ratios. MIT is at .33; Johns Hopkins is a whopping 1.51 . But this isn’t a sign of profligacy; it’s a sign of grant-raising success. NIH and NSF pour money into those two universities (as well as, e.g., Caltech, not on the list), but that money gets spent on an ongoing basis on research.
3) Some other private universities have pretty high ratios, in a way that suggests existence more or less close to the edge. Penn’s 1.05 might suggest tremendous grant success, but I kind of doubt it. I suspect Penn is unusually dependent on tuition and annual-fund contributions to fund each year’s budget. (My grad-school advisor is moving into the Penn presidency this summer, and she’s a pretty effective fund-raiser; maybe she can build the endowment up.) Duke and Vanderbilt at .85 strike me the same way. Brown (.34), Chicago (.40), and Northwestern (.45) aren’t stretched quite as tight, but are still pretty heavily dependent on tuition and annual funds.
4) Yale, Emory, Stanford, Dartmouth, Rice– all between .11 and .25– seem to be much less dependent on tuition and annual funds, and in a good, strong position.
5) Princeton and Phillips Exeter Academy come in below .1, and are in the almost-absurd position of having operating budgets that are basically the same size as the returns on their endowment (Princeton: .096 budget, .082 return; Exeter .095 budget, .113 return). They could just about fund ongoing operations entirely without tuition or annual-fund contributions, and not lose ground financially. The two cases aren’t quite comparable; Princeton, while not nearly a Hopkins-level grant machine, does perfectly well out of the federal science budgets. Exeter’s a high school, and therefore not a research facility. That means Princeton is even less dependent on tuition and annual funds than Exeter is.
No particular lessons or broader meaning to this; just posting the results of a few minutes’ procrastination. I know there would be more-meaningful ways to figure all of this out, e.g. with actual figures about grants, tuition, state appropriations, and annual funds, and don’t mean this to substitute for that. Moreover, annual operating budgets don’t include things like depreciation on buildings or equipment, much less needed ongoing capital improvements, so I’m not really suggesting that Princeton or Exeter could forgo tuition. It really doesn’t work like that. Just trying to get a general picture of the relative importance of endowment income.
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