Financial losses still affect NU

Andrew Scoggin

Northwestern’s endowment has increased about 12.7 percent in the calendar year 2009 as of Sept. 30, but this boost will not be enough to offset the effect of previous losses, according to University officials.

Will McLean, NU’s chief investment officer and vice president of the investment office, said the University endowment was at about $5.8 million on Sept. 30, up from about $5 billion in the first quarter of the calendar year. But he said NU saw a 16.8 decrease in its endowment for the fiscal year 2009, which ran from Sept. 1, 2008 to Aug. 30, 2009. The endowment sat at about $5.6 billion at the end of August.

Despite the modest gains, McLean said the endowment is generally on the upswing.

“You never know where the markets are going, but that’s the trend right now,” he said.

According to THE DAILY and a study by the National Association of College and University Business Officers, NU’s endowment peaked at the end of August 2008 at about $7.3 billion. The endowment increased 11.4 percent from the 2007 to 2008 fiscal years, one of the highest increases among universities with the largest endowments, according to the study. The study said NU had the eighth-largest university endowment at the end of the 2008 fiscal year.

James Hurley, associate vice president for budget and planning at NU, said the budget for the fiscal year 2010, which started Sept. 1, is already set. McLean said the endowment payout for this year’s budget is the same as last year’s.

For the 2011 budget, Hurley said the University is looking at an endowment payout decrease of 3 or 4 percent. The university could have been worse off had the market not recovered, he said.

“It is less of a reduction when we compare ourselves to some of our peer institutions,” Hurley said. “Many of them are looking at a 10 percent reduction.”

Hurley said NU is “in the middle of the pack” in terms of the performance of its endowments. The University of Chicago’s total investment performance was down 21.5 percent for the fiscal year ending June 30, according to University of Chicago spokesman Steve Kloehn, a university official wrote in an e-mail. The University of Southern California saw a 22 percent decrease in its endowment to about $2.7 billion for the fiscal year ending June 30, USC spokesman James Grant wrote in an e-mail.

NU’s major capital projects, including new buildings for the Bienen School of Music, the Kellogg School of Management and the Feinberg School of Medicine, remain in preliminary planning stages, Hurley said. He said the administration is looking at the costs of the projects and the potential timing of each one.

According to the Facilities Management Web site, construction on the music building is slated to start in 2010.

Officials from Facilities Management, the office in charge of the planning and execution of these building projects, could not be reached for comment.

The endowment plays a role in the budgetary process by contributing to the financial flexibility of the University, Hurley said.

“Because the financial market has started to improve, that’s better for the University’s budget,” he said. “It’s better for the students because there are more dollars to support financial aid, for example.”[email protected]