There is a widespread (and not-unfounded) perception that the top university endowments are approaching irrational levels—Yale’s chief Ivy League rival has been called a large hedge fund with a small research institute attached to it.The invaluable Walter Russell Mead notes that the state of Connecticut is now considering legislation that would tax the investment profits of colleges with endowments of over $10 billion. One college in Connecticut meets that standard -- Yale. And it's not surprising; some schools are sitting on a pretty huge pile. According to U.S. News, the top ten at the end of 2014 were:
Meanwhile, desperate cities and states—caught between the unpayable pension promises created by decades of irresponsible governance, bloated workforces organized into unions that keep asking for more, poor residents wanting and needing more basic services, and rich residents threatening to flounce out of town unless they get more ‘amenities’—have no choice but to scrounge under the couch cushions for extra cash. And university endowments are a prime target.
|Only two public institutions on the list|
These schools should think about ways to clone themselves—either by setting up satellite campuses that offer low cost, high quality education to people in all parts of the country, or pioneering new ways to make MOOCs and other forms of online education really work for a larger portion of the population. Some such efforts are already underway at these campuses, but there is much more to be done. If tens of thousands of Connecticut students were benefiting from Yale’s efforts in the state, politicians would be much less eager to go after its endowment.I doubt Yale or Harvard would take Mead's recommendations, because they'd view such efforts as diluting their brand. But they can't roll up the sidewalks forever. We are all broke, in ways that can't be imagined. Plundering the endowments of these schools will only buy more time until the day of reckoning arrives.
From the point of view of much of the public, highly-endowed colleges are becoming an underperforming asset: The feeling is growing that elite fat cat universities are an expensive luxury, and that the money spent propping up their endowments would be better spent buying school lunches for needy kids, or topping off up the pensions of retired civil servants.