Endowment likely to hit $11 billion



Yale’s endowment is poised to reach an all-time high of $11 billion despite the struggling economy, Yale President Richard Levin said Monday.

The increase reverses last year’s slight decline in the endowment and continues a decade-long surge in the value of the University’s portfolio. Levin said this year’s exact endowment figures have not been finalized, but that the total is “hovering right around $11 billion.”

In the fiscal year ending June 30, 2002, the endowment fell from $10.7 billion to $10.5 billion because its 0.7 percent investment return was not enough to offset operating costs.

Yale’s endowment remains second in the nation behind Harvard’s, which was reported at $17.2 billion last year after a 4.4 percent decline. But Yale Corporation Member Len Baker ’64 said he heard Harvard’s endowment grew by a higher percentage than Yale’s this past fiscal year.

In past years, Yale has released its official endowment figures at the end of September.

Baker attributed the Yale endowment’s recent growth to a steady, long-term investment policy and a diversified portfolio.

“There was not a lot of magic to it,” Baker said. “We’ve gotten where we are by being consistent over time.”

Yale’s Chief Investment Officer David Swensen discussed the endowment at a Yale Alumni Fund meeting last weekend. Senior class gift co-chairman Justin Cohen ’04, who attended the meeting, said the investment performance was especially impressive in light of the nation’s foundering economy.

“The endowment was up last year and the economy was completely stagnant,” Cohen said. “That in and of itself is — astonishing.”

The University’s wealth has been targeted by union leaders during negotiations with locals 34 and 35, some of whose members have been on strike since Aug. 27. In the past, union leaders have questioned why Yale does not spend more money on union contracts.

Union leaders could not be reached for comment Monday night.

Baker said he does not expect the endowment’s increase to affect the University’s spending on items such as wages.

“It doesn’t have a big effect on the University’s spending in the short run,” Baker said.

The endowment first reached $10 billion three years ago, after a nearly 41 percent return on investments in the fiscal year that ended June 30, 2000. But administrators said they took more pride in the following year’s 9 percent investment growth, which occurred during a national economic downfall. That increase reflected the University’s cautious investment policies, they said.

The endowment’s growth during the last decade has helped Yale pursue major renovation and expansion projects, repairing physical and financial damages that plagued the University since the 1970s, when slow investment returns and high spending caused a decline in the endowment.

The healthy endowment has also allowed the University to maintain balanced budgets for the past seven years, after several years of deficits in the early 1990s.

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