Yale’s endowment outperformed most college and university endowments in the 2001-02 fiscal year, according to a study of 654 higher education institutions by the National Association of College and University Business Officers.

While the average college endowment fell 6 percent in the fiscal year that ended June 30, Yale’s endowment fell only 1.9 percent, bringing the nation’s second-largest endowment value down to $10.5 billion from $10.7 billion last year. According to the study’s results, the 2001-02 fiscal year marked the first time the average college endowment declined in value for two consecutive years since NACUBO began the annual study in 1971.

Larry Goldstein, a senior fellow at NACUBO, said he was not surprised by the results.

“There’s no doubt that [the economy] is having an impact on colleges,” Goldstein said. “We have no evidence to suggest that it will turn around.”

Yale Deputy Provost Charles Long said recent endowment returns are of “significant concern,” especially if the economic downturn persists. He said the size of Yale’s endowment and the endowment’s contribution to the University’s operating budget — approximately 28 percent — means the effect of a struggling economy is more significant now.

“The irony, of course, is that the size of the impact is going to be greater than a decade ago,” Long said.

The biggest increase in endowment value was reported by Westmont College, a small liberal arts college in Santa Barbara, Calif., whose endowment grew 82.6 percent. Among endowments of at least $500 million, the University of Tennessee system reported a 39.9 percent increase.

Though Harvard University maintained the nation’s largest endowment at $17.2 billion, the value of the university’s endowment fell from $18 billion, a decline in value of 4.4 percent. Harvard’s endowment value has echoed the national trend by decreasing in value for two consecutive years, from a high of $19.2 billion in June 2000.

Goldstein said that despite the poor performance of the economy, he does not recommend that institutions significantly revamp their investment policies.

“We actually invest endowments in the long term, under the recognition that this can happen,” Goldstein said.

Jay Yoder, the chief investment officer at Smith College, said Smith is not making significant changes to its investment targets.

“It’s been a terrible three years, but we’re really not making any changes to our long-term plans,” Yoder said. “It gets a little closer attention when things are going extremely well or extremely badly.”

But the recent Yale endowment report reveals that Chief Investment Officer David Swensen decreased the target for private equity from 25 percent of total holdings to 17.5 percent. The NACUBO study reports that the average college endowment of $1 billion or more holds just 4.3 percent of its funds in private equity.

And while Yale held 15.4 percent of its endowment in public equity on June 30, the average college endowment of $1 billion or more holds 45.1 percent in such stocks.

In the past year, many universities have announced significant budget problems. Stanford and Duke universities announced plans to institute hiring freezes or cut positions earlier this year while Dartmouth and Wellesley colleges have both cut their budgets.

So far, the Yale administration has said that such measures are not being considered at Yale. But Long said that because the University has grown so rapidly in the past few years, there are some things Yale could conceivably cut.

“I couldn’t say no, that it might not be considered,” Long said. “But it’s certainly not being considered now.”

In an introduction to the endowment study, NACUBO senior fellow David Lyons said the good news is that endowments at educational institutions continue to outperform the S&P 500 and the Dow Jones Industrial Average. The S&P reported an 18 percent loss in the same period covered by the endowment study.

But Yoder said one should be careful when comparing endowment values and market indices.

“Endowments aren’t invested entirely in the stock market,” Yoder said. “We would expect to perform better.”

Goldstein said some universities will perform well even during economic slowdowns. He said the success can be attributed to special opportunities particular investment offices discover or sustained performance by investment officers.

“There are always some great stories out there,” Goldstein said. “It’s not surprising that some will do better when others are not.”