Thomas Wolfe

The poetry prize went to University of Houston professor Mark Doty for Fire to Fire: New and Selected Poems (HarperCollins), while the fiction award went to 81-year-old Peter Matthiessen for Shadow Country (Modern Library).

Doty has taught in the UH Creative Writing Progam since 1999, but next spring he begins teaching at Rutgers University. Fire to Fire brings together new poems with selections from his previous seven collections, including My Alexandria (1993), which won the National Book Critics Circle Award. Other nominees in the poetry category included Richard Howard, who taught for many years in the Creative Writing Program at UH.

By FRITZ LANHAM Houston Chronicle book editor

Nov. 19, 2008, 11:23PM

By JEANNIE KEVER
Copyright 2008 Houston Chronicle

Nov. 16, 2008, 8:01AM

Much like your 401(k), endowments at universities across the state are dropping.

“We’re all hopeful that the markets will go through this downturn and come out in a reasonable period of time,” said Raymond Bartlett, treasurer at the University of Houston, where endowment earnings dropped 28.5 percent during the first 10 months of the year.

He and other financial officers say it’s too early to tell how badly the volatile markets of recent months will hurt, partly because the amount of money withdrawn from an endowment is usually based on average earnings over several years. A roaring market means more money is available; a slumping market means less.

So this year’s financial mess ultimately may mean less money for scholarships, faculty salaries and operating budgets.

“It doesn’t matter what you’re invested in,” Robert B. Rowling, a regent for the University of Texas and chairman of the University of Texas Investment Management Co., said at a meeting Thursday. “It’s been a meltdown.”

Many universities have an endowment, a fund built from donations and other gifts and invested in a variety of ways — the stock market, private partnerships, real estate and natural resources, among others — to help support the school’s programs, faculty salaries or other initiatives.

UT has seen earnings drop by about 23 percent this year on both its university endowment fund and the Permanent University Fund, which is managed by UTIMCO and provides money for construction and other capital expenses to the UT and A&M university systems.

So far, many Texas schools say they are proceeding with building projects and other plans, even as they keep an eye on the money.

“Our recommendation is going to be not to stop anything,” said Carl Carlucci, executive vice chancellor for administration and finance at UH.”It’s good for the local economy if we can continue to move these projects forward, and it will be good for our projects in terms of availability of materials and, hopefully, for prices.”

During his State of the University address in late October, Rice University President David Leebron encouraged staff there to be mindful of unnecessary expenses, but he also said he is looking for “strategic” opportunities to grow.

Nonetheless, the past few months have been ugly.

“In this kind of storm, everyone gets wet,” said Bruce Zimmerman, chief executive officer of UTIMCO.

The impact on UT campuses will be blunted by basing withdrawals on a three-year average, he said. The blow also will be tempered by the fact that UT system schools, on average, rely upon the endowments and Permanent University Fund for only about 10 percent of their budgets.

Universities most seriously affected by the market upheaval will be those that rely more heavily upon endowments for their day-to-day operations, Zimmerman said.

Declining markets have thrown another curve at UT regents, as well. At least temporarily.

Last summer, they agreed to sell as much as $1 billion in oil and gas reserves from West Texas, with the money going to the Permanent University Fund.

At the time, oil was selling for almost $150 a barrel. Now it’s at less than $60 a barrel, and regents agreed Thursday that they still like the idea but want prices to rise before proceeding.

Schools, in general, are waiting to see what will happen.

“It’s all relative,” said Greg Anderson, treasurer for the Texas A&M University system, which reported that earnings on its endowment slumped by 16 percent during the first nine months of the year. “Everybody’s seeing losses right now.”

Moody’s Investors Service projects that university endowments will lose about 30 percent of their value this year.

Rice University, which is private, releases its endowment figure only at the end of each fiscal year. On June 30, it stood at $4.61 billion, down slightly from the 2007 figure of $4.67 billion.

Scott Wise, treasurer and vice president for investments at Rice, said earnings actually rose 2.2 percent for the period, even as the Standard & Poors 500 index dropped more than 13 percent. The latest figure includes the slight increase in earnings, a $200 million withdrawal for the Rice operating budget and about $40 million in gifts to the endowment, he said.

Hospitals also hit

Some hospitals have endowments, too. The Methodist Hospital and St. Luke’s Episcopal Hospital in Houston declined to discuss their endowment earnings. A spokeswoman for Memorial Hermann Healthcare System said it does not have a traditional endowment, relying upon more targeted funds.

The University of Texas M.D. Anderson Cancer Center reported its endowment, which is part of the UT system endowment fund, stood at $459.2 million on Aug. 31; Zimmerman said its year-to-date losses have been comparable to those of other UT system endowments.

This is a tough time for endowments, Wise said. “But in terms of managing the portfolio, it’s a very long-term view.”

Still, recent market losses inevitably will show up.

Some schools, including Harvard University and those in the University of California system, have announced plans to cut spending. Boston University announced a hiring freeze last month and put some planned construction projects on hold.

Scrutinizing expenses

Jim Booth, vice president for finance at the University of St. Thomas, declined to describe earnings for that school’s endowment, which was $61 million on June 30.

“To the extent that the balance is down in ’09, that will reduce the amount we can take out,” he said. That, in turn, will affect next year’s budget, although Booth said no decisions have been made.

“Everything’s going to be more carefully scrutinized, from new faculty and staff positions, annual pay raises, everything,” he said.

Most university endowments are well diversified, said Ken Redd, who conducts an annual study of endowments for the National Association of College and University Business Officers. The 2007 survey found that about half of endowment assets were invested in the stock market. Those worth $1 billion or more tend to have an even smaller percentage in the market.

Last year, 76 universities reported endowments worth more than $1 billion, Redd said. The average university endowment was $520 million.

University endowments had average earnings of 17 percent in 2007, according to Redd’s survey. After the market dropped following the Sept. 11 attacks, endowments lost an average of 6 percent, he said.

This year? Who knows?

Because most use a three-year average market value to determine withdrawals, “a downward market for one year probably wouldn’t have a huge impact,” Redd said. (A&M University uses a 20-quarter, or five-year, payout period.)

But Redd foresees another problem. Even if the amount of money available is stable, the demand for financial aid is likely to grow, he said.

“There clearly will be more students needing financial support for the spring,” he said. That’s where you’re going to see a lot of stress on universities.”

Chronicle reporter Eric Berger contributed to this report.

jeannie.kever@chron.com

BusinessWeek

At least one person on campus has done OK as the economy has declined: public university presidents’ salaries climbed 7.6 percent last year.

Fifteen presidents of public research universities took home at least $700,000 in 2007-2008, up from eight in last year’s survey, and nearly one-third now earn over $500,000, according to the annual Chronicle of Higher Education survey out Monday.

The salary increases almost entirely reflect contracts signed before the economy turned sharply downward, and the boards that govern colleges argue that retaining top talent is even more critical during a crisis.

But the latest figures will likely attract more criticism this year because colleges and universities across the country are slashing budgets, with many laying off staff. And despite the troubled economy, public universities increased tuition 6.4 percent this fall, according to recent figures from the College Board.

“The Chronicle’s study shows that the executive suite seems insulated from budget crunches,” said Sen. Charles Grassley, R.-Iowa, who has been the sharpest critic in Congress of pay practices at colleges and other non-profits. “In these hard economic times, apparently belt-tightening is for families and students, not university presidents.”

The median salary for public university presidents — now $427,400 — is almost exactly $100,000 less than at private universities, where the median salary barely changed. But the gap is narrowing as public universities are increasingly willing to spend big money to keep their leaders from being lured away by private schools.

Governing boards, which increasingly comprise people from the business world, “see the investment in a CEO as the single most cost-effective investment they can make in the whole university,” said Raymond Cotton, a Washington attorney who specializes in college presidential compensation matters. But if the downturn continues, “I believe you will have a cooling effect” on compensation, he said.

Chronicle editor Jeffrey Selingo said there is less data covering previous national economic downturns, but that they did not appear to slow the upward trend of presidential salaries.

“The explanation could be in down times boards think you need to pay for stable leadership,” he said.

The highest-paid president in this year’s survey, reporting compensation of $2.8 million for 2006-2007, is David Sargent, the longtime president of private Suffolk University in Boston. That’s the most recent year for which data is available for the Chronicle survey, so the private college figures lag a year behind.

Most of Sargent’s compensation came from various bonuses, however, including $1.19 million, which he will not receive until he retires, for sabbaticals that Sargent never took, plus a longevity bonus that equaled his $436,000 base salary.

Suffolk spokesman Greg Gatlin said Sargent, 77, has worked at Suffolk for 52 years and in 2005-2006 earned less than the presidents of 75 percent of Suffolk’s peer universities, according to compensation experts the school consulted.

Sargent’s pay package “was designed with the understanding that President Sargent’s value to the university has been, and is extraordinary, that the past compensation was inadequate and not commensurate with his leadership,” Suffolk board chair Nicholas A. Macaronis said in a statement. He said Sargent “never took sabbatical or other entitlements usually given to executives at his level.”

Gordon Gee of Ohio State was the highest paid public university president, earning $1,346,000, including a recently announced $310,000 bonus. Michael McCall of the Kentucky Community and Technical College System was the highest-paid community college leader with total compensation valued at $610,670.

The Chronicle identified a number of presidents who have declined or returned bonuses because of the economic crisis, including Michael Hogan at the University of Connecticut, James Ramsey at the University of Louisville and Richard McCormick at Rutgers.

Die Promenade (The Promenade), ca. 1904-05

Pen and ink, watercolor, and spray on paper
31.5 x 40 cm (12 1/2 x 15 3/4 in.)
Private Collection

Wednesday, November 12, 2008 

While just about everyone agrees that more top-tier universities would be a tremendous boon to Texas, taking the next steps to accomplish that goal has been quite difficult.

The problem, of course, is limited resources. Thus it ever was. Every major school in Texas and the regions that are home to them believe they should be next to join the University of Texas and Texas A&M as flagship state colleges. So how to decide where to start?

Politics play the biggest part in that decision. Every school vying to be the next flagship has its alumni base and its political base. Like crabs in a bucket, as soon as one begins to rise, the others pull it back.

So while the talk continues about making the University of Houston, or UT-Arlington or Texas Tech the next top-tier school, nothing gets done. State Sen. Kirk Watson, D-Austin, has proposed — again — a panel of notables to work through the problem and come up with recommendations for the next flagship universities.

Watson co-authored a similar bill in the last session that passed both houses. But Senate Bill 1234 was vetoed by Gov. Rick Perry, who said it was redundant because the Texas Higher Education Coordinating Board has that power.

The Austin Democrat has a point, however. The best way to limit the politics of designating the next top-tier school is to take politics out of the process as much as possible. A task force of educators and experts could look at the criteria needed to develop another high-level research university and investigate which colleges are best prepared to meet the requirements for flagship schools.

It might seem foolish to pour limited state money into higher education during these perilous economic times. And there are always other needs, from children’s health to highways and transportation, begging for a finite amount of state dollars.

But improving higher education is an investment. Top research universities boost the state and local economy and draw more talent to the region. The return on the state’s investment in another flagship university could be substantial.

At any rate, why not have a panel of experts take a long, hard look at the situation, find the best location for the next flagship and estimate the costs and returns? That’s not very expensive, and it could produce a clear picture of what Texas needs to do to boost higher education for the future.

The governor shouldn’t stand in the way of this process again. He and the legislators should hear what a blue-ribbon task force has to say about another flagship college in Texas.

It doesn’t cost much to study the landscape, and the results could be beneficial to Texas in the future.