US: Ivy League university balances budget

Leah Germain 30 August 2009

An Ivy League university has unveiled details of its successful investment and budgetary strategy as it enters the new American fiscal year. The University of Pennsylvania, based in Philadelphia, has reported minimal losses compared to the Standard & Poor's 500 Index of major US major stocks.

The university said that by 30 June, the end of the 2009 fiscal year, its endowment fell 15.7%, considerably better than the S&P 500 which dropped 26%.

Pennsylvania President Dr Amy Gutmann issued an open letter to members of the university community commenting on the institution's successful investment plan. Gutmann spoke about maintaining "a well-diversified portfolio with a core position in treasuries, a focus on quality stocks with strong balance sheets and a strong emphasis on risk management".

She also stressed that the university chief investment officer Kristin Gilbertson and her staff took the necessary steps to shore up the university's financial position ahead of the current economic crisis.

The president noted the university had "saved a total of $44.6 million through initiatives such as the delay or cancellation of $30 million in capital projects, $11 million through a variety of human resource actions, and $3.6 million in discretionary spending through reductions in travel and conference participation".

As a result, the endowment had the necessary liquidity to meet capital commitments and endowment payouts into the foreseeable future: "While concerned about the economic environment going forward, I am pleased that the endowment is well positioned to capitalise on new investment opportunities."

American universities often have healthy endowments for research, education, and scholarships. According to the Association of American Universities, in the 2007-2008 academic year most of the $29 billion in grant money provided to students came from endowment funds.

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