UM system responds to inquiry

By Elliot Njus

Published March 4, 2008

The UM system answered a U.S. Senate inquiry about its endowment Feb. 28, according to a system news release.

The inquiry includes the UM system and 135 other colleges and universities with an endowment of more than $1 billion. The UM system has an endowment approaching $1.1 billion, according to a National Association of College and University Business Officers study.

Senate finance committee leaders Sen. Max Baucus, D-Mont., and Sen. Chuck Grassley, R-Iowa, sent a letter Jan. 24 to the system requesting information about the system’s finances and financial aid. The letter requested a response within 30 days.

The UM system didn’t meet the deadline, but a letter from UM system President Gary Forsee submitted with the response said the inquiry was addressed to MU Chancellor Brady Deaton then forwarded to the system.

A representative from Baucus’ finance committee staff said the committee received 30 responses by the deadline, but that it was a “soft” deadline.

Nikki Krawitz, UM system vice president for finance and administration, said the report took a “considerable” amount of time to compile. She said the UM system assembled a team from the offices of the treasurer, accounting, institutional research and budget. She said the team worked with financial aid offices from each campus.

In an accompanying news release, the senators expressed concern about the rising cost of education and the availability of student aid at a time when most universities are reporting “explosive” endowment growth.

In the letter, Forsee said the university aims to keep costs low, but that the university faces smaller state contributions to operating costs.

“Public institutions like the University of Missouri grapple daily with the question of how to maintain that low price in the face of an uncertain and insecure revenue base,” he said.

Krawitz said the UM system was unusual because it reports the endowment to the NACUBO as a system rather than as four separate campuses. The university’s endowment is managed at the system level.

According to the report, 39.8 percent of money spent from the UM system endowment was spent on professorships. It stated that 39.1 percent went toward scholarships and fellowships.

In the letter to 136 universities, the Finance Committee members said that although most private foundations must pay out 5 percent of their endowment each year, there is no such requirement for universities.

In a previous Maneater report, Krawitz said such a requirement on universities would be ill advised. She said the UM system has its own system to control endowment payout, in which the university only spends between 96 and 106 percent of the previous year’s spending.

Krawitz said Monday that some of the questions seemed to show misunderstanding of the way a university operates.

“I think there were a number of assumptions about how higher education institutions function,” she said.

She said that it could be difficult to understand higher education when your area of expertise is in a different area.

She said the team had to “shape” responses to provide the information the committee would need to make an informed decision.

The full document is available at http://www.umsystem.edu/ums/president/access/.