Still among the top 15, but down to $4.4B from $6.1B

By Neil Offen

noffen@heraldsun.com; 419-6646

DURHAM -- Duke University's endowment declined by 24.3 percent last year, losing more than a billion and a half dollars in value.

The university reports that as of June 30, the value of the endowment was down to $4.4 billion, still among the 15 biggest university endowments in the nation, but significantly reduced from $6.1 billion a year earlier.

With the economy in severe recession over the past year, the endowment decline was not a huge surprise, said Michael Schoenfeld, Duke's vice president for public affairs.

"Duke has been planning for this for a while," Schoenfeld said. "We have been talking about this as the likely scenario and knew what was coming. What you are seeing today is the accounting part of a very fluid situation we began addressing a year ago. When you look at what the investing world was like last year, then you get a measure of what all university endowments were up against."

Endowments across the nation have been hit hard since the stock market began its decline. The endowment portfolio at UNC Chapel Hill during the last fiscal year fell by 19.6 percent, a decline of around half a billion dollars. The value of the endowment at Harvard University, the nation's largest, dropped from $37 billion at the end of fiscal 2008 to $26 billion a year after.

"We don't have the final data yet, but losses for most institutions are going to be between 20 and 30 percent," said Kenneth Redd, director of research and policy analysis at the National Association of College and University Business Officers in Washington. "In general the endowments tend to track the Standard and Poor's 500 index, and last year that index fell by 25 percent, so that's what's we're expecting."

Overall endowment performance, Redd added, is likely to be around twice as bad as the worst the association has ever recorded, an 11-percent decline in 1974.

But though the losses have been significant, the results could have been worse.

"In the last few months, we have recovered some of those losses the endowment suffered in the first quarter," said Schoenfeld, "and we certainly are looking forward to continued recovery."

And long-term, the Duke endowment still has performed well, he said.

"More important than any change in any single year is the performance over the last 10 years," Schoenfeld said. "Even with the decline over the last year, we still have an annualized return of 10.1 percent for the decade, which is among the top two or three results for universities. It's important to remember that we're in this for the long haul."

Still, the recent endowment decline coupled with a reduction in donations to the school, has forced Duke to tighten its belt.

Administrators announced last spring that the university would have to trim $125 million from the school's budget over three years. To accomplish those savings, officials have offered buyout packages to employees, frozen open positions, held back on raises and put construction projects on hold, among other initiatives.