Penn suffers endowment losses

For the first time since 1974, Penn and its peer universities have sustained endowment losses for two consecutive years.

And unless the fourth quarter sees a significant increase, the trend is likely to continue.

"This is a terrible economic environment, the worst in my nine years as president," University President Judith Rodin told the University Council yesterday in Houston Hall's Bodek Lounge. "And that puts pressure on us as an institution."

But, while other universities have seen decreases in gift receipts, Penn's gift receipts have increased this fiscal year.

Rodin was cautionary, though, saying that "we must look at the handwriting on the wall" and consider that Penn could have a decrease in gifts in the coming years.

Rodin said that the unforeseeable post-September 11 investments -- such as increased security and emergency preparedness procedures -- put an added strain on the budget. Coupled with a protracted bear market, the economic climate has been poor for all institutions, including those of higher education.

Stanford and Duke universities are both facing deficits and, as a result, Stanford has implemented a hiring freeze and Duke will eliminate 50 faculty positions over three years, Rodin said.

Rodin also noted that the renovation and construction of facilities like Huntsman Hall and the Annenberg Center have been quite costly.

And while the construction of Pottruck Health and Fitness Center and the Graduate Student Center benefited from individual donors, "they pay for a very small portion," Rodin added.

In response to the poor economic climate, central administration is working to decrease costs -- funding for central administration is at zero percent growth. The individual schools, Rodin said, will not have the same freeze.

"We don't want to put pressure yet on our academic programs," she said.

Acting Executive Director of Budget and Management Analysis Bonnie Gibson reported specifically on the University budget.

Gibson noted that Penn has the 12th largest endowment but is ranked 67th in dollars per student. And of a 16-school peer group, Gibson said, Penn is eighth highest in student charges.

She also said that "fundraising for the financial aid endowment is a top priority."

The UC also heard from Neal Nathanson, vice provost for research, report on the status of research at Penn, explaining regulations that drive up costs of research, ethical questions facing scientists and grant administration.

Carol Scheman, vice president for government, community and public affairs, also told the UC about the University's interaction with the city, state and federal governments.

Scheman emphasized that by bringing government officials to campus, Penn will be able to reap economic benefits through appropriations from city, state and federal governments.

"We have a wealth of talent here at Penn," Rodin said. And by bringing officials here, "we help our academic mission."

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