GUEST ROOM | A Green Endowment

Economics and climate awareness have always been heralded as enemies in the media, with “right-wing, power-hungry” economists battling with “left-wing, hippie” environmentalists. But what if there was a way for them to join forces to achieve a common goal? On Oct. 4, the Senior Leaders Climate Action Group released a report outlining different pathways to achieve carbon neutrality by 2035, furthering its commitment to the Climate Action Plan released in 2009. Members of SLCAG presented the report before the Student Assembly yesterday, and will take questions from the entire community at a forum on Oct.

Skorton Quells Concerns About Workforce Reduction in Open Forum

This story was originally published on March 16.

Addressing Cornell’s approximately $230 million deficit, President David Skorton summarized the University’s current financial situation and answered pointed questions from an audience of at least 200 this afternoon in an open forum aimed for faculty and staff in Statler Auditorium.

Most of the questions raised were centered on the subject of workforce reduction. Skorton said several times during the question-and-answer session that there would be more layoffs in the future.

University Set to Slash Budgets

On Saturday, the Board of Trustees approved cuts to the University’s operating budget, increased the cost of tuition for the next academic year and further extended an external hiring pause and construction pause that were first implemented last October. The move comes as the University reels from a 27-percent decline in its endowment, drastic cuts in state funding and a decrease in philanthropic contributions.

C.U. Sees Endowment Decline by 27 Percent

While Cornell was able to largely avoid the Bernard Madoff ponzi scheme that cost other universities millions of dollars in losses, Cornell’s finances were not invulnerable to the economic meltdown that has gripped the country. According to The Cornell Alumni Magazine, Cornell’s endowment, which was valued at $6.1 billion on June 30, 2008, fell 27 percent during the second half of 2008.
Executive Vice President for Finance and Administration Stephen Golding in an interview on CNBC, considered the current economic status “the perfect financial storm.” He explained the complexities and the uniqueness of the current situation by adding, “This is a much broader problem with many more components at one time than what many of us have historically seen.”

Univ. Claims Zero Impact From Madoff

Although Bernard L. Madoff’s $50 billion ponzi scheme has burdened many institutions of higher education with unforeseen losses in their endowments, Cornell has yet to report any losses incurred by the scandal.
Federal Bureau of Investigation agents arrested Madoff on Dec. 11 and federal prosecutors charged the 70-year-old man with securities fraud. While Madoff’s investors include wealthy individuals like New York Met’s owner Jeff Wilpon and banks around the world like HSBC and Royal Bank of Scotland, Bloomberg reports that Madoff “had directly affected 400 U.S. nonprofits.”
James Walsh, chief investment officer for Cornell, said in an e-mail, “I am glad to say we had zero exposure to Madoff and strongly believe it would never have found its way into our portfolio.”

C.U. Endowment Expected To Shrink in Wake of Crisis

This is the second part of a series delving deeper into the economic crisis and its effects on higher education, particularly at Cornell.

Despite having an “all-weather portfolio,” Cornell’s $6 billion endowment is not immune from the financial storm that is sweeping across the nation.
The endowment acts as a stable source of funds for the University, and nearly all of the money is invested long term. Cornell’s endowment makes up about 11 percent of the University’s revenue.

C.U. Endowment Spending Likely Unaffected by Legislative Proposal

With recent debates in Washington over whether universities should be legally forced to spend more of their endowments, one cannot help but wonder how Cornell utilizes its $5.4 billion endowment, the 18th largest in the nation.
Under law, Cornell is not allowed to spend the principal value of the endowment, but can spend a portion of investment returns.
Nearly all of the $5.4 billion is invested, and after adjusting for inflation, a portion of investment returns are spent. This amount, called the payout, has been 5.1 percent of the value of the endowment on average over the past 10 years.
This figure is slightly higher than the five-percent minimum payout rate that legislation proposed last February by Rep. Peter Welch (D-Vt.).