Schools considering cuts to spending, scholarships
With the value of university endowment funds decreasing across Canada, students at post-secondary institutions may soon experience cuts to scholarships, student aid, and program funding.
Many Canadian universities are already reporting million-dollar losses from endowment funds as stock markets around the world plummet. Endowment funds are created entirely by donor contributions. The capital from these charitable donations is invested and the income is distributed annually, providing long-term and relatively stable funding for universities. Donors allocate funds to the areas they are most interested in financing, such as a university’s general mission or scholarships and bursaries.
Canadian universities currently have an estimated $11 billion in endowment funds. On average, Canadian schools invest over half of their endowment and pension funds in world markets, which have dropped more than 30 per cent in 2008, falling 17 per cent in October alone.
According to a Nov. 13 report in the Globe and Mail, some universities have already taken measures to brace themselves for projected further negative economic impacts. Hiring freezes are in place at several institutions, while others have begun to cut their distributions from endowment funds.
For Queen’s University, an institution that boasts a huge endowment fund, the loss could be more than $100 million. As of March 30, the market value of the school’s pooled fund was $632 million. This has dropped to $507 million as of Oct. 31, according to a report in the Queen’s Journal.
McGill University is facing similar losses from their fund, which had $928 million in endowments and has lost approximately 20 per cent – about $185 million – of its value.
The University of New Brunswick’s $170 million endowment fund has devalued by 20 per cent as of October, according to university president John McLaughlin. The school’s two pension funds have also dropped between 15 and 20 per cent.
At a recent meeting of the University of Ottawa’s board of governors, university treasurer Barbara Miazga said on March 31 the total market value of the school’s endowment fund assets was $139 million. By September this had dropped to $133 million.
These losses come at a difficult time for educational funding. Across the country, government cash and tuition-fee increases have failed to keep up with operating expenses and Canadian universities have already begun to cut costs.
Although dealing with the current economic situation will be a challenge for the universities, university administrators say it is not projected to have serious lasting impacts.
“Over the long term, we expect that at some point the economy is going to turn around and markets are going to recover,” says Miazga. “So that’s not where the risk is. The risk is in the short term.”
The greatest danger in the short term, she says, is that scholarships and bursaries to students could be significantly affected.
– with files from Maclean’s OnCampus, originally published in the The Fulcrum