The unexpected 6 percent rise in the value of Dartmouth's endowment announced by College officials Friday is likely to have little immediate effect on student life, according to faculty and staff members interviewed by The Dartmouth. Some College personnel said they were nevertheless optimistic that the endowment would continue to grow and that the increase has helped to allay fears of further significant budget reductions.
Budget officials do not plan to increase spending or make changes to the College budget in response to the endowment's unanticipated growth, especially because one of the administration's priorities is to reduce the amount of funds drawn from the endowment to cover operating expenses, College Chief of Staff David Spalding previously told The Dartmouth.
Although spending from the general endowment will not increase, Spalding said some individual endowment funds may begin producing funds available for targeted uses. The rise in the endowment will not immediately affect funding for organizations such as the Rockefeller Center and the Dickey Center, which are supported by a proportion of endowment funding each March, according to Rockefeller Center Director Andrew Samwick.
"The announcement that they made really doesn't determine how our budget for the current year was set," he said. "What happened this year was driven by the choice of how much to spend out of the endowment, not how big the endowment was."
Many organizations saw a significant reduction in resources in March funding for the Rockefeller Center dropped 23 percent but that reduction was caused by a decrease in the spending rate that is taken out of the endowment by the College, not directly by a decrease in the size of the endowment, Samwick said.
Funding will likely stay relatively stable in the near future, because another significant decrease in the spending rate is unlikely this year, he said.
"They're not going to do that again," Samwick said. "We're not going to have to endure that sort of sharp reduction."
Dickey Center Director Kenneth Yalowitz was more optimistic about the possibility that College organizations could benefit from positive endowment returns.
"I think that if the endowment value continues to rise, it would be wonderful if [the Dickey Center] could get a higher return for our budget," he said, adding that the Dickey Center would also benefit from future improvement in the economy.
Spalding said he expects the endowment growth seen in fiscal year 2010 to continue over the next five years, although he noted that the endowment's growth will still rely on the market's state.
"We've set our budget plan based on a five-year plan that assumes positive endowment performance for all of those five years," he said.
Both the Rockefeller Center and the Dickey Center have reduced spending in recent months, but they have been able to maintain fundamental services, such as internship funding, according to the directors of both centers.
"Those things we've been able to maintain because we've been very prudent in managing our funds," Yalowitz said. "We have kept all of our core activities going just as before."
Although academic departments are reliant on the endowment for some of their funding, government professor and department chair John Carey said there will likely be little direct effect from the endowment's high performance.
"By and large, I think we are all in better shape when the endowment is rising instead of shrinking," he said.
Although the department has a small amount of dedicated endowment funds, those funds are managed by the College, not by the individual department, Carey said.
The positive endowment return, however, will help keep resources for faculty hiring and other department functions stable, he said.
"I do try to manage the sort of intellectual portfolio of my own department, and we have the resources right now to keep that where it should be," Carey said. "If you had a string of really bad years with the endowment, I don't know where the resources would come from."
The endowment rise will have no direct effect on organizations that are supported by the Council on Student Organizations, because such groups are funded by the student activity fee, a fund tied to student tuition that is separate from the College's endowment money, according to Elizabeth Agosto, COSO advisor and associate director of the Collis Center.
"[Funding] doesn't waver up and down because of the endowment," she said.
Although an increase in the endowment may affect COSO organizations by freeing up funding at the College generally, any effect would be small, Agosto said.
"That would be an indirect impact and not one that would be felt strongly or readily," she said.
Several faculty and staff interviewed stressed the importance of moving carefully as available endowment funds increase in order to avoid another budget shortfall.
"The markets are still volatile, and I think everyone at Dartmouth is being very cautious in recognizing that," Yalowitz said. "The economy is still in a recovery stage."
However, such caution should have been applied in the past as well, Service Employees International Union Local 560 President Earl Sweet said.
"I don't think there's any question that the College should be conservative," he said. "I think the question is, What were they doing before?'"
The rise in the endowment may raise questions over the reasoning behind the staff and benefit reductions in the College's strategic budget plan, Sweet said.
"It's very confusing for us," he said. "It looks like they're making money on the endowment and the question is, Do they still have to cut all these benefits?'"
It may appear to some union employees that the College does not value them as highly as other assets, Sweet said.
"The employees seem to be the last thing on their list of importance right now," he said. "[Dartmouth is] being run like a Fortune 500 company."
