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DrFrocktopus t1_jdcz5ow wrote

Reply to comment by TSL4me in Hundreds Evicted in Isla Vista by New Landlord - The Santa Barbara Independent by Croughman

This is why I support caps on assets under management (AUM) for public universities. You essentially have these ostensibly education-focused institutions that are really operating as publicly owned real-estate/investment conglomerates building endowments they're unlikely to ever use. I mean look at how universities responded during covid, they didnt tap their endowments to make up for revenue shortfalls they just forced kids back to school to prop up their tenament empires despite it representing a major public health risk. Meanwhile, their educational programs are declining as the focus is less on hiring qualified faculty and more on functioning as degree mills so they can churn service related fees.

Cap AUM and make them boost their endowment spending rates to the point where they can maintain a rainy day fund while actually providing value to students. Imo thats how you bring down tuition as private universities will theoretically be forced to lower fees and increase program related spending in order to compete.

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Captain_Mazhar t1_jdd0q3a wrote

As someone who works in higher education finance, it's not that simple. Endowments are not a general fund that can be redirected and tapped for revenue. Most of an endowment is made up from thousands of donors who have specifically earmarked their donations for specific uses, for example paying for more staff at a favored college, or funding research. Those are legal agreements that cannot be redirected without the consent of each donor.

The only sources of redirectable income are state appropriations and tuition/fees. They are not entailed income, so they can be redirected, however much of it is needed for upkeep/maintenance/salaries.

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DrFrocktopus t1_jdd1phd wrote

I used to work in investment consulting, specifically related to university endowments, so Im aware of the distinction between restricted and unrestricted funds. The general idea is a total cap on AUM would make universities reassess their fundraising targets. They'll have to decide between that juicy large dollar restricted donation or comparatively smaller donations that can go into their unrestricted fund. You'll probably see unrestricted funds grow as total % of AUM.

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