Fund Managers Making Millions from University Endowments
The soaring endowments at America’s top universities are doing more to line the pockets of the millionaire private equity fund managers who run them than they are for the schools’ students, argues a New York Times op-ed published today.
At Yale University last year, for example, fund managers received $480 million in compensation for managing a third of Yale’s $24 billion endowment. Meanwhile, the school spent just $170 million of that endowment on tuition assistance, fellowships and prizes, according to an analysis by Victor Fleischer, a law professor at the University of San Diego.
He found a similar at Harvard, the University of Texas, Stanford and Princeton. “We’ve lost sight of the idea that students, not fund managers, should be the primary beneficiaries of a university’s endowment,” Fleischer writes. “The private-equity folks get cash; students take out loans.”
Related: Harvard’s In-House Fund Managers Get 70 Percent Pay Hike
It’s worth noting that all the schools Fleischer cites do have relatively generous tuition assistance programs, and they often spend their endowments on capital improvements and other projects that indirectly benefit students. Their endowments have also enjoyed record returns under private equity management.
Fleischer argues that college endowments should be required to spend a percentage of their assets each year, much like other private endowments. That would lead to lower overall endowments but might put a damper on tuition increases and would lead to improved research facilities, he claims.
Last year American universities invested about 11 percent of their portfolios in private equity and saw a 16.5 percent return on them, according to the National Association for College and University Business Officers.
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Deficit Hits $738.6 Billion in First 8 Months of Fiscal Year
The U.S. budget deficit grew to $738.6 billion in the first eight months of the current fiscal year – an increase of $206 billion, or 38.8%, over the deficit recorded during the same period a year earlier. Bloomberg’s Sarah McGregor notes that the big increase occurred despite a jump in tariff revenues, which have nearly doubled to $44.9 billion so far this fiscal year. But that increase, which contributed to an overall increase in revenues of 2.3%, was not enough to make up for the reduced revenues from the Republican tax cuts and a 9.3% increase in government spending.
Tweet of the Day: Revenues or Spending?
Rep. Kevin Brady (R-TX), ranking member of the House Ways and Means Committee and one of the authors of the 2017 Republican tax overhaul, told The Washington Post’s Heather Long Tuesday that the budget deficit is driven by excess spending, not a shortfall in revenues in the wake of the tax cuts. The Wall Street Journal’s Kate Davidson provided some inconvenient facts for Brady’s claim in a tweet, pointing out that government revenues as a share of GDP have fallen significantly since 2015, while spending has remained more or less constant.
Chart of the Day: The Decline in IRS Audits
Reviewing the recent annual report on tax statistics from the IRS, Robert Weinberger of the Tax Policy Center says it “tells a story of shrinking staff, fewer audits, and less customer service.” The agency had 22% fewer personnel in 2018 than it did in 2010, and its enforcement budget has fallen by nearly $1 billion, Weinberger writes. One obvious effect of the budget cuts has been a sharp reduction in the number of audits the agency has performed annually, which you can see in the chart below.
Number of the Day: $102 Million
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“The $102 million total to date spent on Trump’s presidential golfing represents 255 times the annual presidential salary he volunteered not to take. It is more than three times the cost of special counsel Robert Mueller’s investigation that Trump continually complains about. It would fund for six years the Special Olympics program that Trump’s proposed budget had originally cut to save money,” HuffPost’s S.V. Date writes.
Date says the White House did not respond to HuffPost’s requests for comment.
Americans See Tax-Paying as a Duty
The IRS may not be conducting audits like it used to, but according to the agency’s Data Book for 2018, most Americans still believe it’s not acceptable to cheat on your taxes. About 67% of respondents to an IRS opinion survey “completely agree” that it’s a civic duty to pay “a fair share of taxes,” and another 26% “mostly agree,” bringing the total in agreement to over 90%. Accounting Today says that attitude has been pretty consistent over the last decade.
