UCLA is one of 136 colleges that has received a letter from two high-ranking senators questioning their financial policies. The letter requests from the Senate Finance Committee inquire about each college’s endowment spending behavior and how financial aid policies are affecting the affordability of college for students.
“Something’s not right when tuition heads sky-high alongside college endowment funds. … Billion-dollar tax-free endowments should help mean affordable education for more students, rather than only a security blanket for colleges,” said Sen. Charles E. Grassley, R-Iowa, a co-author of the letter.
Each of the universities the senators chose to write to has an endowment of at least $500 million as of the end of the last fiscal school year, which ended on June 30, 2007.
According to the UCLA Foundation in its 2006-2007 annual report, UCLA’s endowed investment pool totaled $953.4 million.
An aide for Sen. Max Baucus, D-Montana, the other co-author, said the letters were sent so Congress could better understand the financial policies established at wealthier universities. After the responses have been assessed, the aide said, the next step would most likely be a roundtable discussion or a hearing.
Barry Toiv, a spokesperson for the Association of American Universities, believes that the request from the senators will be an educating experience for all parties involved.
“While the request that’s been made for information is in some ways rather burdensome for some universities, we urge our members to provide as much information as they reasonably can because we think it will help to educate Senators Baucus and Grassley in particular about how universities sustain and use their endowments for the benefits of students today and in the future,” Toiv said.
Phil Hampton, a UCLA spokesman, said that the university does not necessarily see the task of responding to the letter as burdensome. “We welcome the inquiries,” he said.
Instead, Hampton said that the letter gives UCLA the opportunity to clarify what role the endowments have regarding how they are utilized to benefit the student experience.
Whereas private institutions such as Harvard and Yale have just recently announced plans to increase their financial aid programs, UCLA has always acknowledged the importance of affordability, long seen as a vital part of the mission of the UC system, Hampton said.
According to Hampton, 36 percent of undergraduates receive need-based financial aid, which is far more than at any of the other universities.
While the letter promises to be an educating experience, however, Hampton said that placing mandatory percentage caps restricts the flexibility for the university. “A one-year analysis can be misleading,” he said.
Hampton said that endowment and investment gains go up and down depending on the performance of the stock market. Placing mandatory restrictions would make it difficult for universities to take into account factors such as inflation.