Syracuse University expects its roughly $1.43 billion endowment to grow 7.2% to 7.8% per year over the next 10 to 20 years, according to a newly released report compiled by the University Senate Committee on Budget and Fiscal Affairs.

The report provides a look into the endowment’s performance over the last fiscal year and details SU’s near- and long-term expectations for the investment portfolio. The report also breaks down the university’s budget for fiscal year 2020. Senators discussed it at their January meeting on Wednesday.

SU’s endowment is a pool of money collected from donors that is invested in the stock market and other assets. The funds are used for scholarships and academic programs. It was valued at $1.43 billion as of Nov. 30.

According to the committee’s 16-page report, SU’s endowment grew 8.1% over the past fiscal year. The report also said that, on a “positive note,” the university’s private equity program was up 18.5%.

More than 50% of the SU endowment’s asset allocations go to alternative assets like private equity, hedge funds and real estate, per the report. These so-called alternative investments are financial assets not in stocks, bonds or cash.

In comparison, 16% of the asset allocations go to domestic equity and 17% go to international equity.

Experts previously told The Daily Orange that alternative investments are risky because high returns are not guaranteed and investors can’t pull their money out at any given time. But alternative investments are also a common practice in higher education because of the potential for lucrative returns.

SU’s endowment is ranked 81st out of 108 in absolute value compared to other college endowments with a market value over $1 billion, according to the report. The committee said SU is trying to recover from a period when it was spending higher, “unsustainable” amounts of the endowment.

The endowment was valued at about $1.3 billion when the committee met with an SU official in April 2019 to discuss the report.

“We are drawing less than 4% a year from the endowment,” Chancellor Kent Syverud said during his Winter Message on Jan. 13. “By balancing our budget and managing our expenditure from the endowment, we are giving the university degrees of freedom to respond to urgent priorities in the future.”

The endowment has grown since Syverud was hired in 2013. It surpassed $1.25 billion for the first time in 2017. And SU’s ongoing $1.5 billion capital campaign centers around increasing the endowment, among other priorities.

“The most important thing for SU is to fund-raise [sic] really well,” the budget report said.

The report also detailed the Fiscal Year 2020 University Budget, which is balanced. Total revenue is marked at $1,510,240,000. SU’s largest source of revenue is undergraduate tuition, which accounts for just under 49% of the university’s total revenue in fiscal year 2020.

Endowment distributions are the third-lowest source of revenue, accounting for $16,458,000, according to the report.

The planned growth in tuition income for fiscal year 2020 is 6.3%, the committee found. Likewise, growth in undergraduate financial aid is 8.8% compared to fiscal year 2019. Growth has been larger in both categories — tuition income and undergraduate financial aid — because of the Invest Syracuse tuition premium.

Invest Syracuse is a $100 million fundraising pledge first announced by SU in 2017. The initiative’s $3,300 tuition premium was added into the university’s tuition base in fall 2018 for first-year students. The Class of 2022 will pay $13,000 in tuition premium costs if it takes them four years to graduate.

SU is a tuition-driven university, the report said. Student tuition and room and board make up about 80% of all available funds.

The university’s biggest expense in fiscal year 2020 is salaries, which account for $336,840,000. Salaries and fringe benefits are 29.05% of the total expenses at the university. Fringe benefits are costs to the university such as health care, retirement contributions and employee tuition benefits, among other things. According to the report, Invest Syracuse expenses only amount to about $2.27% of total expenses.

Senators on the budget committee also examined the fiscal year 2020 budget for SU’s Division of Enrollment and the Student Experience. The division’s budget is $54 million — a 2.5% increase over last fiscal year.

Of $60 million raised through the tuition premium and administrative spending cuts, $22.5 million has been allocated to the division and $37.5 million has been allocated to schools, colleges and other academic units under Invest Syracuse, per the report.

The division has already allocated $16.5 million of that $22.5 million, the report said. The report did not detail what those allocations are.

Published on January 29, 2020 at 10:17 pm

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