Improved management of endowment funds could save fall 2020

Tuesday, June 16, 2020 - 5:54pm

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As we progress into the summer months and adjust to our state’s reopening economy, students, faculty and staff are anxiously awaiting a definitive answer regarding the University of Michigan’s plans for fall 2020. While University President Mark Schlissel has only announced vague intentions to have a public health-informed fall semester, rumors are spreading throughout the University community regarding what we should expect. These unsubstantiated ideas include small classes being held in person and large ones held online, with social distancing and masks being required within classrooms. It has also been mentioned that the University may start the semester early with the goal to send students home by Thanksgiving and proctor finals remotely, mirroring what Michigan State University plans to do. 

Until we have an answer from Schlissel, we’re left to make predictions based on plans from other universities. For example, the University of Kentucky is discussing implementing fever checkpoints throughout campus, reserving quarantine dorms for those who were exposed to COVID-19 and screening students each morning through an app that would reward them a pass for classes if they don’t show any symptoms. Yet, this is in addition to administering COVID-19 tests to the entire student body before classes begin. Similarly, Emory University recently announced intentions to test all students who will live on campus or take in-person classes. 

Many schools that have announced their plans for the fall intend to implement widespread testing before the initial return to campus. However, they also cite the intimidating cost of the tests. The University of California at San Diego, with roughly 40,000 students, is expecting to spend more than $2 million to test their entire student body — and intends to repeat this widespread testing each month of the semester. With approximately 31,000 students solely in our undergraduate student body, testing at this scale is daunting to the University of Michigan’s administration. However, the immense size of our campus population is precisely why we need it. 

Currently, public health experts are concerned the number of COVID-19 cases is much higher than what has been reported because of an abundance of asymptomatic cases and a lack of widespread testing. Research into the spread of COVID-19 has indicated that it can potentially spread quite easily among asymptomatic individuals and that younger people are more likely to be asymptomatic and, therefore, more likely to spread the virus unknowingly. This makes our U-M campus, among many others, vulnerable to hastily spreading the virus, allowing it to spread among students, faculty and staff and eventually into the larger Ann Arbor population. Making matters worse, out-of-state students constitute nearly half of the Ann Arbor undergraduate population, so the return to campus means thousands of students traveling back to Michigan and potentially bringing the virus with them. For these reasons, the University is responsible for any outbreak in Ann Arbor in the fall if they don’t fund mandatory campus-wide COVID-19 testing before the initial return to campus and throughout the semester. 

Given the hesitation from the federal government to distribute tests and other aid to the states, as well as the Michigan government’s inability to provide an adequate amount of tests on its own, we’re unlikely to get the funding we need from the government. However, Schlissel truly has no reason to be concerned about how we could fund this level of widespread testing on campus. The University’s endowment fund is now worth $12.4 billion with a distribution rate of 4.5 percent, a relatively minimal amount that allows the University to add more money to the endowment without any intention to spend it to benefit our campuses. For example, in 2018, the endowment grew by an astounding $1 billion while the distribution, the money spent to directly benefit the University, was a mere $346 million. The other $654 million was added to the endowment fund, where a quarter of its investments are in private equity and venture capital — two areas of investment that have some of the highest risk factors. 

By increasing the distribution rate of the endowment, which has decreased by 1 percent since 1995, we could fund all of the tests required to safely return to and remain on campus. Additionally, the University could provide more financial aid to students who have experienced financial difficulties during the pandemic, as well as increased pay for faculty and staff who are risking their health and the health of their families in order to return to campus and teach. Avoiding contributing to the second wave of a pandemic that has already killed more than 116,000 people in the United States is certainly enough justification for the University to dig deeper into its endowment funds. It would be careless for Schlissel to devise a reason not to do so — he already has done so with calls to raise the distribution rate to increase financial aid funds for students and salaries for professors, lecturers and Graduate Student Instructors. 

Given the University’s history of parsimonious management of the endowment, it’s unlikely that Schlissel and the Board of Regents will take action to increase the distribution rate, even during a pandemic. It is up to us to demand that Schlissel does his part to ensure a safe return to campus this fall. However, in addition to our demands, it is still our responsibility to make a sort of social contract: agreeing to socially distance, be honest with our symptoms and get tested when required by the University or if we’re feeling sick. No matter what happens, campus will not appear the same next semester. But, with proper action taken by the University, as well as adequate social responsibility, we can — as safely as possible — return to Ann Arbor this September. 

Elayna Swift can be reached at elaynads@umich.edu.