@whvalpo - expensive coaching buyout? Valpo will tank over a $500k Lottich buyout? This is crumbs compared to the problem. What about the multi year severance pay to dismissed faculty and others?
what about the $300m endowment? I guess there’s little value or they cannot cash out. What if the endowment drops to $200 and you keep the university afloat?
@whvalpo - expensive coaching buyout? Valpo will tank over a $500k Lottich buyout? This is crumbs compared to the problem. What about the multi year severance pay to dismissed faculty and others?
what about the $300m endowment? I guess there’s little value or they cannot cash out. What if the endowment drops to $200 and you keep the university afloat?
The endowment issue is another topic that I do not fully understand. My answer to the above question (perhaps a naive take) is that of course you should cash deep into endowment if the alternative is the University closure. And go all in for that matter (i.e. sufficient money to improve everything, buildings, dorms, the salaries etc) rather than half measures that will leave the university still uncompetitive but with less money.
However, I am told that the vast majority of those funds cannot be used because they have specific designations from their donors. that I understand. The donor certainly has the right to use their money as they see fit. But I wonder if those donors can loosen up the restrictions if they understand the place is in danger to be close in the near future. What happens with those funds if the university closes? will they return to the donor? Will those donors be happy to get the money back and no VU or will they prefer to change the designation of those funds and keep the university afloat? I don't know. I certainly do not have money to spare to understand the mindset of those donors.
And I do have my utmost respect to those who can and will donate (regardless of string attached). Again, it boils down to this: are the important people involved here( the president, the board, the donors, etc.) lucid enough to understand the magnitude of the danger? Or are they themselves a combination of idealism and incompetence ? I have no idea.
Speaking of naivety: I have internal information (that I can vouch for) that there is one person in the administration who thinks that if worst is about to happen and we are in the brink of closing then we will dip into endowment and we can count on that "cash cow" to keep the ship afloat for 2 decades at least. I am no specialist but even I can see this extremely naive. But the fact that a person in a leadership position thinks this way speaks volumes. Granted, we are not talking really top of the ranks but still in the administration. Or maybe I am too pessimist who knows...
If this situation is as bad and desperate as people on this board are saying, then nickel and diming to resolve this will not be effective. Look at the endowment and see what, not all, can be tapped out to keep the university afloat in the near and long term.
then again, in reality how bad is this situation? For decades, Valpo has been crying for cash from alums and donors. I’m naive also.
@USC, I find your mocking description of $500K as 'crumbs' as really tone-deaf.
For context, we recruit a bunch of first-gen black and brown students to come buffer enrollment stats, but then they're denied registration (and retention suffers) because they're not permitted to even register for the next semester's classes. So when they do get their balances current as they're working over winter break or whatever trying to scrounge up $700 hundred dollars or whatever, they may or may not then be able to get into the classes they need in last-minute registration to actually graduate in four years. THAT's nickel and diming.
Or, most of the academic departments can't even afford to host a simple reception for their graduating seniors in May. Honestly, it's embarrassing. The students are there in cap and gown, the parents have driven in or even flown in for the celebration, and then maybe they get a sandwich and a bag of chips from the university or buy entry into the dining hall. Some of the larger departments may be able to budget a little something to put out a platter of brownies. Or sometimes the faculty (making $50-55K or maybe $60K annual salaries before tax?) finally break and run to Aldi to get some crackers and a block of cheese themselves, knowing there's no budget to get it reimbursed. I used to do more out of my own pocket to try to convince the parents/families that their investment in their kids coming to VU was something special, but I don't really bother any longer. It's pretty pathetic and I feel sorry for the students/families, but I guess I've just concluded they should see the uni for what it is, as they're discerning whether to spend any more money to send any younger siblings here. Everybody can just stand around awkwardly until the parents finally say, 'well, shall we start heading home...?'
If there are really $500K 'crumbs' lying around the university, then PLEASE can somebody cough up these 'crumbs' for the students?
@vuindiana - you are comparing 2 different minimally related situations. In Division 1 sports today, and with the flagship program, a desperate coaching change vs. saving $500k is a no brainer for pretty much every program. Perhaps we should back out of D1 sports altogether? Seriously, do we keep Lottich and maintain a lethargic basketball program to save a few hundred grand?
As the situations you described, that is ridiculas and embarrassing. How did Valpo get into this situation? Who is responsible on budgeting this? And why are faculty paid 20% below norm? Where are the budgeting faults?
usc4valpo - Always love your passion, but let me offer my perspective on some of your comments.
-The buyout for Matt Lottich was a gamble...in which Valpo was gambling that they can hire a strong coach. If Powell gets Valpo to a few NCAA tournaments, generates excitement in the university, and brings the university positive publicity, then it was a smart gamble. Otherwise, the cost is more than a 'drop in the bucket' because the reference point is Valpo...not all D1 basketball. I can certainly understand VUIndiana's frustration...particularly since he/she is likely in one of the most cash-strapped departments and he/she seems to have put a lot of effort into trying to overcome huge limitations.
-Faculty salaries at private universities like Valpo have always been lower than they are at public universities. Lots of reasons for this such as no state funding, less research obligations, acceptance of the societal value of teaching. But the 20% is high and comes from being one of the few expense variables that can be adjusted to balance a problematic budget.
-However you want to frame it, you will always have problems when you budgeted/planned for student enrollment and the enrollment targets are repeatedly missed. From my perspective, Valpo (first and foremost) has a revenue problem. While I am not that close to what is actually going on, my fear is that the administration is not rallying everyone around needing to increase enrollment.
@vu84v2 - the faculty salaries were compared with similar private schools, not state schools.
Regarding basketball and dismissing Lottich, at least Valpo was committed to be successful.
Has Valpo ever provided free food at graduation ceremonies previously? I don't remember such a thing when I graduated 20 years ago.
@whvalpo - expensive coaching buyout? Valpo will tank over a $500k Lottich buyout? This is crumbs compared to the problem. What about the multi year severance pay to dismissed faculty and others?
what about the $300m endowment? I guess there’s little value or they cannot cash out. What if the endowment drops to $200 and you keep the university afloat?
The endowment issue is another topic that I do not fully understand. My answer to the above question (perhaps a naive take) is that of course you should cash deep into endowment if the alternative is the University closure. And go all in for that matter (i.e. sufficient money to improve everything, buildings, dorms, the salaries etc) rather than half measures that will leave the university still uncompetitive but with less money.
However, I am told that the vast majority of those funds cannot be used because they have specific designations from their donors. that I understand. The donor certainly has the right to use their money as they see fit. But I wonder if those donors can loosen up the restrictions if they understand the place is in danger to be close in the near future. What happens with those funds if the university closes? will they return to the donor? Will those donors be happy to get the money back and no VU or will they prefer to change the designation of those funds and keep the university afloat? I don't know. I certainly do not have money to spare to understand the mindset of those donors.
And I do have my utmost respect to those who can and will donate (regardless of string attached). Again, it boils down to this: are the important people involved here( the president, the board, the donors, etc.) lucid enough to understand the magnitude of the danger? Or are they themselves a combination of idealism and incompetence ? I have no idea.
Speaking of naivety: I have internal information (that I can vouch for) that there is one person in the administration who thinks that if worst is about to happen and we are in the brink of closing then we will dip into endowment and we can count on that "cash cow" to keep the ship afloat for 2 decades at least. I am no specialist but even I can see this extremely naive. But the fact that a person in a leadership position thinks this way speaks volumes. Granted, we are not talking really top of the ranks but still in the administration. Or maybe I am too pessimist who knows...
Unless we know how much of the endowment is for unrestricted use vs. restricted use (i.e., designated for a donor-specified purpose), it's very difficult to know whether the endowment principal is a viable close-to-extremis or in extremis source of funding. Also, some things to keep in mind:
- Let's say we're talking about foundation or major institution donations for a specific purpose to the endowment fund, with interest used to fund an endowed chair, programming, or scholarships. If VU approaches those donors to say we need to use your donation principal specified for X to instead bail us out generally, then they may have a right to ask for the unused principal to be returned, AND, VU would be positively murdering its reputation in the bigger money philanthropic world for future gifts.
- A similar dynamic may occur in approaching individual donors, many of whom are alums. While this alum group may be more willing to say yes because of ties to alma mater, VU may well lose their support for future gifts, given that for many individuals, an endowment gift with a specified purpose is really seen as a personal legacy gift, often given later in life.
- In any event, spending endowment principal means less annual endowment interest, forever. Thus, a $10 million draw on endowment principal means approx. $400k less going to the University each year, based on a 4% average. Now, $10 million now vs. $400k+ annually may look like a smart short-term move, but the well-capitalized universities know that endowment principal spinning off interest income every year is basically like someone who invents or creates something that sells itself for years, with little extra effort expended. Or, to put it in terms that might resonate for some of us of a certain age, raiding the endowment principal is like a premature draw on your 401k. You're paid now but will pay for it later.
VU's endowment is competitive with its peers and much larger than many of the private universities that have gone under in recent years, in some of the latter cases by a factor of 3x or 5x or 10x. But it's not enough to be the sufficient cushion the university could sure use right now.
