DaytonDailyNews.com

The drop in your retirement savings account probably pales compared with that of area college and university financial endowments, which have lost millions of dollars amid the current economic crisis.

Wall Street's historic losses already are impacting higher education institutions in Southwest Ohio. Wilberforce University in Greene County on Friday, Nov. 14, announced plans to cut jobs and reduce salaries in response to a $2.8 million budget shortfall. Miami University in Oxford last month announced that it would freeze hiring and construction projects based on expectations of decreasing income. Two days later, Xavier University in Cincinnati enacted a hiring freeze because of a budget shortfall.

The University of Dayton's endowment dropped approximately $75 million from fiscal year 2007 to 2008, before the recent market meltdown, said President Daniel J. Curran. "We're down from a high of around $410 million to somewhere around $300 million, $325 million," Curran said.

Wright State University's Foundation value dropped $12 million from fiscal 2007 to 2008, falling from $104 million to $92 million, said Matthew Filipic, senior vice president of business and fiscal affairs. By Oct. 31, that figure fell an additional $24 million, or 22 percent, to $68 million.

Sinclair Community College Foundation's endowment, one of the largest in the nation for a community college, has declined nearly $8 million.

Despite upheaval in markets, universities solid

The University of Dayton remains in solid financial condition despite a significant and rapid decline in the market value of its investments, said President Daniel J. Curran.

UD's endowment has dropped from a high of $410 million at the end of fiscal year 2007 to $317 million as of Oct. 31. However, higher-than-expected enrollment this year has produced "millions of dollars of surplus," Curran said.

"We've had such strong success on the operational side that we're feeling very confident (about) what we're going into," Curran said.

Wright State University and Sinclair Community College officials remain positive about their situations, despite recent losses in the value of their respective foundation investment portfolios. Wright State's Foundation value fell from a high of $104 million in fiscal 2007 to $68 million as of Oct. 31. Sinclair's Foundation value fell from a high of $27 million in fiscal 2007 to $20 million as of Oct. 31.

The foundation losses are a "paper decline," said Sinclair President Steven Lee Johnson. "When the market goes back up, they're going to go back up," Johnson said.

The possibility of state budget cuts for the current fiscal year, as well as for the next biennial budget starting July 1, 2009, could further impact public institutions such as Wright State and Sinclair.

"The big unknown is the extent to which all of these economic problems affect the state revenues in the state budget, and then state funding for us," said Matthew Filipic, Wright State senior vice president of business and fiscal affairs.

Wachovia Bank last month froze the accounts of nearly 1,000 colleges, including UD, leaving those institutions unable to access billions of dollars from Wachovia's Common Fund for Short-Term Investments. Many schools depend on those funds for salaries, campus construction and to pay debts.

UD, a private institution, had $8 million of its endowment in the Common Fund, Curran said. UD has been able to draw down $4 million and will be receive the remainder over the course of 2009. "For us, it hasn't caused any cash liquidity issue at all," Curran said.

Wright State and Sinclair were not part of the Wachovia Common Fund, officials said.

Wright State invests from its endowment, which is comprised of restricted donations and gifts earmarked for specific purposes, and its university reserves, which are expendable net assets. Wright State's reserves dropped from $121.4 million in fiscal 2007 to $105.9 million in fiscal 2008. "We haven't had any problems with getting cash as we needed it," Filipic said.

Sinclair Community College's reserves are invested in U.S. government-backed Ginnie Mae securities, as prescribed by the state. "We're actually earning positive interest, where the rest of the stock market and bond market is tanking," Johnson said.

Sinclair does not borrow money or take out short term loans to operate, "so the credit crunch is not affecting our operations," Johnson said.

UD in the first quarter of 2007 concluded a multi-year process of converting its debt from variable to fixed rate.

As of June 30, Wright State had less than $35 million in bonds outstanding, all with fixed interest rates, and less than $1 million in capital leases.

UD, Wright State and Sinclair have no current plans for staff cuts or hiring freezes, officials said. Still, the institutions are taking steps to prepare in case of a prolonged economic crisis, including some reductions in spending.

The UD board of trustees has slowed endowment spending to 5 percent, but UD won't cut back any financial aid programs. "We're projecting a large operational surplus at the end of this year, so no one will be hurt," Curran said. "Students will not lose scholarships. We'll cover it through operations, rather than through the endowment."

UD will continue with plans to renovate Stewart Hall, a residence facility. However, UD will make sure that it secures credit for the project before moving forward, Curran said.

Wright State will be more selective in filling position vacancies and make modest reductions in capital improvement spending, Filipic said. Building projects will continue, but some renovations and routine maintenance will be put on hold, said Wright State President David Hopkins.

"We have been very fiscally responsible at this university," Hopkins said. "We always are looking for efficiencies and better ways to do things, so I think we're in a position to weather the storm. It depends how bad the storm gets."

If the market does not come back, there could be cutbacks in student scholarships from the Sinclair Foundation, Johnson said. But it's possible that the college itself could offset some of those cuts, he said.

"We're really in a good place to offer affordability and high quality," Johnson said. "However, if this is really a bad economic downturn for a long period of time and the state has to cut us back, even our health will make it difficult."

Contact this reporter at (937) 225-2419 or dlarsen@DaytonDailyNews.com.