After requesting information regarding finances and endowment spending from 136 colleges and universities, the Senate Finance Committee is currently reviewing the information it has received before deciding which step to take next.
The Finance Committee, led by Sens. Max Baucus (D-Mont.) and Charles Grassley (R-Iowa), sent letters to all colleges and universities with endowments of more than $500 million in January, citing concerns over the burden families face in light of rising tuition costs.
One proposed solution is legislation requiring universities with large endowments to spend 5 percent of their endowments yearly, though it has not yet been officially considered by the Finance Committee and many schools do not view it as a necessarily positive step.
The committee's letter has been somewhat controversial because many colleges contend that increased spending from the endowment -- which is designed to sustain the university indefinitely and is often limited by spending restrictions imposed by the donors -- would not necessarily lead to a decrease in tuition prices or an increase in financial aid.
At the University of Pennsylvania, for example, the endowment only funds about 15 percent of the financial-aid budget. The rest comes out of the University's operating budget.
But despite some disagreement, 87 universities, including Penn, have submitted detailed summaries of their finances to the Finance Committee as of last week. Most of the others, including Columbia University, asked for and received extensions.
And while the letters are still being reviewed, Grassley said he's "thrilled with the responses" thus far because they've shown that many universities are "self-correcting" problems he's seen with affordability. Many universities, including Penn, have recently announced efforts to improve their financial-aid programs.
"Self-correction is better than legislation," Grassley said, adding that it's still "too early" to draw definite conclusions on the committee's course of action.
Because of the intricacies of endowment spending, Penn and other universities viewed the letter as an educational opportunity "so that members of the Senate Finance Committee can understand that we're not trying to hoard money," said Bonnie Gibson, Penn's vice president of budget and management analysis.
"One of the real challenges of endowment [budgeting] is balancing how much you spend for current students against the needs of future students," she said.
Bill Andresen, the head of Penn's office of federal affairs, says he would be "a little surprised" if a bill mandating endowment spending emerged this year, but added that it's likely that the Higher Education Reauthorization Act, currently being debated in a conference committee, could mandate additional reporting requirements on endowment payouts.
Still, he cautioned that it was still too early to tell what actions may be taken.
"My impression is when Congress started this process they didn't totally understand how university endowments [are] structured so we've worked very closely with people on the Hill" to clarify endowment structure before legislative steps are taken, he said.
© 2008 Daily Pennsylvanian via U-WIRE