Harvard Now Just Like Other Universities: Poor.

Fosco has been following the story of Harvard's financial dissolution for several months now. You may recall that, when we last checked, Harvard had lost 8 billion dollars from its endowment in 2008. But this week, new details have emerged. In this NY Times article, you can read a profile of Harvard's embattled Endowment Director, Jane Mendillo.

You have to feel for Mendillo, who took the job on July 1, 2008. How can you not admire timing like that? It's a little like being promoted to US Director of National Intelligence on September 10, 2001. If I were a Wall Street bank, I would have a standing job offer out to Mendillo. The day after she accepts it, you would know that it's time to sell.

But whether or not Mendillo got hosed by taking her new job, she still has to try to account for the largest endowment loss in forty years--a loss that has left Harvard short of the ready cash it needs to meet its immediate obligations. As the article notes:

Harvard has frozen salaries for faculty and nonunion staff members, and offered early retirement to 1,600 employees. The divinity school has warned it may not be able to cover tuition for all its students with need, the school of arts and sciences is cutting its billion-dollar budget roughly 10 percent, and the university president said this week than the unprecedented drop in the endowment was causing it to delay its planned expansion, starting with a $1 billion science center, into the Allston neighborhood of Boston.

The delay on the Allston Science Center (pictured above) is actually the saddest part here, because it will mean an additional four to five years until Harvard students will have access to Laser Floyd.

If you're interested, there is much complicated financial jargon to help explain Harvard's situation:

The endowment was squeezed partly because it had invested more than its assets, a leveraging strategy that can magnify results, both good and bad. It also had invested heavily in private equity and related deals, which not only lock up existing cash but require investors to put up more capital over time.
[...]
She has raised the equivalent of 3 percent of assets for a cash reserve. “For a long time, Harvard had a negative 5 position,” she said. “That means that 105 percent of the assets are invested at most times.”

I don't really understand any of that, of course. But I'm pretty sure it means that Harvard is broke. All I know is that I keep getting emails every week or so from Harvard President Peri Gilpin Drew Gilpin Faust soliciting items for a "Harvard Yard Rummage Sale." I'm thinking of sending along a nice tea set that I've never used.