(U-WIRE) Senators Max S. Baucus and Charles E. Grassley, the chairman and ranking member of the Senate Finance Committee, sent letters to the 136 wealthiest colleges in the nation last week asking for detailed information about their finances and operations.
The questionnaires, which were sent to colleges whose endowments topped $500 million as of the end of 2007, come amid a push to force universities to spend a larger share of the endowments, which some lawmakers believe would reduce tuition costs.
Harvard’s $34.9 billion endowment is the largest in the country, though it trails Princeton on a per-capita basis.
Kevin Casey, Harvard’s director of federal relations, said that the University would answer the voluntary questionnaire, which it received last Friday.
“We look at it as an opportunity, if it’s seriously a fact-finding matter, to help broaden Mr. Grassley’s perspective about what the endowment is all about,” Casey said.
Grassley, an Iowa Republican, has gained widespread attention for proposing that universities be held to the same standards as other charitable organizations, which must spend a minimum of five percent of their endowments each year.
Jill Gerber, a Grassley spokeswoman, said that no legislation has yet been filed, and that responses to the questionnaire will provide needed information before further steps can be taken.
“This will give the committee members a more complete picture of what’s happening,” she said. “Senator Grassley would like to see more action and a fuller understanding of growth and spending.”
While Harvard, which currently spends 3.5 percent of its endowment wealth each year, intends to provide the committee with much of the information that it has requested, Casey said a five-percent rule would be detrimental because universities face different challenges than other types of non-profit organizations.
“When charities have to reach the five-percent spending rate, they can just write a check to another group, but we have to plan budgetary cycles over a much longer horizon,” Casey said. “To establish the rules of the road is fine, if there’s abuse. But you don’t always have to legislate.”
Casey added that much of the difficulty in developing new spending efforts rests in the very nature of the endowment, which is comprised more than 11,000 private funds, many of which come with constraints on how they can be spent.
“The endowment has to support all of the University — all 11 schools and all 20,000 students,” he said. “I don’t know if Grassley has thought of it as serving all of those purposes.”
Grassley and Baucus, a Montana Democrat who attended Stanford, applauded the recent expansions of financial aid by Harvard, Yale, and Dartmouth in their letter to the 136 universities, calling it the “first good news in a long time” in terms of reigning in tuition costs.
“It seems clear from recent actions by our nation’s top universities that there is much that can be accomplished…to control costs and provide real relief for students from low and middle income families,” the senators wrote.
The Senate investigation — which was launched after a study by the National Association of College and University Business Officers revealed massive endowment growth at the nation’s wealthiest universities — has received strong support from senators on both sides of the aisle.
Senator John F. Kerry, a Yale alumnus who also serves on the Finance Committee, said that with soaring tuition costs and shrinking middle-class incomes, it has become increasingly important to expand tuition assistance programs for families and students.
“This initiative will help us better understand how endowments work and the role they play in making college education more affordable for everyone,” Kerry said through a spokeswoman.
Steve Adamske, a spokesman for Rep. Barney Frank ’62 (D-Newton), the chairman of the House Financial Services Committee, said Frank does not plan on launching a similar investigation because his committee does not have jurisdiction over the issue.