by Caroline Incledon, Community Investment Campaign Organizer
Massachusetts state Senators Michael Moran and Pat Jehlen recently co-sponsored a bill that would strengthen state financial disclosure requirements for private universities. The bill calls for more transparency and accountability in endowment practices or other investment procedures of universities. This bill is an initiative that students should support, because it will promote better practices and ensure the financial stability of the institutions of which we are part.
The recent financial crisis significantly hurt school endowments. For example, the University of Massachusetts endowment lost 17% of its value from 2008-2009. The lack of oversight and transparency on Wall Street created problems that affected all, and made it even more imperative for universities and colleges to closely monitor their financial situations. However, schools of higher education often fall prey to the same mistakes that Wall Street did, by not incorporating enough transparency and accountability into their endowment or investment management.
Endowments can and should be handled responsibly. The Higher Education Right-to-Know Act aims to define and implement ways that universities can improve their financial stability to the benefits of the schools themselves and the communities of which they are part. For example, if the bill were passed, colleges and universities would have to calculate the amount of subsidies and tax exemptions they receive from the government and report that figure. They would also have to provide listings of their assets and real property and report that figure, as well. These increased reporting would ensure that universities were honest about their holdings, and that their tax exemptions were fair. Furthermore, colleges would have to list all employees making over $250,000 a year, and ensure that individuals on their boards file conflict of interest disclosures. These steps would make legislators, citizens, stakeholders, and students more equipped to monitor if endowments were being managed soundly and in the interest of the students and community – not in the interest of generating personal wealth. The bill allows universities to retain opaqueness in their individual investments, but ensures that this investment is done in a safe and fair way.
My group, Students at Tufts for Investment Responsibility, supports this legislation. I hope that other Massachusetts students will also fight for the bill’s passage. Students in other states should also look to this bill when advocating transparency, as it provides clear examples of tangible transparency goals. Hopefully, these goals will turn into a reality.
Want to help get this historic legislation passed? Email organize@endowmentethics.org to learn how you get involved.
