Topeka Some state higher education officials say they hope Congress keeps its hands off the college endowment business.
In a briefing last week to the Kansas Board of Regents, Kansas University Endowment President Dale Seuferling said, "We don't see that there is any reason to overreact to a short-term situation."
But some in Congress see a problem.
"Tuition has gone up, college presidents' salaries have gone up, and endowments continue to go up and up," said U.S. Sen. Charles Grassley, R-Iowa.
"We need to start seeing tuition relief for families go up just as fast," Grassley said.
U.S. Sen. Max Baucus, D-Mont., who is chairman of the Senate Finance Committee, and Grassley, the ranking Republican, have a proposal that would require university endowments pay out 5 percent of their assets each year.
Endowments are made up of funds established by donors, which are invested to support a university.
In recent years, endowments have enjoyed significant investment growth. Harvard University's endowment is nearly $35 billion, while Yale's is at $22.5 billion.
KU's endowment is at $1.24 billion and grew by 18 percent in 2007, driven by a record number of donors and a 19.3 percent return on investment. It disbursed $94.9 million to students, faculty and staff last year.
Meanwhile, tuition costs have exploded. In the past five years, tuition at KU has doubled.
But Seuferling said it's difficult for the endowment to respond directly to that situation because approximately 95 percent of donations made to the endowment are restricted by purpose.
And many endowed gifts specify that the principal cannot be spent. The donor expects the gift's value will increase through investment and that growth will be expended, Seuferling said.
"Our objective is to make sure we can, as much as possible, smooth the volatility in the markets so that spending is dependable for university needs, so that the fund that is supporting a freshman scholarship doesn't have to be reduced by 20 percent in the student's junior year," he said.
Several regents members seemed sympathetic.
Jarold "Jerry" Boettcher of Beloit, who has been an investment analyst, said Congress seems to point toward large investment earnings over the past several years and forgets about investment problems in 2000 and 2001.
But Regents Chairwoman Christine Downey-Schmidt said the proposals in Congress should put university and endowment officials on notice that the public has questions.
"Are we doing what we want with our endowments? Are our donors being encouraged to increase scholarships based on what we are seeing with tuition? That's their responsibility to follow up on those questions," she said.
Grassley asked the question this way: "It's fair to ask whether a college kid should have to wash dishes in the dining hall to pay his tuition when his college has a billion dollars in the bank."