After taking a hefty dip during the height of the recession last year, Penn State's endowments are now on the upswing, university officials said Monday.
The total endowment, which dropped to $1.28 billion at the end of last June, has rebounded to $1.46 billion, Penn State spokeswoman Lisa Powers said.
Powers wrote in an e-mail Monday "the university's overall conservative and sound investment practices" helped Penn State to regain $180 million in the last six months.
Use of Penn State's endowment is divided into three areas: Sixty-two percent funds faculty and program support, 37 percent goes toward student financial aid and 1 percent finances other university costs.
But Penn State cannot spend endowments to finance just any university expense. Nearly all donors earmark their contributions for use in a specific area, Powers said, which is why endowment donations often cannot be used to offset tuition costs.
The National Association of College and University Business Officers and the Commonfund Institute -- two institutions that examine higher education -- issued a press release last Thursday detailing the endowments of American universities. Most endowments suffered in the recession but are now recovering, according to the report.
"No one knows when university endowments will recover to the highs they were at before market crashed," said William Jarvis, managing director and head of research of the Commonfund Institute. "But they have been on the rebound."
Because Penn State, unlike other universities, does not depend on its endowment to support its operating budget, variations in market conditions will not adversely impact university operations, Powers wrote.
But while the loss of endowment funds did not alter tuition costs, other areas of the university were affected.
"Other funding has to be used to make up any reduction in endowment income. The same is true for student aid scholarships," Powers wrote, adding that most of the additional funding comes from the budget of a department or college.
"That's one of the reasons we try to create more general university resources to add to the financial aid pot," she wrote. "We don't use the principal of the endowment to make up the shortfall."
