Wednesday, August 08, 2007

Not Driving Me Crazy

In the last couple of days, I've spent many hours in phone meetings and email contact between Paris and California on the subject of faculty salary increases. I've been trying to understand how a 2.5% cost of living increase plus a scale adjustment of, well, long story, but the numbers involved are $30-46 million to bring UC faculty pay from about 15% below UC's peers to maybe 13% below UC's peers at a public university with 200,000 students and all sorts of cutting-edge research on which at least some future economic and social progress depends. And yet we don't think we can find the money in an $18 billion budget.

Meanwhile, private equity firm Blackstone announced that its latest equity fund raised $21.7 billion in about two years. It had about $80 billion under management at the time of its IPO a little while ago. KKR has about $53.4 billion under management. Goldman Sachs - in the same ballpark. And so on.

Why do I mention this? Because of how private equity - which is basically the buying and selling of existing assets - compares to education. A list of the largest university endowments shows you Harvard at the top with about $29 billion, only 5 universities on earth with more than $10 billion (Harvard, Yale, Stanford, University of Texas Oil System, Princeton ). There are 62 universities with $1 billion or more. This means that Blackstone raised in 2 years as much as Harvard raised in 400 years, and Harvard is in a class by itself, the most successful university - financially speaking - in the history of the world. KKR has about twice as much money under management as Harvard and three times Yale, which has been growing faster than almost any other university endowment on earth.

You get the picture. Higher ed gets a drop in the giant swimming pool of the nation's wealth. Higher ed has the proportionately tiny influence over the country's general direction.

I will be sitting in the chair above for a week or two successfully forgetting all this.

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