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Print Edition StoriesMonday, January 4, 2010
MIT expansion continues despite lower endowment
By Tim McLaughlin, Boston Business Journal staff
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Net endowment assets at MIT sank 20 percent to $8.15 billion in fiscal 2009, but the school is primed for major expansion over the next two years after securing $610 million of tax-exempt financing despite turbulent capital markets.
Cambridge-based MIT said net endowment assets declined by $2.1 billion from $10.2 billion in fiscal 2008. The endowment is a workhorse for MIT operations.
For example, in the fiscal year ended June 30, MIT said it appropriated $518 million in endowment assets for school expenditures. That was up from about $393 million in fiscal 2008.
Most of the endowment’s asset decline was a result of realized and unrealized losses that totaled $1.79 billion in fiscal 2009, according to MIT’s financial statements.
Stock holdings ($5.1 billion) and alternative investments ($2.2 billion) remain MIT’s largest asset categories. MIT also appeared to emphasize more cash-equivalent holdings with $751.9 million at the end of fiscal 2009, compared with $434 million in the year-earlier period, according to financial statements.
Consolidated net assets at MIT fell by $2.82 billion to $9.95 billion during the fiscal year ended June 30.
“The decrease in net assets reflects the effect of the economy’s impact on investment performance across all invested assets including endowment, working capital and retirement assets,” according to a report submitted by MIT Treasurer Theresa Stone.
MIT officials were not immediately available for further comment.
Meanwhile, the college’s total borrowings in fiscal 2009 surged 30 percent to $1.74 billion. MIT’s publicly held debt continues to be rated “AAA” by Moody’s Investors Service and Standard & Poor’s.
MIT said it plans to complete construction on the following major projects over the next 18 months: the Koch Institute for Integrative Cancer Research; the Sloan School of Management; and the Media Lab and School of Architecture and Planning.
When the global credit crisis hit, MIT and other Boston-area colleges and universities moved to cut expenses as their endowment assets shrank. MIT then projected it may have a potential need to reduce expenditures by up to 15 percent within two to three years.
After initial savings in 2009, MIT said it will have additional budgeted savings of at least 5 percent in 2010. That will give MIT about half of the needed reductions, according to its report.
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