Category Archives: education

What is their Value, Really?

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What is their Value, Really?

In a Sunday Wall Street Journal article on universities’ penchant for investing their endowments in private equity (as opposed to instruments bought and sold on public exchanges, these are bought and sold in private deals between the university and one or another private (i.e., not traded on an exchange) entity, or rarely a private deal to which a publicly traded entity might also agree.

A few exceptionally talented, or lucky, endowment managers seemingly did very well in this environment. Yale’s late David Swensen got an annualized return of 13% over the course of his management.

But how valuable are those investments, really? The WSJ‘s subheadline reads

Universities and other institutions have built up large private-equity holdings, but they are now lagging behind the S&P 500 and aren’t easy to shed

And this:

And much of what those funds earned for their investors in that time was on paper; endowments and other institutions were getting less and less cash that they could put to work in the booming stock market.

And this [emphasis added]:

…making it hard for managers to get the prices they want for the companies in their portfolios. Meanwhile, institutions have struggled to find investments that hedge against stocks and private equity without further eroding returns—and the problem has gotten worse with the stock market’s latest rally.

The value of any investment is what someone is willing to pay to get it. The initial value of those private equity investments in these endowments is what the endowment managers paid to get the private entity or a piece of it. Now they’re moving to sell some/most/all of these privately held pieces, but there are few to no buyers at those initial prices or anywhere near those prices.

This is Yale’s continued position:

Yale said in a statement that it remains committed to its private-markets strategy. “We trust that sophisticated investors, especially our partners who know us best, understand this,” the school said.

That sounds like the typical arrogance of Know Betters.

What is, in the end, the true value of those privately held pieces? It’s still whatever a buyer is willing to pay for them. And that calls into question two things: an accurate valuation of those entities and the wisdom of relying so heavily on non-publicly traded entities for endowment investments.

Former Yale endowment private-equity manager Tim Sullivan:

One of the reasons we hire these guys is because they know when’s the right time to sell an asset[.]

The problem here is that a potential buyer won’t necessarily agree that it’s the right time to buy that asset.

It’s tough to grow, or even just to maintain the value of, an endowment based on phantom valuations of its holdings.

Not Entirely Sufficient

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Harvard University and the Federal government apparently are nearing a deal that would pressure Harvard to abide by federal regulations around merit-based hiring and admissions as well as protecting students’ civil rights in return for a $500 million payment to “workforce and vocational programs.”

Pressure only, though, no overt, absolute requirement.

The administration wouldn’t appoint a monitor to oversee Harvard’s compliance with the deal. The university would pledge to continue to abide….

That’s a serious weakness in the supposed deal. Harvard’s management team already isn’t abiding by those regulations, and it already isn’t protecting its students’ civil rights—much less better reducing the school’s antisemitic bigotry and its pro-terrorist stance. Since it’s not doing, it can’t be continuing.

An addition to this deal is needed: Harvard should be required to put up a cash bond, say $500 million, for 10 years against its performance of its pledge. At the end of those 10 years, should the university actually have abided, the principal would be returned, and the accrued earnings on the principal paid to those workforce and vocational programs.

School Choice and a Teachers Union

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In Wyoming, the State’s legislature passed and the governor signed legislation to create school choice for the State’s parents and children.

Wyoming lawmakers created the state’s first K-12 education savings account (ESA) program in 2024, effective in the coming school year. This spring they expanded eligibility to families of any income. The $7,000 accounts can be used for private-school tuition, tutors, homeschooling, or other education expenses. Nearly 4,000 students applied for them this fall.

In the first year, those 4,000 students amount to about 3.5% of the State’s K-12 population (some arithmetic involved), a pretty rapid start to the take-up. The main teachers union in the State, the Wyoming Education Association, is busily objecting and hailing the State into court to get that legislation overturned. The union is claiming that the State’s constitution requires the Legislature to maintain a “complete and uniform” public school system, the State cannot fund “private education that is not uniform.”

This is a distortion of the facts, including of what the State’s constitution says. This is that constitution’s Art 7, Sect 1, in its entirety:

Legislature to provide for public schools. The legislature shall provide for the establishment and maintenance of a complete and uniform system of public instruction, embracing free elementary schools of every needed kind and grade, a university with such technical and professional departments as the public good may require and the means of the state allow, and such other institutions as may be necessary.

That’s the short and sweet of it. There’s nothing in there that would preclude the State from establishing, supporting, or merely funding alternative means of education. Indeed, that last clause, and such other institutions as may be necessary, being separate from the clause mandating a system of public instruction, explicitly authorizes alternative means of education structured entirely differently from, or the same as, the public system.

This is just another example of a teachers union trying to deny parents their right to see to their children’s education in their own way. It’s the union way or nothing. That’s just union abuse of education and of the students in it out of its own greed: those alternative means would not be controlled by the union.

The Wyoming constitution can be read here.

It’s a Start

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This time, it’s a start on cleaning up the bigotry sewage and ideological indoctrination that’s polluting our colleges and universities. Columbia University, of antisemitic bigotry and pro-terrorist/Hamas infamy, has agreed to pay the Trump administration $200 million along with an additional $21 million to EEOC to settle the latter’s investigations. Now,

[t]he administration is in talks with several universities, including Cornell, Duke, Northwestern, and Brown, the person familiar with the talks said, though it sees striking a deal with Harvard, America’s oldest university, as a key target.

The deal:

The Columbia agreement prohibits programs that promote “unlawful efforts to achieve race-based outcomes” in student admissions and faculty hiring. It calls for the appointment of a senior vice provost to review programs in the department that houses Middle Eastern studies. It also appoints new faculty members in Jewish studies, economics, and political science to “contribute to a robust and intellectually diverse academic environment.”
The deal [provides for] a “resolution monitor,” who has been jointly selected by Columbia and the government, and paid for by the school, will keep tabs on Columbia’s compliance.

This is a good step with Columbia, and I hope the administration succeeds with those additional institutions, along with so many others, also. On the other hand, Michael Roth, Wesleyan University President, is already distorting what’s going on.

We’re in a world now where the government can say to all these schools, “Hey, we’re serious, you’re going to have to pay the piper to get along with the most powerful organization in the world. Which is the federal government.

It’s not at all a matter of “getting along” with the Federal government. It’s a matter of, if the institution wants Federal money—us average Americans‘ tax dollars—money the Federal government has no obligation to provide and which the institution has no intrinsic right to get, the institution must leave off its bigotry and support for terrorism, and it must stop discriminating in hiring and teaching based on political stance in addition to the discriminations that already are illegal. If Roth is going to insist on pretending to not understand that, his behavior should drive up the cost to Wesleyan.

There are two more step that are necessary, though. Each of those institutions first must admit, explicitly, to its bigotry, pro-terrorist support, and naked indoctrination of its students. Second, each of those institutions must identify the concretely measurable and publicly accessible steps it’s taking to correct those failures and its hard, unchanging schedule for completing those steps.

My Sympathy Meter…

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…is flashing Empty. On a note related to another post of mine, there’s this out of Tucson, AZ:

Tucson Unified School District (TUSD), based in Tucson, Arizona, is reportedly facing financial and enrollment struggles after universal school choice passed in the state in 2022.
A TUSD official told KGUN that approximately 4,000 students used vouchers to either go to private schools or homeschool.
The trend of parents overlooking TUSD cost the school district about $20 million. TUSD’s Chief Financial Officer, Ricky Hernandez, told the local outlet that TUSD is “preparing for continued declines in enrollment as a result” of vouchers.

This, after TUSD as a whole had these test score outcomes, as of the 2020-2021 and 2021-2022 school years:

In Tucson Unified District, 28% of elementary students tested at or above the proficient level for reading, and 23% tested at or above that level for math. Also, 27% of middle school students tested at or above the proficient level for reading, and 19% tested at or above that level for math. And 48% of high school students tested at or above the proficient level for reading, and 42% tested at or above that level for math.

Here’s a thought—bear with me on this; it’s a strange concept for many—maybe the TUSD managers and teachers should do a better job of teaching the children in their educational charge the basics and advanced principles of reading, writing, and arithmetic, with budgeting, finance, and economics added in for the district’s grade schools, junior highs, and high schools, respectively. Room in the school day for that last, especially, could be made by eliminating the claptrap of DEI, “flexible” gender, pornographic books in grade school libraries, and other Woke ideologies.