The independent news organization of Duke University

Duke responds to Senate inquiry

Duke officials responded to a Jan. 25 letter from Congress members questioning the University's financial aid and endowment spending with a letter of their own last week.

The 15-page response was sent Feb. 28 and was addressed to Sens. Max Baucus, D-Mont., and Chuck Grassley, R-Iowa who sent the original letter to 136 well-endowed American colleges.

Included in the University's letter was a 3-page cover letter from President Richard Brodhead outlining the University's objectives for the endowment and describing recent changes to financial aid. Additionally, the report contained a smorgasbord of statistics-ranging from the percentage of students who received grants from the University for the 2006-2007 academic year to the average annual endowment return over the past 10 years.

"This is a good opportunity for us to explain and educate members of Congress and our staff about how we manage and use the endowment to improve and enhance the education of our students," said Chris Simmons, associate vice president for federal relations.

Baucus and Grassley's letter pointed to a federal law requiring non-profits to pay at least 5 percent of their assets each year toward their charitable purpose-a requirement that currently does not apply to university endowments. The senators asked universities to specify their spending rates for the past 10 years.

In its response, the University estimated endowment expenditure for the 2007-2008 academic year as $207 million, representing 4 percent of the endowment's market value at the beginning of the academic year.

"There's always a balancing act of how much money should be pulled from the endowment to be invested in current activities and how much should be set aside to ensure that future Duke students will have access to the same quality of education that today's students do," said John Burness, senior vice president for public affairs and government relations.

Last Spring, the University committed to an annual spending rate of 5.5 percent of the endowment's average market value over the preceding three years, a policy that will go into effect for the 2008-2009 academic year and is subject to a provision capping annual endowment spending growth at 10 percent more than the previous year.

Brodhead's cover letter said the University's investments in fields that did not exist a few decades ago require increased spending on facilities and faculty recruitment.

"Duke undergraduates today take courses with the very best researchers in these fields, many of whom teach freshman courses, because Duke's endowment strategies have helped provide financial flexibility to support new academic initiatives and faculty deepening," Brodhead wrote.