Baylor

Baylor University’s endowment sits at $1.23 billion after a strong year for growth and returns.

Staff photo — Rod Aydelotte

Baylor University’s endowment grew by about $80 million to $1.23 billion over the past year, according to newly released data.

Chief Investment Officer Brian Webb said growing the endowment is a high priority for Baylor administrators and regents as higher education costs skyrocket nationwide.

Considered a lifelong fund used largely for student scholarships, rather than as a bank account for temporary or immediate university needs, the endowment has periodically grown since the Great Recession caused a roughly 20 percent loss at most universities, including Baylor.

“(Growth) is critical for a university from an affordability standpoint, so students that need scholarships can come here,” Webb said. “But, also from a competition standpoint over the long run, it does generate a steady flow of income to the university. And when you’re competing with other universities with large endowments, they have that steady flow coming, and you’ve got to be able to compete with them.”

Endowment return figures are not yet finalized, but Webb said he expects a return of more than $100 million.

About 67 percent of returns from the endowment pay for student scholarships. The rest goes to academic programs and salaries for specific chairmanships and professorships. Baylor President Linda Livingstone intends to incorporate fundraising for endowed chairs and faculty initiatives into her academic strategies, officials said.

With almost 14,500 undergraduates, Baylor’s endowment comes to about $85,000 per student. Webb said he wants to double that as Baylor works to compete with neighboring private schools Texas Christian University and Southern Methodist University.

TCU has almost 9,000 undergraduates and a $1.2 billion endowment — more than $133,000 per student. SMU has about 6,500 undergraduates and a $1.5 billion endowment — more than $230,000 per student.

Baylor officials have longed for a $2 billion endowment for at least 15 years. Webb called the number a “reasonable, but clearly aspirational goal” with no set timeline to achieve. He said regents still discuss the number but realize it will not be met overnight.

“If you do the math, it’s going to take a little bit longer for us to get there,” he said. “But that is the target number we need to be as competitive as we should be with our peers. … Setting a specific date, as we saw with the 2012 initiative of wanting to get to $2 billion by that point in time, is probably a dangerous thing to do, quite honestly.”

Mamie Voight, vice president of policy research for the Institute of Higher Education Policy, said by email that endowment funds should be leveraged for access and support to low-income students. After reviewing data, she estimated low-income students pay about $27,000 after grants and scholarships to attend Baylor for one year.

“This price amounts to just about the entire annual income for many low-income families — an insurmountable barrier to enrollment and degree attainment for some,” Voight said.

A 2017-18 Baylor undergraduate education costs $43,790. Regents raised tuition 4 percent, the smallest increase in more than 20 years, to $45,542 for the 2018-19 academic year. These rates fall below TCU, SMU and Rice University, and 93 percent of Baylor students receive some form of financial assistance, according to the university.

“Well-resourced colleges employ sophisticated fundraising strategies designed to sustain and grow their endowments to meet specific goals,” Voight said. “Colleges can prioritize need-based aid in fundraising efforts and create the flexibility to provide more low-income students a real chance of accessing their universities.”

Baylor’s sexual assault scandal, accompanied by fierce backlash from influential donors, has not affected the endowment, because the financial market largely dictates the health of the fund, Webb said.

“We’re very pleased with how our portfolio is positioned right now, because we’ve been able to enjoy the benefits of the market run we’ve been on for the last number of years,” Webb said. “We think we’ve got enough downside protection built in. If and when (a hit from financial markets) comes, we’ll perform very well on a relative basis to our peers.”

Phillip has covered higher education for the Tribune-Herald since November 2015.