Yale Loses a Quarter of its Endowment

Yale's endowment—the second largest in higher education—has lost an estimated quarter of its value since June 30, plunging to $17 billion from $22 billion this summer, Yale officials said Tuesday.

The announcement comes two weeks after news that Harvard's endowment, higher education's largest, fell 22 percent—or $8 billion—in four months from its June 30 value of $36.9 billion.

Unlike Yale's estimate, Harvard's 22 percent figure does not include potential losses for November or the first half of December, when Yale officials estimate their endowment experienced about half of its decline. At the beginning of December, Harvard officials projected a 30 percent drop for the fiscal year.

But though both schools' endowments have suffered heavy losses amid the recent financial turmoil, Levin announced less dramatic cutbacks yesterday than those occurring at some of Harvard's schools.

Urging against a "possible overreaction," Levin wrote in a letter to faculty and administrators Tuesday that Yale would not implement hiring and salary freezes, which are already in place for certain Harvard faculties.

Yale will postpone all new construction projects, curb salary growth, and limit new hiring by requiring approval for new positions from its provost's office, according to the letter. In addition, Levin wrote that the university's budgets would be cut by 5 percent this year and the year after.

Some of Harvard's schools, including the flagship Faculty of Arts and Sciences, have already responded to the financial crisis by freezing hiring and wages and preparing to slash budgets.

FAS Dean Michael D. Smith announced a freeze on faculty salaries and cut 70 percent of faculty searches earlier this month, just weeks after freezing staff hiring in the school. Two weeks ago, Harvard Medical School and FAS administrators asked their departments to plan for 10 percent budget cuts in light of the deteriorating financial situation. And last week, the Harvard Kennedy School announced it would freeze salaries and slow or stop faculty and staff hiring except in cases of "extremely high strategic priority."

Some Harvard construction projects, including the massive expansion into Allston, are also likely to see delays.

Leaders at both universities have repeatedly said their institutions' financial aid programs will continue unabated.

In an interview with the Yale Daily News Tuesday, Levin said Yale would continue to move forward on its most important aims, though new fiscal realities would demand more budgetary discipline than in recent years, when the university could support "virtually every good idea that came along."

"We're going to do just fine—this is not the end of the world," he told the Daily News. "But we'll have to set priorities more carefully."

—Staff writer Bonnie J. Kavoussi can be reached at kavoussi@fas.harvard.edu.