Friday, August 19, 2011

Endowment Fund Should Embarrass the State and the University of Washington…

In the Puget Sound Business Journal this morning is an article bragging:
University of Washington fund beats bigger rivals.

Amid the financial gloom of the past three years, one part of the University of Washington has rebounded: Growth of the UW’s endowment fund has outpaced those of Harvard, Yale and other giant schools.

The value of the university’s consolidated endowment fund rose to $2.14 billion on June 30 at the end of the third quarter of 2011’s fiscal year, the latest number available, up 10 percent from a year earlier. That follows an 11 percent rise in 2010.

Like many investment pools, the UW endowment has bounced back since it lost 23 percent of its value during the financial crisis…

That’s nice, isn’t it? Alumni are very generous and contribute greatly to the University’s Endowment. And the Wall Street people who run this giant fund are doing a great financial engineering job creating “growth.”

Of course with a fund that size, there is A LOT of fees to be earned.

But what is the endowment fund for anyway? Is its goal to provide churn and fees to the people who manage the fund? Or is the purpose of the fund to educate this state’s youth?

I would contend that education is taking a back seat to Wall Street… again. Let’s follow the flow of money, shall we?

The University raised tuition 28% in the past two years, all approved by the Washington State Senate who regulates the tuitions of the six Washington state colleges. They get to regulate the tuition because the state uses taxpayer money to help fund the school.

Over the past two years, the colleges, led by the U.W., lobbied the state for the right to set their own tuitions. The state, without the approval of the voters, gave them that right:

Immediately upon approval, the University of Washington raised tuitions AGAIN, this time by a record amount, 20% more on top of the previous raises. In addition, they are laying off a “significant” portion of their staff due to taking $106 million in cuts from the state.

The cut in state funding is due to the impossible math the state faces. It’s impossible because everything the state does they first borrow money from Wall Street and pay them fees and interest to finance it! Of course any push for a state chartered bank that would eliminate finance costs doesn’t make any headway because it’s fought by the private banks who produce money from nothing.

So, the state is actually bankrupt. The state gives the colleges the right to massively raise tuition, but in turn cuts the amount of funding to the schools – not eliminate mind you, but cut. The schools cut staff, hike tuition which comes out of the pockets of Washington families… AND further burdens the students with massive student loans, the only category of consumer credit that is still growing.

WHO issues those loans? Why private banks, of course! Who profits from those loans? Private banks, of course! Who lobbied to make student loans the only loans that are not dischargeable in any fashion whatsoever inside of any bankruptcy process? Private banks, of course!

So the state is bankrupt, Washington families are poorer, and the students are debt slaves. All are the servants of the private banks.

Meanwhile the University’s endowment fund balloons to well over $2 billion!!! And the boys on Wall Street churn and fee, churn and fee.

Congratulations! I’m so proud!

Of course I'm not really proud, it's just that this disgrace produces a sarcastic tone. What I'm really wondering is what would happen if the University used its endowment for its intended purposes instead of sticking it to the students and families? You can do one heck of a lot of educating with $2 billion! Do the math. This is the typical create an emergency on one hand while robbing you with the other. It’s a disgrace and an embarrassment from my point of view.

The state is doing this same trick in other areas. The State parks is one, where the state just unilaterally imposed a new $30 annual parks fee in order for anyone to enter our beautiful state parks. Let’s examine that flow of money…

State parks were already bought and paid for by the taxpayers. Their upkeep has been paid for from sales and property taxes. The impossible math created by the private banks again causes the state to be functionally bankrupt. Instead of taking it out on the bankers, the state turns to its citizens claiming they need the money or else they will shut down the parks and deny the citizens access to their own land!

No vote, they impose the fee. The money travels to the general fund where it services the debt held by the private banks. Now think about the poor who are getting poorer. Many can’t afford food for their children, and the public parks were one of their only refuges. No longer – now you can’t even enjoy nature without an additional fee on top of the taxes we already pay.

These schemes do nothing but place further pressure on the people. This pressure will continue to build under the weight of the impossible math until “other events” force a proper change in the rule of law.

The state should be embarrassed, the Governor should be embarrassed, the university should be embarrassed, but I know that the banks are not. They are narcissists – the more they take, the better they feel.