Fund ranks No. 3 in conference for 2012 increases, outpaces national average
USC’s endowment was among the fastest growing in the SEC last year, but on a per-student basis, it’s still the smallest in the conference.
The university’s endowment grew 4 percent in fiscal year 2012 to $514 million.
That made it the third-fastest growing fund in the SEC, and it was one of just three schools in the conference to record positive growth last year, along with Texas A&M and Missouri.
It also outpaced similarly sized endowments nationwide, according to a study by the National Association of College and University Business Officers and Commonfund. Endowments between $501 million and $1 billion grew 0.4 percent on average.
But divvy the endowment up among the USC system’s students, and it would rank dead last, with $11,109.
The conference’s median per-student endowment size in 2012 was $19,966, including Vanderbilt, a private school, according to an analysis of data compiled by NACUBO and Commonfund and Fall 2012 enrollment numbers.
That means USC has less money than its conference peers to invest in its students — less money for scholarships, new buildings or faculty raises.
In recent years, the USC Educational Foundation, which manages the endowment fund, has contributed $15 million toward the new business school and paid for a $125,000 raise and $250,000 retention bonus for President Harris Pastides. It also covered part of the $4.1 million in bonuses USC handed out this year.
And USC officials will likely lean on the endowment to give faculty raises beyond those required by the state. Increasing pay will be key for USC to keep professors on campus while the higher education job market heats up, and they get competing offers, Pastides said last fall.
But most of the endowment’s spending goes toward scholarships, said Russ Meekins, USC Foundations’ executive director.
According to Meekins, the Foundations paid for $11 million in scholarships this year, along with $3 million for endowed chairs and professorships and $10 million for other academic needs, like lectures and equipment.
USC’s relatively small endowment fund — it’s No. 11 of 14 in the SEC — has limited what it has to give out.
USC Foundations give faculty members’ children $1,500-per-year scholarships, but it would like to make them full-tuition awards like some SEC schools do, Meekins said. For now, it doesn’t have the funds to do so.
“We can’t do that here,” he said.
The endowment has grown 20.8 percent over the last five years, outpacing 11.4 percent enrollment growth in the USC system. That works out to an 8.5-percent increase in the per-student size.
This year, it’s on track for double-digit growth, Meekins said, after 14.9 percent growth over the 2012 calendar year.
“We want to build it more and more, so we can grow it more and more,” Meekins said.
The overall growth has been fueled by the Carolina’s Promise fundraising campaign and a rebounding stock market. USC’s fund isn’t big enough to make alternative investments or hedge funds practical, Meekins said.
That leaves it with stocks, where most of its investments lie. That spelled trouble during the Great Recession when the market plummeted, but the market has been surging in recent years and taken USC to the front of the SEC for investment growth.
Over the last three calendars, it’s been No. 1 in the SEC for investment growth twice and No. 2 once, Meekins said.
But the high growth is starting to raise questions among the Foundations’ investment committee, which manages the endowment’s roughly $300 million portfolio and is tasked with maintaining — and growing — its value.
“Have we ridden this ride long enough? It is time to get off this roller coaster?” Meekins said. “And if you get off the roller coaster, do you get on the Ferris wheel next?”