Campus / News / February 2, 2011

Endowment in line with size of Knox

The almighty endowment is a multi-million or billion dollar amount that higher education uses to keep a school running.Does it line up with other basic statistics of a school?

Vice President for Finance and Administrative Services Tom Axtell stated that when it comes to presidential salaries, it does.

“The presidential salaries are most highly correlated with the endowment value,” he said. This prompted the search for what else is, and isn’t, correlated with the endowment value.

To keep the study close to home and a small size, it will be limited to the Associated Colleges of the Midwest.

Grinnell College leads the 14-school group with an endowment of $1,076,249,000 in 2009, and Ripon College trails the list with a substantially smaller sum of $45,752,838, according to US News and World Report. There is a big gap between Grinnell and the second place school, Macalester College with an endowment of $544,541,000, but after that, the difference between schools is more gradual.

With the endowment correlation with presidential salaries, based on 2009 tax returns reported on, there are few outlying colleges, including Grinnell and Beloit Colleges, on the low side, and Lake Forest College spikes higher than the colleges with endowment values close to them. Besides those three outliers, the correlation is mostly correct.

The median salary of private-college undergraduate presidents was $387,923 in 2008, according to a Chronicle of Higher Education story on Nov. 14, 2010. Nine out of the 14 presidents in the ACM earned less than that median average. The ACM turned in a median compensation amount of $365,787.

The next statistic up for comparison is the student-teacher ratio. For this comparison, the similarity is a reverse correlation. Unfortunately, there are numerous outliers, according to ratios gathered from the colleges’ websites. This large amount of outliers most likely occurs because the ratio is tied in more with student enrollment than endowment.

With a larger student enrollment, should the endowment be larger to allow for an equal spending on each student?

That correlation is not always correct, according to US News and World Report. There are three major outliers, though, on this comparison too. The schools that stick out the most are St. Olaf and Luther Colleges, which both enroll near 1,000 students more than the schools next to them in the endowment ranking.

It could be easy to think that with a larger endowment, the cost to go to the school would be lower, but this is not true. The cost to go to the schools during the 2009-2010 school year was indirectly proportional to endowment size, with the obvious few outliers, according to data from US News and World Report. The schools that go against the grain—Knox, Cornell and Lake Forest Colleges—charge the student a higher rate then the two schools that sit beside the trio; this might be the case so these schools can maintain a lower student-teacher ratio than the two schools around them, which have 2-4 students more per teacher than the trio.

When sorting by student-teacher ratio, the cost to attend becomes more correlated. With more students per teacher, the cost of attendance goes down.

The last collection from the individual college websites was acres of land the school owned, minus large conservation plots o other land owned by the school located away from the main campus. Unfortunately, the relation of acres to endowment is hard to find.

There are most likely two reasons for this inability to correlate. First, the school has most likely maintained this amount of land for a long time with minimal change, while endowment value has greatly fluctuated over the years.

The second possible reason could be the location of each school. If one of the schools is located in a more urban environment, the size of the campus is going to be vastly smaller than a school in a rural environment, where campuses have more opportunity to spread out. This is proven by the fact that Macalester College, ranked second highest in endowment size, is located in an urban environment in St. Paul, Minn, while Ripon College, last in endowment size, has the second biggest campus due to its location in the small town of Ripon, Wis.

Overall, the endowment has a slight connection with some other college statistics, but not as much as one would think. One can do enough sorting of the graphs to find connections from one piece of data to another, but sorting only from endowment size the correlations are minimal, with numerous outliers or no connection at all.

John Williams

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