Pension Investment in Higher Ed

I have blogging for a while about how cash-strapped governments are managing to grow out of crisis.

Rather than stick their heads in the sand like ostriches, public officials are increasingly finding ways of

- building new roads,

- laying fiber optic cables,

- and modernizing water systems.

They are doing so with pension fund money rather than taking out debt--the government credit cards are simply maxed out. A number of advantages exist for pursuing this approach.

It is that time of year, and new students are arriving--and being dropped off--at colleges and universities around the country.

Many of these places are very expensive to attend. So, we should be forgiven for not realizing that many university presidents find themselves feeling a lot like officials running debt distressed cities that need fast internet to attract high-wage-paying businesses.

I spent over a decade as a law professor, so at 32 Advisors we know the aspirations and constraints of universities. A trusted advisor in a highly transactional world-that's the business model.

We advise these universities on how to put this same pension fund money to work so that they can build that science complex that attracts the right professors and, in turn, students. Same thing for dorms, campus centers, and other facilities. Also it is about other innovative financing and project delivery approaches-important.

Most universities face a crunch. However, the public and private ones with limited endowments have it the toughest. You'd be surprised, many of these are our biggest universities in the nation.

We find that they do not often have that line of credit needed to modernize facilities to attract talent-throughout the university community, student to professor.

As a sector, from 2002-2010, debt liabilities within these places increased by more than 50%. While debt service increased by over 86%. So, you can see how the credit-card approach has an expiry date.

To give an idea of how important the sector is, education makes up 7% of our GDP.

If you, or someone you know, is immersed in earnestly trying to make a university meet its obligations and grow to remain competitive, be in touch.