Universities cut in wake of crisis
Higher Education

Universities cut in wake of crisis

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Canadian universities could be forced to cut student aid, scholarships and funding for various programs as early as next spring because of multi-million dollar losses in their investment holdings. The recent free fall of financial markets, coupled with a wait-and-see attitude of donors, has campus leaders across the country preparing for the worst and hoping for a quick recovery.

Some, such as the University of Waterloo, have already taken action, freezing most hiring for the next six months. Others, including the University of Victoria, have issued notices saying they may have to cut distributions from their endowment funds, which pay for scholarships and research chairs. Stock markets around the world are down more than 30 per cent this year and dropped roughly 17 per cent last month alone. That has cost universities hundreds of millions of dollars because on average more than half of their endowment and pension funds are invested in financial markets. 'We are down big time in terms of the market value of our endowment fund,' said David Mitchell, vice-principal of advancement at Queen's University in Kingston. At the end of September – before the worst of the market woes – Queen's had lost more than $100-million in its endowment, which had fallen to $550.6-million from $658.2-million. Many universities managed to build buffers in their endowments because stock-market returns had been strong prior to 2007. But in most cases those buffers have largely been wiped out.

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