Economic Budgeting for Endowment-Dependent Universities
John Campbell,
Jeremy Stein and
Alex A. Wu
No 32506, NBER Working Papers from National Bureau of Economic Research, Inc
Abstract:
To understand their financial position, universities need to understand the long-term implications of their operating revenues and costs in relation to the financial assets they have available. Standard budgeting procedures that focus on one or two years at a time and use generally accepted accounting principles (GAAP) do not do this. We present an alternative framework that discounts cash flow forecasts over the infinite future and compares the present value of operating obligations to the value of the university’s endowment net of any debt it has issued. We illustrate the potential of this framework using recent data from Harvard’s Faculty of Arts and Sciences (FAS).
JEL-codes: G31 I22 I23 (search for similar items in EconPapers)
Date: 2024-05
New Economics Papers: this item is included in nep-acc
Note: CF ED PE
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Citations:
Forthcoming: Economic Budgeting for Endowment-Dependent Universities , John Y. Campbell, Jeremy C. Stein, Alex A. Wu. in Financing Institutions of Higher Education , Campbell and Husbands. 2024
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Chapter: Economic Budgeting for Endowment-Dependent Universities (2024)
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