Rutgers University is refusing to pay some instructors living wages or give its faculty raises that would keep up with inflation — prompting the first-ever strike in the school’s history. At the same time, New Jersey’s state university has continued to plow ever-more funds from its endowment into high-fee investments that are performing poorly.
The Rutgers strike, which began Monday, is over basic issues like wages, job security, and the cost of university-owned housing. Currently 9,000 educators are taking part in the action. New Jersey Gov. Phil Murphy (D), who appoints members of Rutgers’ Board of Governors, is currently acting as mediator between unions and university management.
The episode underscores the critical role that university endowments are playing in subsidizing the lifestyles of some of the wealthiest people on the planet — at the cost of livable wages for the people who teach students.
The interest from university endowments is used to fund school operations, including educator salaries, as well as designated scholarships and faculty chairs.
Instead, Rutgers has pumped more than $246 million, or 12.6 percent, of its $1.9 billion endowment investments into high-risk, high-fee hedge funds in just the past two years. The amount that the university has invested in hedge funds has more than doubled since 2020, from $213 million to $459 million.
Rutgers’ increase in hedge fund investments comes as other major investors, including the New Jersey state pension fund and the California Public Employees Retirement System have pulled away from the sector, due to concerns about fees and performance. Hedge fund performance has overall suffered relative to the broader market.
The Rutgers endowment portfolio has massively trailed its peers, according to Markov Processes International, a research firm. In fiscal year 2022, the Rutgers endowment returned -9.7 percent, as opposed to an average of -4.5 percent for its peers. Had Rutgers’ endowment performed at the same rate as the average endowment over just that one year, it would have about $96 million more in its coffers, according to a Lever analysis.
Compounding matters, hedge funds charge investors high fees — whether they perform well or not. Hedge funds typically charge a 2 percent commission on assets, plus a 20 percent commission on fund performance. Index funds, by comparison, typically charge a 0.1 to 0.4 percent commission for pension funds.
“Hedge funds have exponentially greater fees, the transparency is significantly less, and the risks are significantly greater,” said Ted Siedle, a former attorney with the Securities and Exchange Commission. “That’s why hedge funds say in their offering documents that they are speculative investments. The performance claims of the hedge fund industry have long been disputed. And the notion that these funds outperform has been discounted.”
While pumping fees to Wall Street, Rutgers management has declined to give its faculty raises that keep up with inflation or provide a living wage to graduate workers and adjunct faculty, according to the union.
The university has also rejected outright unions’ proposal for a $1 million “Beloved Community Fund” that would benefit community members in New Brunswick, New Jersey, countering with a $250,000 fund that would match money raised by unions. Management additionally rejected a $5,000 child care subsidy for graduate students and postdoctoral researchers.
Rutgers investment decisions are made by the Chief Investment Officer, Jason MacDonald, who is supervised by the President of the University. A Rutgers spokesperson did not respond to requests for comment from The Lever.
I honestly don't care that much about how these private universities manage their money. The entire USA education system is capitalist and corrupt. Here is a comparison of the USA university system and the US system for public universities, and they are also overpriced based on the financing structure of USA education. Watch this comparison of the USA and Germany, where higher education is free not only to Germans, but to anyone in the world who can get in.
https://youtu.be/2Uc-ga6pYx4
Guess in which country my daughter is going to university next year. In fact, she has a classmate whose parents made sure her German was good enough to get into German university as well. They both passed the C1 test. Yahoo. I recommend that more Americans learn German and Icelandic. Why the latter? Because Iceland not only is free to anyone who can get into their universities, but they are also ranked the safest country in the world safety index.
https://worldpopulationreview.com/country-rankings/safest-countries-in-the-world
Germany comes in at #16, although it varies from place to place. Munich is pretty safe, whereas Berlin is less safe. Most smaller university cities are even safer. Still, the USA places at #129. I guess that is going to be the case until we can wrest control of gun laws from the NRA and the Republican Party! See how we compare to other countries.
https://youtu.be/yqdT8-DaVk4
They neglect to mention that in Germany gun owners need to pay 1.1 Million Euros in Insurance to have guns. Just that law alone would go a long way to improving the situation here. So, while I support unions and hope that the faculty at Rutgers can get a better deal from their university, I do not currently have faith in our higher education system. It has all the wrong priorities. Americans are marketed to and then they believe in the hype surrounding getting a degree at a private university, which will have a lot of amenities to attract and retain them, while making it out of reach of most Americans. If their public elementary schools and high schools were smart they would prepare their students to go abroad for their education. The application process to a German university is much simpler. Your language skills and grades need to be good, and you need to have taken enough of certain subjects, but otherwise no one cares if you did community service or were in clubs. You probably don't have to write any essays in most cases. You can have a life your senior year except for the applications at the end of the year, and making sure you pass a B2 level or C1 level language test.