Some schools have been left in the lurch after Wachovia's announcement last week that it would freeze $9.3 billion in funds for nearly 1,000 colleges and universities across the country, but Penn will not be one of them.
Wachovia had been managing a short-term cash fund for the management firm Commonfund, but froze the account last week after resigning its position as a trustee. Many institutions used the account to store money for payroll and capital expenses - bills that need to be paid in a relatively short time frame.
Penn, which had $250 million in Commonfund at its peak, had been steadily withdrawing funds due to concerns about the account's management. It only had $100,000 in the fund when it was frozen, said Penn Treasurer Stephen Golding.
All schools with money in the account were granted access to 34 percent of it at the end of last week.
"The fact that we had $100,000 sitting there . we're quite pleased we're in that position," said Golding.
He added that the alternative fund being used for short-term investments is well-secured.
While the schools will eventually see their money returned, it will take a few years before the money is completely liquidated, depending on how quickly the short-term investments mature. About 57 percent of the money will be available by Dec. 31, Commonfund said.
But many colleges were not as fortunate. The University of Vermont, for instance, had half its liquid-operating assets - about $79 million - in the fund. Grinnell College had almost $5 million there. Bethany College, a small school of about 500 students in Kansas, is looking into whether it needs to secure a temporary line of credit, various news outlets have reported.
Even schools that didn't have money in the Commonfund account are taking bold protective measures.
At Boston University, for instance, President Robert Brown announced that the school would temporarily freeze all hiring for non-security positions as well as postpone capital projects.
Although BU had no money invested in the short-term fund frozen by Wachovia, the school saw the general market climate as enough provocation to take cautionary measures.
Currently "there are just too many variables," said BU spokesman Colin Riley. "It was a wise and prudent move to protect our resources."
He added that the school isn't in any financial difficulty, but instead wanted to take preemptive measures.
As for Penn, the University is still employing Wachovia - now in the midst of a legal battle to be bought by either Citigroup or Wells Fargo - as its money manager.
"We're still of the opinion that Wachovia has sound operational banking mechanisms in place and our interests are still well-served," Golding said, adding that Penn constantly monitors both its own finances and the state of the market. "The revenue is still coming in, and . the market hasn't gone that far south that we have to take any drastic, panicky action."
