The United States federal government has launched an open inquiry into Penn’s astronomical endowment, which rose in fiscal year 2015 to $10.13 billion.
Penn, along with 55 other wealthy colleges in the U.S., received a letter from the Senate Finance Committee and the House Means and Ways Committee on Feb. 8. The letter contained 13 questions regarding Penn’s endowment and how the money is used.
The investigation comes at a time when tuition costs are continuing to rise across the country at rates above inflation.
“Colleges and universities and their spending is of interest periodically for government officials,” said Dawn Maglicco Deitch, the executive director of the Office of Government and Community Affairs. “There will be a group coming together to put together Penn’s response here on campus.”
In 2015, Penn’s endowment was the No. 7 largest of any private college in the country. The college’s endowment has increased steadily in the past five fiscal years, rising $3.55 billion from $6.58 billion in fiscal year 2011 to its current level in 2015.
This fiscal year, 57.5 percent of Penn’s endowment went to instructional use, 17.2 percent to health care, and 17.6 percent to student financial aid. However, U.S. lawmakers have voiced their concerns about the ever-rising cost of college tuition in the country despite some schools’ efforts to provide financial aid to their students.
In particular, one member of the House of Representatives, Tom Reed of New York, called for colleges with endowments above $1 billion to spend 25 percent of their annual endowment income on financial aid.
Colleges are required to report specifics of their financial activity to the Internal Revenue Service each year, but with this new inquiry by Congress, more information on endowment usage and tax code compliance is expected to be forthcoming.
“We are in partnership with the federal government in that we are recipients of so much grant funding,” Maglicco Deitch said. “There are [a] number of ways in which we are involved in reporting on [our] finances and spending [to the government].”
The letter from the government asked for a response from colleges by April 1, a deadline with which Penn expects to comply.
“It seems pretty straightforward,” said Maglicco Deitch. “It just requires the attention of an executive team to put together the details. Our institutional spending and reporting is routine activity.”Comments powered by Disqus
Please note All comments are eligible for publication in The Daily Pennsylvanian.