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The Real Costs of Fiduciary Negligence

  • Post last modified:May 22, 2023

Funds that could have endowed 2,000 full scholarships for PSU students.

2,000 Full Scholarships for PSU students, each and every year, forever.

All thrown away – for absolutely no benefit.

Recent Letter to the Editor in the CENTRE DAILY TIMES:

As the individuals responsible for oversight of the Penn State endowment, Penn State’s trustees have approved of dramatic increases in the fees paid to Penn State’s “Investment Advisors”, including increases that are far in excess of the limitations put forth in Penn State’s own guidelines (nearly tripling those fees in just the last four years).
I am unaware of any concerns raised by any of the University Trustees on this matter.  Ever.

These fees are intended to procure financial expertise that will lead to excess investment returns on those endowment funds – greater returns than those that might be achieved without such expertise – such that the funds paid to those advisors will provide a net benefit to the University.
Is that what has happened?

In analyzing the investment performance from 2008 through 2017 (the most recent 10 year period for which “Right to Know” data, and IRS filings, are available on the University’s website), the inordinately expensive “expertise” has generate returns that have resulted in the Penn State endowment being worth $1 Billion LESS than what would have been achieved by simply putting the funds into a stock index fund.

How impactful would it have been, if Penn State simply realized the returns that could have been achieved without such “expertise”?    The $1 Billion of additional endowment funds would have been enough to endow 2,000 full scholarships for Penn State students – each and every year, in perpetuity.

That is the real-life impact of fiduciary negligence.   And no one seems to care, least of all the individuals with a duty to responsibly steward Penn State’s resources.

 

barron i dont care
 

Penn State President Eric Barron

 

 

dambly con man
 

Penn State Chairman of the Board Mark Dambly

 

 

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