In stark contrast to the investment boom of the 1990s, College endowments last year turned in their worst performance since 1974, according to the New York Times. This financial blow comes at a time when many public schools are losing state aid. While the endowments and contributions for public institutions continue to shrink in a sagging economy, the New York Times reported the nation's private colleges and universities are raising tuition for the next academic year more sharply than in recent years, in some cases, significantly so.

These tuition increases, just now being reported, come after seven years of moderate tuition increases at generally twice the rate of inflation. Colleges are also scaling back on construction and hiring, after a span of flush years when institutions added buildings, increased faculty sizes and created academic programs.

"Tuition is definitely going to go up at a disproportionately higher rate than we have seen in recent years," said Larry Goldstein, a senior fellow at the National Association of College and University Business Officers. "Tuition rates have been remarkably stable because of the good economy. Now the economic pressure has increased, and they cannot keep tuition growth at this level anymore."

While colleges are cutting back on their revenue from tuition, the Boston Globe reported endowments are down by at least 5 percent across the country. According to a survey of 654 institutions sponsored by the National Association of College and University Business Offices, the vast majority of colleges and universities lost money on their investments during the 2001/2002 academic year, with the average endowment falling by 6 percent. Some colleges suffered greatly, losing nearly 20 percent for the year.

Executive Vice President and Chief Operating Officer Peter French said Brandeis, which relies on income from its endowment for much of its annual operating budget, experienced less damaging losses. The University endowment shrank by 2.5 percent in the last fiscal year -- between July 1, 2001 and June 30, 2002. This relatively small decline in the University's endowment puts Brandeis in the top quartile of the nation's universities in this respect.

"The endowment today is around $363 million," said Jeffrey Solomon, University treasurer and chief investment officer. He described a reversal in market trends that raised the endowment from $353.9 million in September. "We've been participating in the rally," he said. Stock market losses in September led to a 7.5 percent decline in the endowment. But, Solomon said, "We performed better than 75 percent of endowments out there."

Since most schools doubled and some even tripled, their endowments between 1996 and 2001, almost all have a cushion to fall back on, said higher education consultant Joe Cronin, of the Milton-based higher education consulting firm, Edvisors Inc.

The news is worse for the least-wealthy institutions. Endowments of $100 million or less have posted negative returns on average, for three straight years. With the economy and the financial markets still shaky at the midpoint of the 2003 fiscal year, it is easy to envision a fourth straight year of negative returns for those institutions. With endowments suffering two and three straight years of negative returns, college budgets are now feeling the pinch. "We were stung by the rapid downturn in the equity markets," said Albert G. Horvath, vice president for business and finance at Caltech.

The Chronicle of Higher Education ranked the endowments of the nation's top 654 universities. Brandeis ranked 108th with an endowment of $384.34 million as of June 30, 2002, a 3.2 percent decrease from the preceding year.

The University has announced another budget cut for fiscal year 2003. On Dec. 4, French, Ex-Provost Mel Bernstein and University President Jehuda Reinharz led a forum in Olin-Sang Auditorium, informing faculty of new reductions to the University's budget. French also led four meetings on the budget with academic and non-academic staff.

This followed a Nov. 18 memorandum in which Reinharz announced that the University's operating expenditure base would be reduced by a further $1 million and that capital expenditures would be cut by as much as $1 million as well.

This new reduction to operating expenditures for fiscal year 2003 follows an already announced reduction of $2.6 million, made on Aug. 30. This is the first time in the current financial crisis that capital expenditures have been cut.