YALE DAILY NEWS · FRIDAY, AUGUST 28, 2015 · yaledailynews.com
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“Think only of the past as its remembrance gives you pleasure.” JANE AUSTEN ENGLISH NOVELIST
Endowment spending draws criticism BY LARRY MILSTEIN STAFF REPORTER A recent New York Times op-ed calling upon Yale to spend more of its endowment has prompted renewed debate — both on campus and among experts — over how the University should invest its money. On Aug. 19, University of San Diego law professor Victor Fleischer published an opinion column in The New York Times in which he accused Yale, along with other educational institutions of its kind, of “hoarding cash” and valuing investment returns over financial support for students. Fleischer argued that the University should increase its annual spending from the endowment to fund educational purposes rather than placing more money in the hands of asset managers, which Yale uses to manage its endowment. According to Fleischer, about $480 million of Yale’s roughly $24 billion endowment was paid to private equity fund managers as compensation last year, while only $170 million was directed to such things as tuition assistance, fellowships and prizes. “We’ve lost sight of the idea that students, not fund managers, should be the primary beneficiaries of a university’s endowment,” Fleischer wrote in his piece. “The private-equity folks get cash; students take out loans.” Fleischer specifically called for a law requiring universities with endowments of over $100 million to spend 8 percent of their endowments annually, nearly three percentage points higher than what Yale aims to spend. Following the publication of the piece, strong criticism emerged from across the web calling upon Yale and other institutions listed — including Harvard, the University of Texas, Stanford and Princeton — to reform their endowment management policy and direct more funds toward scholarship and research. Most notably, Malcolm Gladwell — bestselling author of “The Outliers” and a New Yorker staff writer — published a stream of tweets in which he accused Yale of focusing more on its money management business than its “declining legacy educating business.” “I was going to donate money to Yale,” Gladwell wrote from his account, which has over 300,000 followers. “But maybe it makes more sense to mail a check directly to the hedge fund of my choice.” In an interview with the News,
Fleischer said the purpose of his article was not to condemn the work done by the Yale Investments Office or its chief investment officer, David Swensen, whom he described as a terrific investor. Rather, he said the goal was to force trustees and other leaders at colleges and universities to ask difficult questions about the allocations of their endowment. “It is really a question of priorities and whether Yale should be spending more to benefit the current generation of students and faculty and scientific research,” he said. But in the wake of the article, several financial experts, alumni and current students have come to the defense of the Yale Investments Office, arguing that a large increase in spending would not only harm Yale’s portfolio, but also financially disadvantaged students and faculty in the long run. Some financial experts said they believe that an increase in cash flow out of the endowment may be shortsighted for educational institutions such as Yale, whose assets are intended to exist in perpetuity and maintain their value in the long term.
[F]ailing to hire — and pay — the best investment managers … means less money available for spending on students. BERNARD STANFORD ’17 Dan Primack, senior editor at Fortune and author of Term Sheet — a daily newsletter about private equity — said that criticizing Yale’s private equity managers overlooks the fact that many of the fees are tied to performance. As a result, cutting off these investments would mean losing billions of dollars for the University, and more generally, decreasing student payouts. “The reason that Yale is able to afford year in and year out to spend the amount that they do on student aid, on facilities, on faculty and all the other things that come with going to Yale … is because it has an endowment that performs really well,” Primack said. “The endowment is not automated, it is not something that just sits there and collects interest, it is invested and it is invested well.”
On “Overheard at Yale,” a popular Facebook group in which the article was shared and hotly debated, roughly a dozen students voiced concerns about what they felt was an unfair distribution of funds away from campus and into the hands of Wall Street investors. Others, however, remained skeptical of the arguments made by the piece. Bernard Stanford ’17 said that while it is true that the University spends a large sum on financial professionals, these payments made to firms cannot be viewed in isolation. “Since Yale’s endowment contributes a full third of the University’s budget, building up the endowment is incredibly important, and failing to hire — and pay — the best investment managers out there ultimately means less money available for spending on students, faculty and facilities,” he said. “People critical of Yale’s endowment strategy need to see [private equity] fund fees for what they ultimately mean to the University: more professors, better buildings and higher financial aid.” Alex Fisher ’14 said those who are attacking the compensation arrangements of fund managers are creating a false comparison since that money cannot simply be redistributed to students. He added that it would be impossible to remove these management fees and expect the endowment returns to go unchanged without these investors’ contributions. “Fund managers are not charities, and if Yale won’t pay market rates for their work, somebody else will use their expertise instead — if you want a quality product, you have to pay for it,” he said. “Perhaps some would feel ethically pure were the University to invest only in low-yield government bonds, but I doubt that the students of tomorrow would thank them for it.” Isa Qasim ’15, a former opinion columnist for the News, said that while there are reasonable arguments to be made about fees paid to money managers and the money directed to financial aid, the true purpose of the endowment is to maintain its purchasing power for future generations, and as a result, spending must be kept conservative. According to the 2014 Yale Endowment report, the target endowment spending rate approved by the Yale Corporation is 5.25 percent. Contact LARRY MILSTEIN at larry.milstein@yale.edu .
Dismembering case remains unsolved BY STEPHANIE ADDENBROOKE STAFF REPORTER The family and friends of Ray Roberson, whose dismembered body parts were found across New Haven this summer, have yet to find peace, as the cause of his death remains unknown. On July 15, the New Haven Police Department discovered two severed legs by the State Street train station. Later that day, officers also discovered two handless arms. Both these body parts were identified as belonging to Roberson, a local homeless man who had last been seen alive on May 20. After the NHPD discovered that Roberson spent time in the old Salvation Army building at 301 George St., which is known as an unofficial shelter for the city’s homeless population, they searched the building and found a headless human torso next door at 274 Crown St. The torso has not yet been identified as Roberson’s, but NHPD spokesman David Hartman said that it would be disturbing if the discoveries were found not to be linked. “We don’t know if these body parts have been here for a week, or for a month,” Hartman said when the limbs were first found. Uncertainty continues to prevail, as police have not yet found any other body parts that could be linked to this case, and no suspects have been revealed to the public at this time. One man found in the old Salvation Army building was arrested for criminal trespassing. Although he knew Roberson, he is not being held in relation to Roberson’s death, Hartman said in a release on July 31. The case, which was originally considered to be the result of a train accident, is now listed as the city’s ninth homicide of 2015. While Hartman has maintained that there is no information indicating where the homicide or dismemberments occurred, he said after the discovery of the torso
that the case appears to be a personally motivated crime. Roberson was identified after samples of the discovered body parts were compared to DNA samples of convicted felons. According to the state’s judicial branch, Roberson was arrested in 2005, 2007, 2008, 2011 and 2012 for counts that include disturbing the peace, disorderly conduct and violation of a protective order. He has also served multiple jail sentences. On May 5, according to state records, Roberson was arrested by the Yale Police Department for a breach of peace in the second degree. He was released with a promise to appear in court on June 17, but he failed to appear in court. His next court appearance was scheduled for Aug. 3.
We don’t know if these body parts have been here for a week, or for a month. DAVID HARTMAN Spokesman, New Haven Police Department Roberson was a graduate of Wilbur Cross High School and a former employee of Yale Dining. Roberson is survived by his six siblings. The family could not be reached for comment. A memorial service will be held this coming Saturday at Christ Chapel New Testament Church at 11 a.m. Sherell Nesmith, one of Roberson’s sisters, told the New Haven Register that she wanted her brother’s memorial to be a joyous celebration of his life, as opposed to a reminder of its horrific end. “We wanted to remember the Ray we knew all our lives,” she said. Contact STEPHANIE ADDENBROOKE at stephanie.addenbrooke@yale.edu .
Summer business openings diversify downtown
ALEXANDRA SCHMELING/PHOTOGRAPHY EDITOR
Salsa Fresca, a casual Mexican restaurant on Broadway, is one of four new dining establishments available near campus. Two more are expected to open in next two weeks. BY CAROLINE HART STAFF REPORTER A series of recent and upcoming business openings in downtown New Haven are diversifying the food options near campus. Since students left Yale for summer break, four new businesses have opened on the perimeter of campus, and two restaurants are set to open in the next two weeks. In the Broadway shopping district, fast-casual Mexican restaurant Salsa Fresca opened in July, while Chinese restaurant Junzi Kitchen is set to open in two weeks. On Chapel Street, Florian Atelier — an upscale seafood restaurant —
opened in the early summer, and candy store Canditopia opened on Aug. 4. On the opposite side of campus, behind Silliman and Timothy Dwight Colleges, New Haven-based crepe truck Crepes Choupette will open a brick-andmortar location at 44 Whitney Ave. on Sept. 3. “I think it is really good to have more businesses come to the area,” said Salsa Fresca Marketing Manager Katie George. “It will draw more students and locals downtown.” George added that Salsa Fresca has plans to draw students — from the University of New Haven and Quinnipiac, in addition to Yale — to the restaurant by ultimately
launching itself as a late-night food option, joining the ranks of Yorkside Pizza and Good Nature Market just down the street. Currently, the business is open until 10 p.m., but they may eventually stay open until 3 a.m., George said. The restaurant has also run promotions, such as advertising free tacos, to introduce students to the restaurant. The founders of Junzi Kitchen, which was created as a studentrun enterprise with funding from the Yale Entrepreneurial Institute, are also hoping to attract students to the restaurant, which will serve Northeastern Chinese food in a Chipotle-style service line.
Yong Zhao FES ’15, a cofounder of Junzi Kitchen, said that construction delays pushed back the opening of the restaurant from last spring to this fall. Zhao said his team is planning an invitation-only trial of the menu in the next two weeks, followed by a soft opening. He added that the restaurant is planning events with Y Pop-Up, a non-profit student-run food business. Alex Herkert ’17, a member of Y Pop-Up, said he is excited to see the opening of an affordable dining option near campus. “It’s always good to have more authentic Chinese options in New Haven,” Herkert said. “I
hope students give it a chance because it sounds like a unique concept.” Another unique concept that opened on the other side of campus is Canditopia, a bag-yourown candy and confectionary shop at 1022 Chapel St., a University-owned property. The store is located above Sushi on Chapel in the space formerly occupied by Peter Indorf Jewelers, which closed in December after owner Peter Indorf retired. Offerings include chocolates, jelly beans, gummy candies and lollipops, as well as nut-free and gluten-free products. John Piazza, an employee at Canditopia, described the store’s
target demographic as “anyone who likes candy” and said that the shop has seen a variety of customers, including families and athletes on Yale sports teams. In the coming weeks, students can expect to see an elaborate grand opening event at Crepes Choupette, said the food cart’s co-owner Adil Chokairy. The cart operated on the corner of Wall and Chapel last year, and will move into a storefront next week, where they will serve not only crepes, but also coffee and raclette, a Swiss cheese-based dish. Contact CAROLINE HART at caroline.hart@yale.edu .