After National University of Singapore gave an unsatisfactory reply with regard to its huge reserves currently stood at $9.5 billion (‘NUS asked to explain fee increases despite having huge reserves; it replies it didn’t increase this year‘), another member of the public, Tan Boon Huat, wrote to ST Forum to ask for further clarification (‘NUS should explain why it needs billion-dollar reserves‘, 22 Aug).
Mr Tan wrote that NUS’ previous reply on ST Forum did not address the questions raised by the public.
“NUS focused only on the fact that most undergraduates experienced no increase in fees this year and that many schemes exist to help students,” Mr Tan commented. That is to say, NUS didn’t say much about its reserves in its previous reply.
Mr Tan reiterated the public concerns about NUS’ huge reserves which could have been used to address the increasing cost of tertiary education.
“The gold standard for non-profit organisations is to accumulate two years of reserves,” he remarked. “Is there no limit to the amount of reserves that an institution like NUS should keep?”
And added, “I strongly advocate a moratorium on NUS raising funds until the reserves are reduced to a specific level. NUS owes the public an explanation as to why it needs to accumulate $9.5 billion in its reserves and the purpose for such huge reserves.”
Accumulated operating surpluses of $2.8 billion or about 30% of reserves
NUS Senior Vice-Provost, Prof Bernard Tan Cheng Yian, replied on ST Forum today (‘Endowment helps keep university education affordable‘, 28 Aug), giving some details with regard to the $9.5 billion reserves NUS is keeping.
Prof Tan revealed that NUS’ total funds and reserves stood at $9.5 billion for the financial year that ended on 31 Mar 2018. He then broke down details of the reserves:
- Endowed funds – $5.9 billion
- Non-endowed donations for specific purposes – $0.8 billion
- Accumulated operating surpluses – $2.8 billion (~30%)
Prof Tan said the endowed funds are principal that NUS cannot spend. It can only use the income generated.
“For both the endowed and non-endowed donated funds, the large majority of donors specify how the funds are to be used, typically for research, bursaries and scholarships. NUS therefore has no flexibility to change their usage,” he explained.
He also added that NUS’ endowment target payout is at about 4 per cent per annum.
“In the financial year that ended on March 31 last year, NUS spent close to $230 million in endowment investment returns and non-endowed donations; 60 per cent was spent on operating expenditure for education and related programmes like overseas exchange, 22 per cent on bursaries and scholarships, and the rest on professorships, research and enterprise,” he revealed.
“In addition, MOE contributes to the endowment funds by matching donations raised by the university. Hence, a significant part of the income from endowed funds goes towards funding operating expenditure for education, and forms part of the education subsidy.”