Is There an 'Education Bubble'? And Not Just at Harvard?

On The Deal Professor blog, Steven M. Davidoff looks closely at Harvard's financial situation and draws potential conclusions about an 'education bubble' potentially being burst by illiquid assets:

So, my numbers are rough, very rough estimates — but the problem is apparent. In the short term, unless it boosts its liquid returns, Harvard is going to have to raise a lot in donations or eat up its liquid assets to fund university obligations and its private equity commitments. This results in a spiraling decline in Harvard’s liquid assets as each year they go lower to meet these needs and more and more assets become tied up in private equity. This assumes the markets stay where they are in the next three years — there are scenarios where liquid assets do worse (like yesterday), or better, of course.

This is likely why Harvard recently sold $1.5 billion in debt, and unsuccessfully tried to sell $1.5 billion of its private equity portfolio. It needs to cover short-term funding obligations rather than liquidate illiquid assets at fire-sale prices. In essence, Harvard is more like a hedge fund than ever — trading for short-term gain with the same risks involved.

Other universities may be in worse positions. Duke, for example, sold $500 million in bonds, and Princeton $1.5 billion. Again, the reason appears to be to fund liquidity.

Harvard Slows Its Growth in a Boston Neighborhood

We don't know if this is going "from eating brie to cheddar," but even Harvard University is finding that the financial crisis has an impact on its expansion plans into the Allston neighborhood:

The university is reviewing its plans for a four-building, $1 billion science center in Allston, which is across the Charles River from the Cambridge campus. It was scheduled to be completed in 2011.

The university plans to finish the complex’s foundation and build to ground level, but plans after that are uncertain.

“As we approach the end of the current construction phase,” the university president, Drew Gilpin Faust, said in a letter to the Harvard community, “we will examine whether economic conditions are enough improved to allow us to continue construction, or whether to reconfigure the building in ways that yield either new cost savings or new space realization, or whether we need to pause construction.”

The Machine as Garden: The New Harvard Campus in Allston, Sustainability, and Its Effects on Design

In the latest issue of Harvard Design Magazine, SCUPer Nathalie Beauvais portrays a vision for Harvard's Allston Campus in an essay titled: The Machine as Garden: The New Harvard Campus in Allston, Sustainability, and Its Effects on Design.

The old cliché that the pursuit of greenness in buildings is inevitably in conflict with the pursuit of aesthetic quality is disappearing fast. Green features are no longer being thought of as “tack-ons,” like solar roof panels, but instead as elements as integral as support beams or doors. One must design using green features and making them as aesthetically rich and appealing as any other aspect of buildings. The goal of sustainability integrates professions because it forces comprehensiveness and interconnection in addressing all elements of the project: infrastructure, architecture, landscape, and place-making. Only sophisticated engineering and technology can mitigate the impact of development. We must begin to think not of Leo Marx's “machine in the garden” but of the machine as the garden. Acknowledging the engineered nature of the built habitat is a necessary step for embracing sustainable design at the campus scale.

Got Questions About Green Buildings? Go to Harvard!

SCUPer Bill Johnson of Haley and Aldrich shared this great resource with the SCUP office. Even though we know and admire Leith Sharp, we did not know of this very useful online resource, Havard's Green Building Resource:

The Harvard Green Campus Initiative has developed this Green Building Resource to support the implementation of Harvard’s Green Building Guidelines and Harvard’s Sustainability Principles.

The Resource is the result of seven years of work, and includes the experience and knowledge gained from 25 Harvard LEED projects. It has been designed to foster continuous improvement in cost-effective green building design, using LEED as the accountability tool. The Resource will be continuously updated and expanded to reflect the frontier of best practice across the university.