LEXINGTON—Lexington Theological Seminary announced that substantial losses on its stock market investments have decimated its $16 million endowment and may force the institution to change directions. This news comes amidst one of the worst financial meltdowns the United States has ever experienced, at least in the last 15 years.
“We never saw it coming,” LTS President James P. Johnson said in an article that ran in newspapers throughout Kentucky. “This whole stock market decline was like a huge sucker punch. It seems unwarranted, if not entirely unpredictable. But there’s nothing we can do about it now.”
LTS is not the only institution in Kentucky to suffer from the recent economic downturn because it had hitched its wagon to an unstable global financial market. The University of Kentucky also lost nearly 25 percent of its endowment, a decline that caused university leaders to wonder how UK will ever achieve top twenty status.
“Our President, Dr. Todd, always talks about the Kentucky Uglies,” said Mira S. Ball, chairperson of the UK Board of Trustees and CEO of Ball Homes. “But what’s happened to the university’s endowment portfolio is ugly as sin. If you want to put a categorical value on ugliness, this is pretty ugly.”
Ball insisted that, despite her familiarity with the homebuilding and home buying industries, neither she nor anyone else on the Board of Trustees could have foreseen this type of collapse.
President Johnson also pleads the same type of naiveté, even though a Feb. 6 report in The Chronicle for Higher Education suggests that the free-fall of national endowments is following the same obvious principles of the dot com bust nearly a decade ago.
“Conventional wisdom had our institution investing in the funds that we did, but as it turns out, conventional wisdom is foolish, just as the world’s wisdom is foolishness compared to the wisdom of the world, which God has confounded,” Johnson explained. “So, in the end, it would have been wise to have been foolish and play it safe.”
Johnson admitted that the market collapse will result in job cuts for many of the poorest people who work for the seminary, like custodial workers and library staff, but he also insists that LTS should see this misfortune as an opportunity to reinvent itself.
“Just think of Madonna, Prince, Pearl Jam, Christina Aguilera, Garth Brooks, and Apple Computers. What do all of these have in common? They re-invented themselves to stay culturally relevant.”
The Chronicle study confirms the need for LTS to change its course. According to its report, universities have lost an average of 22 percent of their endowments in the last 4 months.
“This is a hard time for everyone, and we do know that there are Monday morning quarterbacks who stand around and point fingers,” said UK President Lee Todd, Jr. “But we can’t lose perspective here. The market goes up and down.”
The Chronicle report on endowments and stock market losses blames blind hope and uncritical optimism for this collapse.
“This is a time where we all need to look ourselves in the eye and decide what we’re really made of,” Todd said.