Harvard's Endowment Returns Outpaced by 71% of Universities

The rate of return on Harvard's $5.1 billion endowment was lower than that of 71 percent of the nation's colleges and universities in fiscal 1992.

Since 1989 Harvard has performed below the national average for university endowments, according to the National Association of College and University Business Officers.

And as far back as 1987--the last date for which records are kept--Harvard's annual rate of return was consistently outperformed by at least 30 percent of universities nationwide, according to figures compiled by Wurts, Johnson and Associates, a Seattle-based investment performance consulting firm.

Had Harvard performed as well as the average school in the top quartile over the last five years, the University would have earned an additional $1 billion, more than half of the estimated target of the University's upcoming capital campaign.

The endowment's lackluster performance record has many Harvard graduates, themselves experts in the investment field, seriously concerned.

The alumni are directing increasingly sharp criticism at both the leadership and the investment techniques of the Harvard Management Corporation (HMC), which administers the endowment.

"Just as the taxpayer in the United States has been asked to pay for the savings and loan fiasco, so too are Harvard alumni being asked to bail out the President and Fellows for their egregious lack of oversight in the management of Harvard's money," said one Harvard graduate who is a major contributor to the University. "This is a bailout. It's nothing more complicated than that."

Resurrecting a Giant

When New York financial wizard Jack R. Meyer took over as head of HMC in the autumn of 1990, his mission was to resurrect a bleeding giant.

Following more than a decade of explosive growth and nationally recognized leadership in the endowment management industry, HMC was in serious trouble.

Returns on Harvard's endowment were falling, from an impressive rate were falling, from an impressive rate of 43.3percent in fiscal 1983, to half that in 1985, toless than half again four years later.

The company's reputation was flagging as well.

Some alumni had begun to wonder whether WalterM. Cabot '54--Meyer's venerable predecessor andHMC's president since its creation in 1974--hadlost control after years of decentralizedleadership.

Two of Cabot's top money managers, Scott M.Sperling and Michael Eisenson, were widelyregarded on Wall Street as inexperienced andreckless. Both were formerly employed by theBoston Consulting Group.

In addition, HMC was dogged by criticisms thatits employees--whose salaries far exceeded thoseof any other University official, includingthen-President Derek C. Bok--were overpaid.

In 1989, Sperling and Eisenson earned over $1million each. Cabot took home more than $1.4million in salary and bonuses the year he steppeddown.

Meyer, the former chief investment officer ofthe Rockefeller Foundation, set out to change allthat.

In his first year, he created a new board ofdirectors to oversee HMC's Aeneas Group--theportfolio managed by Sperling and Eisenson--whichconsists of aggressive private placements in realestate, venture capital and energy commodities.

The move was seen by those familiar with HMC asboth a blow and a warning to Sperling andEisenson--an image that was further enhanced whenthe board devalued Aeneas's investments by nearly$200 million, more than 20 percent of their totalworth. Several critics claimed that the investmentvaluations were inflated in the first place.

The board also redesigned HMC's compensationsystem, which the critics charged allowed foremployees to earn enormous performance bonusesbased on unrealized gains.

In addition, Meyer outlined a clear schedulefor asset allocation, known as a policy portfolio,to cover the next several years. And he announcedplans to scrap the widely used standard againstwhich HMC had long measured its performance--aconventional "vanilla portfolio" of stocks andbonds--in favor of a new system of internalbenchmarks based on the policy portfolio.

Critics have said that the move makes it easierfor HMC to appear to outperform the market when infact it is not.

"It's the famous portfolio manager dodge," saidone financial expert who spoke on condition ofanonymity. "Eventually you can always find astandard against which you can perform well."

Overall, however, the changes seemed designedto centralize the company's power structure,coordinate its goals, and prevent any abuses ofpower over Harvard's money.

But today, with Meyer two months intohis third year at HMC's helm, the giant continuesto bleed. And the critics are wondering whethermore fundamental changes are needed, perhaps inpersonnel or even in the very manner by which HMCdoes business.

To be sure, the management company is stillearning money. This year, returns on the endowmentwere 11.8 percent. But Harvard's performancecontinues to lag well behind that of otheruniversities.

Nationally, university endowments earned anaverage return of 12.7 percent in fiscal 1992,according to a preliminary report by the NationalAssociation of College and University BusinessOfficers. Schools with endowments greater than$400 million averaged 13.8 percent, the reportsaid.

Last year--Meyer's first as HMCpresident--Harvard was outperformed by 95 percentof U.S. universities, according to Wurts, Johnsonand Associates. Meyer attributed the poor showingto the Aeneas writedowns.

Still, the critics have said, this year'sperformance was not much better comparatively,with 71 percent of the nation's universitiesperforming better than Harvard.

The results come on the eve of the largestcapital campaign in the history of any university,an effort that will require Harvard graduates tocough up substantial sums of money if theUniversity is to reach its estimated target of $2billion.

That figure is contingent on Harvard's abilityto double the amount it receives in charitablecontributions--now about $200 millionannually--over a five year period.

But according to several Harvard graduates, ifHMC had simply managed the University's moneyproperly, the need for the entire capital campaignwould be erased.

"There are all kinds of wonderful things thatthey could have done, had they not wasted all thismoney in the endowment," one major contributorsaid. "Because Harvard's leaders were satisfiedwith mediocre performance, this is what itproduced in terms of lost opportunity."

Meyer himself has said that HMC'sresponsibility is not simply to meet the nationalaverage of endowment performance but to surpass itby a meaningful margin, something he conceded hasnot happened for several years.

"I don't think it's our role to keep pace. Ithink our role is to do better," he said.

But the HMC president said that no investmentorganization is without its share of poorperformance years, noting that Harvard has beenhit especially hard recently by a soft real estatemarket and low gas prices. The managementcompany's performance needs to be judged over thelong term, he said.

"I think over time our policy portfolio willslightly outperform the average universityendowment, and I think that we will succeed inmodestly outperforming the policy portfolio," hesaid. "Put the two together, and we'll have a nicerecord."

Harvard President Neil L. Rudenstine agrees.

"How you evaluate performance, I think, isprobably something you want to do comparativelyover a long period of time...certainly a decade,and in most cases longer," Rudenstine said."Mostly, we look in terms of literally 25 to 30years to see whether the endowment has maintainedits purchasing power."

But many alumni, themselves experts in theinvestment industry, dispute that argument.

"It occurs to me that that is a completely weakand shamelessly transparent justification formediocre performance," said one alumnus and majorcontributor. "It's tragic that these guys havejust totally abdicated their fiduciaryresponsibility."

"When you're dealing with a broad basedportfolio, and talking about billions of dollars,it's a little tough to say that somehow you'regoing to have unsystematic returns that shoot youway down into the lower ranks," said another. "Youcan be a little bit off for a while, but if you'reway off the money you've got to ask some prettypenetrating questions."

Several finance experts said that theperformance of most investment managers is judgedover three to five years. Anything more, theysaid, increases job security to the point that itdecreases the incentive to perform.

"I know many places where they're evaluatedevery six months," said longtime Harvardbenefactor Albert F. Gordon '59. "Twenty or 30years is meaningless."

And George F. Bennett '33, a former Harvardtreasurer who managed the University's endowmentduring a period of explosive growth after WorldWar II--and before the creation of HMC--agrees.

"I think a management company has to produceresults in three to five years," Bennett said."Some might argue that five years is too long, andmaybe it is."

The suggestions of Bennett, Gordon and othersmean that Meyer--with more than two years underhis belt--may be due for a performance reviewsometime soon.

"They should have a performance review ifHarvard were in the real world," Gordon said.

If that is true, then alumni concerns aboutHMC's lackluster returns may be given seriousconsideration.

These include questions about the heavyweighting of the policy portfolio towardexpensive-to-manage investments in foreignsecurities and venture capital, and about Meyer'scontinued support of Sperling and Eisenson.

"I think that there's a fundamental mismatchbetween the strategy that they have and the peoplethat they have," said one alumnus in theinvestment management industry. "To the degreethat you look to Jack Meyer as somebody who isresponsible for selecting and managing hisindividual asset managers, then that is a criteriafor evaluating Meyer."

In addition, Gordon and others have criticizedMeyer for his failure to disclose what specificinvestments Aeneas makes.

"I think there's a pattern here of cavalierdisregard for the outside world," Gordon said."They would seem to be most comfortable withgiving out the minimum possible information thatthey possibly can get away with, and I think thatthis is a very damaging course of action becausein doing so they avoid accountability to theoutside Harvard community."

Still, others have come to the HMC president'sdefense.

"Thank God for Jack Meyer," said one alumnusand financial expert. "I can't think of anyone inthe United States I'd rather have [as HMCpresident]."

Another alumnus said that Meyer should be givenmore time.

"In fairness, you should give Meyer anothercouple of years," the source said He addedhowever, "I don't think we can afford to let himhave 10 to 15 years of sub par performance."

Rudenstine said he has complete confidence inthe management company's leadership.

"Any management of any portfolio is always opento criticism and we should listen to it. But youtake it into account and then you make your bestjudgment as to what to do," Rudenstine said. "Onceyou've made your decision you either decide thatyou have good managers or you don't, and I thinklast year's performance was quite a goodperformance."

Still, some critics have suggested that,as one of only a handful of universities in thecountry with its own in-house endowment managementteam, Harvard may want to consider a gradual moveback to independent management by competitivefirms.

Combined with lengthy tenures for investmentmanagers, the in-house system reduces theincentive to perform by eliminating anycompetition for Harvard's business, the criticssaid.

"They're in an ivory tower. They don't knowwhat's going on in the real world," Gordon said."They know they're not going to lose the accountand there's little chance that they're going to befired except for internal power struggles."

Some of the critics have suggested that Harvardconsider investing in a firm like the widelyrespected Common Fund for Nonprofit Organizations,a Connecticut-based cooperative that manages thepooled endowments of several hundred colleges,universities and independent schools.

The Common Fund, with more than $7 billion inendowment funds under its management, farms themoney out itself to private managers.

Since 1976, the average Common Fund member hasearned an annualized rate of return of 13.2percent on its endowment. Harvard, by contrast,has earned 11.9 percent over roughly the sameperiod.

According to Bennett, Harvard was invited tojoin The Common Fund when the fund was establishedin 1971, but opted instead to create HMC.

"We decided not to do it, because we felt itwas a very good concept for a small to medium sizeendowment, but ours was large enough to befree-standing without participating," Bennettsaid.

Bennett and Common Fund President George F.Keane are reluctant to criticize Meyer or hispredecessor, Cabot. But both acknowledged thatHarvard probably would have done better as amember of The Common Fund than it has on its ownover the past two decades.

"The fact is that compared with other largeendowment funds, The Common Fund has generallydone a little better over time," Keane said.

HMC has invested some money with The CommonFund, and Meyer conceded that the fund has a goodperformance record.

"I think The Common Fund has done a nice job,"he said.

Still, the HMC president said that the fund'soverall mission differs from Harvard's and thatHMC has no current intentions of investing anymore money with outside managers.

Meyer, Rudenstine and Harvard Vice Presidentfor Finance Robert H. Scott said that Harvardwould likely pay higher management fees to privatefirms than it currently pays to run HMC.

"I'm quite confident that our costs aresignificantly less than if we went outside," Meyersaid. "I think that our after-cost return will behigher managing the assets as we do now ratherthan going to external managers."

But other investment managers disagree,suggesting that Harvard could easily find qualityindependent managers who charge prices comparablewith the $24 million Harvard invested in HMC infiscal 1991. That number--equivalent to nearly 50basis points, or fractions of a percent spreadover the whole endowment--was up $4 million fromthe year before.

"Indexing you can probably do for four or fivebasis points," said one alumnus and financialexpert, referring to the so-called "passive"investing of money spread out over standard stockand bond indices.

"Active management goes for 40 to 50 basispoints," the source continued. "I don't think $24million is out of line...[Calling it] a bargain ismaybe going too far."

"[HMC is] very tilted towardexpensive-to-manage investments," said Harvey M.Young, a senior vice president at the MetropolitanLife Insurance Company in New York. "They could dobetter [in terms of management fees] if they said,'Let's go to passive rather than activemanagement.'"

Still,. other investment experts have suggestedthat even if Harvard were to pay higher fees tooutside managers, the net gain might outweigh anylower costs incurred by HMC.

"The real question is, does the opportunitycost [of maintaining HMC] outweigh the hard dollarmanagement cost," asked one alumnus. "Five billionis certainly a critical mass to merit having acaptive unit...but if you don't have able andexperienced people, you're not going tooutperform."

Meyer said Harvard has no intention of alteringits current system in the near future.

"I know that we can go back historically andfind funds and managers that have performed betterthan HMC," Meyer said. "My job is not to find theones that have performed better historically, butto go forward...We think that we are set upproperly for the future."

According to one source close to Meyer,however, the HMC president has given thealternative options--including further investmentwith outside managers--serious thought.

"I'd let Jack Meyer make that choice," thesource said. "He's spent hours worrying aboutthis."

Scott said that Harvard is committed tomaintaining its internal management organization.But he added that the University will neverentirely rule out the option of externalmanagement.

"I have great faith in the structure Harvardhas established to manage its investments," Scottsaid. "I'm not saying that we always will dothings internally...but I don't think there is aplan to do things differently."

And Rudenstine agrees.

"I think that our system is working well and Idon't have any serious doubts about it," he said."In fact, I think it's doing extremely well, butit's not as if it's the only way to do things."

"I don't think anybody I know would claimthat," Rudenstine added. "And if anybody knewexactly the way to do it, then everybody would doit."Crimson File PhotoHMC President JACK R. MEYER

The company's reputation was flagging as well.

Some alumni had begun to wonder whether WalterM. Cabot '54--Meyer's venerable predecessor andHMC's president since its creation in 1974--hadlost control after years of decentralizedleadership.

Two of Cabot's top money managers, Scott M.Sperling and Michael Eisenson, were widelyregarded on Wall Street as inexperienced andreckless. Both were formerly employed by theBoston Consulting Group.

In addition, HMC was dogged by criticisms thatits employees--whose salaries far exceeded thoseof any other University official, includingthen-President Derek C. Bok--were overpaid.

In 1989, Sperling and Eisenson earned over $1million each. Cabot took home more than $1.4million in salary and bonuses the year he steppeddown.

Meyer, the former chief investment officer ofthe Rockefeller Foundation, set out to change allthat.

In his first year, he created a new board ofdirectors to oversee HMC's Aeneas Group--theportfolio managed by Sperling and Eisenson--whichconsists of aggressive private placements in realestate, venture capital and energy commodities.

The move was seen by those familiar with HMC asboth a blow and a warning to Sperling andEisenson--an image that was further enhanced whenthe board devalued Aeneas's investments by nearly$200 million, more than 20 percent of their totalworth. Several critics claimed that the investmentvaluations were inflated in the first place.

The board also redesigned HMC's compensationsystem, which the critics charged allowed foremployees to earn enormous performance bonusesbased on unrealized gains.

In addition, Meyer outlined a clear schedulefor asset allocation, known as a policy portfolio,to cover the next several years. And he announcedplans to scrap the widely used standard againstwhich HMC had long measured its performance--aconventional "vanilla portfolio" of stocks andbonds--in favor of a new system of internalbenchmarks based on the policy portfolio.

Critics have said that the move makes it easierfor HMC to appear to outperform the market when infact it is not.

"It's the famous portfolio manager dodge," saidone financial expert who spoke on condition ofanonymity. "Eventually you can always find astandard against which you can perform well."

Overall, however, the changes seemed designedto centralize the company's power structure,coordinate its goals, and prevent any abuses ofpower over Harvard's money.

But today, with Meyer two months intohis third year at HMC's helm, the giant continuesto bleed. And the critics are wondering whethermore fundamental changes are needed, perhaps inpersonnel or even in the very manner by which HMCdoes business.

To be sure, the management company is stillearning money. This year, returns on the endowmentwere 11.8 percent. But Harvard's performancecontinues to lag well behind that of otheruniversities.

Nationally, university endowments earned anaverage return of 12.7 percent in fiscal 1992,according to a preliminary report by the NationalAssociation of College and University BusinessOfficers. Schools with endowments greater than$400 million averaged 13.8 percent, the reportsaid.

Last year--Meyer's first as HMCpresident--Harvard was outperformed by 95 percentof U.S. universities, according to Wurts, Johnsonand Associates. Meyer attributed the poor showingto the Aeneas writedowns.

Still, the critics have said, this year'sperformance was not much better comparatively,with 71 percent of the nation's universitiesperforming better than Harvard.

The results come on the eve of the largestcapital campaign in the history of any university,an effort that will require Harvard graduates tocough up substantial sums of money if theUniversity is to reach its estimated target of $2billion.

That figure is contingent on Harvard's abilityto double the amount it receives in charitablecontributions--now about $200 millionannually--over a five year period.

But according to several Harvard graduates, ifHMC had simply managed the University's moneyproperly, the need for the entire capital campaignwould be erased.

"There are all kinds of wonderful things thatthey could have done, had they not wasted all thismoney in the endowment," one major contributorsaid. "Because Harvard's leaders were satisfiedwith mediocre performance, this is what itproduced in terms of lost opportunity."

Meyer himself has said that HMC'sresponsibility is not simply to meet the nationalaverage of endowment performance but to surpass itby a meaningful margin, something he conceded hasnot happened for several years.

"I don't think it's our role to keep pace. Ithink our role is to do better," he said.

But the HMC president said that no investmentorganization is without its share of poorperformance years, noting that Harvard has beenhit especially hard recently by a soft real estatemarket and low gas prices. The managementcompany's performance needs to be judged over thelong term, he said.

"I think over time our policy portfolio willslightly outperform the average universityendowment, and I think that we will succeed inmodestly outperforming the policy portfolio," hesaid. "Put the two together, and we'll have a nicerecord."

Harvard President Neil L. Rudenstine agrees.

"How you evaluate performance, I think, isprobably something you want to do comparativelyover a long period of time...certainly a decade,and in most cases longer," Rudenstine said."Mostly, we look in terms of literally 25 to 30years to see whether the endowment has maintainedits purchasing power."

But many alumni, themselves experts in theinvestment industry, dispute that argument.

"It occurs to me that that is a completely weakand shamelessly transparent justification formediocre performance," said one alumnus and majorcontributor. "It's tragic that these guys havejust totally abdicated their fiduciaryresponsibility."

"When you're dealing with a broad basedportfolio, and talking about billions of dollars,it's a little tough to say that somehow you'regoing to have unsystematic returns that shoot youway down into the lower ranks," said another. "Youcan be a little bit off for a while, but if you'reway off the money you've got to ask some prettypenetrating questions."

Several finance experts said that theperformance of most investment managers is judgedover three to five years. Anything more, theysaid, increases job security to the point that itdecreases the incentive to perform.

"I know many places where they're evaluatedevery six months," said longtime Harvardbenefactor Albert F. Gordon '59. "Twenty or 30years is meaningless."

And George F. Bennett '33, a former Harvardtreasurer who managed the University's endowmentduring a period of explosive growth after WorldWar II--and before the creation of HMC--agrees.

"I think a management company has to produceresults in three to five years," Bennett said."Some might argue that five years is too long, andmaybe it is."

The suggestions of Bennett, Gordon and othersmean that Meyer--with more than two years underhis belt--may be due for a performance reviewsometime soon.

"They should have a performance review ifHarvard were in the real world," Gordon said.

If that is true, then alumni concerns aboutHMC's lackluster returns may be given seriousconsideration.

These include questions about the heavyweighting of the policy portfolio towardexpensive-to-manage investments in foreignsecurities and venture capital, and about Meyer'scontinued support of Sperling and Eisenson.

"I think that there's a fundamental mismatchbetween the strategy that they have and the peoplethat they have," said one alumnus in theinvestment management industry. "To the degreethat you look to Jack Meyer as somebody who isresponsible for selecting and managing hisindividual asset managers, then that is a criteriafor evaluating Meyer."

In addition, Gordon and others have criticizedMeyer for his failure to disclose what specificinvestments Aeneas makes.

"I think there's a pattern here of cavalierdisregard for the outside world," Gordon said."They would seem to be most comfortable withgiving out the minimum possible information thatthey possibly can get away with, and I think thatthis is a very damaging course of action becausein doing so they avoid accountability to theoutside Harvard community."

Still, others have come to the HMC president'sdefense.

"Thank God for Jack Meyer," said one alumnusand financial expert. "I can't think of anyone inthe United States I'd rather have [as HMCpresident]."

Another alumnus said that Meyer should be givenmore time.

"In fairness, you should give Meyer anothercouple of years," the source said He addedhowever, "I don't think we can afford to let himhave 10 to 15 years of sub par performance."

Rudenstine said he has complete confidence inthe management company's leadership.

"Any management of any portfolio is always opento criticism and we should listen to it. But youtake it into account and then you make your bestjudgment as to what to do," Rudenstine said. "Onceyou've made your decision you either decide thatyou have good managers or you don't, and I thinklast year's performance was quite a goodperformance."

Still, some critics have suggested that,as one of only a handful of universities in thecountry with its own in-house endowment managementteam, Harvard may want to consider a gradual moveback to independent management by competitivefirms.

Combined with lengthy tenures for investmentmanagers, the in-house system reduces theincentive to perform by eliminating anycompetition for Harvard's business, the criticssaid.

"They're in an ivory tower. They don't knowwhat's going on in the real world," Gordon said."They know they're not going to lose the accountand there's little chance that they're going to befired except for internal power struggles."

Some of the critics have suggested that Harvardconsider investing in a firm like the widelyrespected Common Fund for Nonprofit Organizations,a Connecticut-based cooperative that manages thepooled endowments of several hundred colleges,universities and independent schools.

The Common Fund, with more than $7 billion inendowment funds under its management, farms themoney out itself to private managers.

Since 1976, the average Common Fund member hasearned an annualized rate of return of 13.2percent on its endowment. Harvard, by contrast,has earned 11.9 percent over roughly the sameperiod.

According to Bennett, Harvard was invited tojoin The Common Fund when the fund was establishedin 1971, but opted instead to create HMC.

"We decided not to do it, because we felt itwas a very good concept for a small to medium sizeendowment, but ours was large enough to befree-standing without participating," Bennettsaid.

Bennett and Common Fund President George F.Keane are reluctant to criticize Meyer or hispredecessor, Cabot. But both acknowledged thatHarvard probably would have done better as amember of The Common Fund than it has on its ownover the past two decades.

"The fact is that compared with other largeendowment funds, The Common Fund has generallydone a little better over time," Keane said.

HMC has invested some money with The CommonFund, and Meyer conceded that the fund has a goodperformance record.

"I think The Common Fund has done a nice job,"he said.

Still, the HMC president said that the fund'soverall mission differs from Harvard's and thatHMC has no current intentions of investing anymore money with outside managers.

Meyer, Rudenstine and Harvard Vice Presidentfor Finance Robert H. Scott said that Harvardwould likely pay higher management fees to privatefirms than it currently pays to run HMC.

"I'm quite confident that our costs aresignificantly less than if we went outside," Meyersaid. "I think that our after-cost return will behigher managing the assets as we do now ratherthan going to external managers."

But other investment managers disagree,suggesting that Harvard could easily find qualityindependent managers who charge prices comparablewith the $24 million Harvard invested in HMC infiscal 1991. That number--equivalent to nearly 50basis points, or fractions of a percent spreadover the whole endowment--was up $4 million fromthe year before.

"Indexing you can probably do for four or fivebasis points," said one alumnus and financialexpert, referring to the so-called "passive"investing of money spread out over standard stockand bond indices.

"Active management goes for 40 to 50 basispoints," the source continued. "I don't think $24million is out of line...[Calling it] a bargain ismaybe going too far."

"[HMC is] very tilted towardexpensive-to-manage investments," said Harvey M.Young, a senior vice president at the MetropolitanLife Insurance Company in New York. "They could dobetter [in terms of management fees] if they said,'Let's go to passive rather than activemanagement.'"

Still,. other investment experts have suggestedthat even if Harvard were to pay higher fees tooutside managers, the net gain might outweigh anylower costs incurred by HMC.

"The real question is, does the opportunitycost [of maintaining HMC] outweigh the hard dollarmanagement cost," asked one alumnus. "Five billionis certainly a critical mass to merit having acaptive unit...but if you don't have able andexperienced people, you're not going tooutperform."

Meyer said Harvard has no intention of alteringits current system in the near future.

"I know that we can go back historically andfind funds and managers that have performed betterthan HMC," Meyer said. "My job is not to find theones that have performed better historically, butto go forward...We think that we are set upproperly for the future."

According to one source close to Meyer,however, the HMC president has given thealternative options--including further investmentwith outside managers--serious thought.

"I'd let Jack Meyer make that choice," thesource said. "He's spent hours worrying aboutthis."

Scott said that Harvard is committed tomaintaining its internal management organization.But he added that the University will neverentirely rule out the option of externalmanagement.

"I have great faith in the structure Harvardhas established to manage its investments," Scottsaid. "I'm not saying that we always will dothings internally...but I don't think there is aplan to do things differently."

And Rudenstine agrees.

"I think that our system is working well and Idon't have any serious doubts about it," he said."In fact, I think it's doing extremely well, butit's not as if it's the only way to do things."

"I don't think anybody I know would claimthat," Rudenstine added. "And if anybody knewexactly the way to do it, then everybody would doit."Crimson File PhotoHMC President JACK R. MEYER