The Sunday NY Times noted the difficulties that most college endowments have had a rough go of it lately. Harvard, with an endowment of over $30 billion, suffered a slight loss in the last quarter, a period during which the S&P gained nearly six percent. The gist of the article is that the magic elixir that hedge funds have been offering their clients has evaporated.

But universities aren’t the only ones who have cast their lot with the hedge funds: state and local pension funds have been chasing returns as well by paying these guys hefty fees, and they’re suffering just like the university endowments.  The difference between the two is that colleges–at least for now–have the ability to raise more money by shaking alumni harder, charging more tuition, or ramping down the rate at which they spend on it. Illinois has thus far been unwilling to hit spending for the next thirty years or so. This isn’t going to end well.