Peter Conti-Brown (Stanford) has posted Scarcity Amidst Wealth: What Law, Finance, and Culture can and Cannot Explain about University Endowments in Financial Crisis on SSRN.  Here is the abstract:

The financial crisis of 2008-2009 left elite university endowments with 30% less value. These universities have responded with a dramatic budgetary restructuring. While endowments had received probing national and Congressional attention in the months prior to the crisis, that attention has largely given way to the conventional wisdom that universities are no longer able to meet their budgetary needs because of these losses. This wisdom has taken hold despite the fact that elite universities still sit atop multi-billion dollar endowments designed, at least in theory, to provide a cushion in times of financial distress.

This Article explores this apparent puzzle by looking at the legal and financial restrictions placed on endowment spending. The Article finds that, arguments to the contrary notwithstanding, the law does not meaningfully restrict elite universities in their spending largely because the law does not apply to unrestricted funds that compose almost half of elite universities' endowments. A stronger explanation is financial: elite university investment in illiquid assets means that universities cannot cash out endowments to stabilize their budgets because of an inability to access those investments. I argue, though, that that explanation is still inadequate: illiquid investments probably account for a minority of a university’s endowment, and probably provide some degree of liquidity that universities have determined not to tap. The Article finds a fuller explanation in the culture of university endowments, or the non-economic value that a large and growing endowment provides to universities and university administrators. The Article concludes that the drop in attention to endowment management is unwarranted: if anything, university reactions to the financial crisis should prompt more inquiries into why universities have endowments, how they use them, and how society is served by the continuing benefits that elite endowments receive.

Gordon Smith (BYU) praises this "fascinating paper" in The Taxing and Spending of University Endowments.