State Treasurers Call on Tesla Board to Ensure Musk’s Focus on Company

A letter from Americans for Responsible Growth called for board engagement with stakeholders, as well as oversight of the automaker’s key executive.


Several state treasurers, from states that collectively invest hundreds of billions of dollars of public pension assets, have informed the board of Tesla Inc. that they are concerned about the performance of Tesla’s stock, as well as where Tesla CEO Elon Musk is focusing his attention.

The April 17 letter, signed by seven state treasurers and the controller of California and presented by Americans for Responsible Growth, an advocacy group focused on ensuring responsible fiscal stewardship, asked the board of Tesla to “act decisively to ensure the company returns to a stable and focused trajectory.”

Tesla shares are down nearly 40% so far this year. The company, which Tuesday evening announced that company profits fell 71% in the first quarter of 2025, has grappled with a decline in deliveries and increased competition in China from upstart automakers like BYD and Xiaomi. Tesla reported Q1 2025 revenue of $19.34 billion, below the $21.3 billion it reported a year ago. 

“Tesla, Inc. is not just one of the world’s most valuable companies—it is a major player in the clean energy economy and a leading force in emerging technologies such as robotics and autonomous driving,” the letter stated. “The company’s success or setbacks have significant implications for workers, regional industries, and innovation ecosystems in our states.”

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news.

The signatories were also concerned with Musk’s divided attention across his multiple companies, including X, XAI, SpaceX and Neuralink, as well as his role as the head of the Department of Government Efficiency service temporary organization.

“These external commitments raise serious questions about whether Tesla’s leadership is fully engaged in addressing the company’s core challenges,” the letter stated. Musk’s position at DOGE and closeness with the administration of President Donald Trump has drawn criticism from investors and fiduciaries.

“The Board’s role is especially critical now—to provide strong oversight, uphold fiduciary standards, and ensure that the company’s leadership is aligned with the long-term best interests of the company,” the letter stated. “Public officials like us do not take the step of raising these concerns lightly except when the obvious risks demand it.”

The letter called for the Tesla board to provide clarity on the following questions:

  • How is the board ensuring that Musk and Tesla’s leadership team are devoting adequate time and focus to resolving recent performance issues and guiding the company’s future direction?
  • In light of the company’s underperformance, how is the board evaluating whether executive compensation remains aligned with shareholder value and corporate accountability? and
  • How does the board plan to communicate its strategy for navigating this period of uncertainty and restoring investor and public confidence in Tesla’s leadership?

“Finally, we strongly believe Tesla’s board would benefit from engaging with public sector stakeholders who share an interest in the company’s long-term value and societal impact,” the letter stated. “We welcome the opportunity to speak further about these concerns and discuss how the board can take swift and transparent action to restore investor confidence and public trust in Tesla’s leadership and the company’s future.”

Several institutional investors have criticized Tesla’s governance and Musk’s political ventures at DOGE. New York City Comptroller Brad Lander earlier this month called for the city’s law department to pursue securities litigation against Tesla over what he identified as the board’s failure to properly oversee Musk.

“Ever since Elon Musk took over DOGE and became best-friend-in-chief with President Trump, Tesla—where Musk is supposed to be CEO—has suffered financially, causing enormous losses for Tesla shareholders,” Lander said in a statement earlier this month. “In less than three months, Tesla stock has lost nearly 40% of its value, with losses over $300 million for the New York City pension systems.”

Danish pension fund AkademikerPension in March announced plans to sell its remaining shares of Tesla and add the company to its exclusion list if major changes were not made.

In early April, the Canadian Association of Professional Employees, one of the largest public sector unions in Canada, called on the Public Sector Pension Investment Board, as well as all Canadian pension funds, to divest from their Tesla holdings.

Signatories of the ARG letter, in the order listed, included:

  • Washington State Treasurer Mike Pellicciotti (signing the letter solely in his official as a state treasurer);
  • Massachusetts State Treasurer and Receiver-General Deborah Goldberg;
  • Illinois State Treasurer Michael Frerichs;
  • Connecticut Treasurer Erick Russell;
  • New Mexico State Treasurer Laura Montoya;
  • Colorado State Treasurer David Young (signing the letter as an elected official and not as a fiduciary);
  • Vermont State Treasurer Mike Pieciak; and
  • California State Controller Malia M. Cohen.

Related Stories:

Danish Pension Fund: Musk ‘Destroying’ Tesla Brand, Value

NYC Comptroller Brad Lander Takes Aim at Elon Musk’s Political Ventures

Large Institutional Investors Rally Against Tesla Pay Package

Tags: , ,

Why Endowments Are Not a Quick Fix for Universities Facing Funding Cuts

Restrictions on use and the funds’ earmarked status limit how much universities can rely on endowments to address funding shortfalls.




Most universities facing funding cuts from the administration of President Donald Trump have sizeable endowments, but using those portfolios to address the funding shortfalls is not as easy as it seems.

Ivy League and other top universities have massive endowments. Harvard University’s, for example, was valued at $53.2 billion as of June 30, 2024, the largest of any U.S. university, according to a report by the National Association of College and University Business Officers and Commonfund. But that sum is not readily accessible.

In fact, the endowment is not even a single fund—the $53.2 billion is comprised of 14,000 individual funds, most of which are subject to restrictions and long-term purposes, according to Harvard’s fiscal 2024 financial report.

“People think of endowments as one big pot of money, but most are made up of thousands of restricted funds tied to donor intent, usually for a specific purpose,” says Cathleen Rittereiser, co-author of the book “Foundation and Endowment Investing.” “It’s just not that easy to just tap into that.”

Want the latest institutional investment industry
news and insights? Sign up for CIO newsletters.

Even if universities do pull from their endowments to make up for federal funding losses, they jeopardize their ability to provide the same level of education for future generations, a concept often referred to as intergenerational equity.

“If a university pulls from its endowment now, it reduces what future generations can benefit from,” Rittereiser says. “It’s not just a financial hit—it’s a philosophical one.”

Trump vs. Harvard

Harvard, facing a $2.2 billion cut in multi-year federal grants after refusing to comply with government demands to change its hiring and oversight practices, would see a loss nearly equal to the $2.4 billion it drew from its endowment last year—37% of its total revenue.

The list of demands with which the government insisted Harvard comply—such as curbing antisemitism on U.S. campuses—was communicated via an April 11 letter to the university, which Trump administration officials claim was sent by mistake, according to a New York Times report.

“For the government to retreat from these partnerships now risks not only the health and well-being of millions of individuals, but also the economic security and vitality of our nation,” Harvard President Alan Garber said in a statement on last week.

The government is planning to pull an additional $1 billion of Harvard’s funding for health research as the dispute continues, according to the Wall Street Journal.

Harvard on April 21, sued the Trump administration in Massachusetts federal court to prevent the funding cuts.

A group of nine other universities and higher education associations sued the U.S. Department of Energy on April 14, also in Massachusetts federal court, calling cuts to federal funding “a flagrantly unlawful action by the Department of Energy (“DOE”)—slashing ‘indirect cost rates’ for government-funded research.”

The Bigger Picture

Taken together, the potential loss of federal funding at targeted universities would create immediate and long-term financial strain. While endowments may see increased demand from university budgets, legal restrictions and market volatility make them an unreliable solution to these shortfalls.

“It’s a very risky time for colleges and universities, particularly those that rely heavily on their endowments,” says Larry Ladd, an executive search consultant at the Association of Governing Boards of Universities and Colleges, who previously served as director of budget and financial planning at Harvard.

Moving forward, universities may look to aggressively grow their endowments, but that approach comes with its own risks.

Some universities facing federal funding cuts could lose more money in federal funds than the amount of endowment funds they have used for operations in recent fiscal years.

John Hopkins University, for example, which could lose $800 million in federal grant money, drew about $544.5 million from its endowment toward its $8.9 billion in operating revenues in fiscal 2024, according to its 2023-2024 audited financial statements. The college had an endowment return of 12.6% in fiscal 2024, following a loss in fiscal 2023.

Brown University had about $7.2 billion in its endowment as of June 30, 2024. The university appropriated $281 million from its endowment to support its fiscal 2024 budget, providing 21% of revenue. Its endowment had a 11.3% return in the fiscal year, according to the report.

The New York Times reported earlier this month that Brown stands to lose more than $500 million in federal funding due to Trump administration cuts, but that total has not been announced, as of this article’s publication.

Like Harvard, other universities would need to raise alternative funding to make up for the loss of federal funds, but tapping into their endowments is hard to do, and it would not cover the shortfall.

“Taking money from the endowment for shortfalls means cutting support for something else,” Ladd says. “It’s not a trade-off—it’s a reduction.”

Universities Lack Liquidity

Another hurdle faced by higher education institutions is that their endowment funds are, largely, not tied to liquid assets.

For example, Harvard’s endowment is allocated as follows: 39% to private equity, 32% to hedge funds, 14% to public equities, 5% to real estate, 5% to bonds and TIPs, 3% to other real assets and 3% to cash, according to its financial report. Harvard’s asset allocation usually stays consistent, with a three-percentage-point increase in public equities representing the largest year-over-year change.

Brown’s is similarly allocated, with 42% to private equity, 21% to absolute return or hedge funds, 13% to public equity, 12% to real assets, 7% to fixed income and 5% to cash, according to its financial report.

After accounting for an annual spending rate of about 5% and the need to keep pace with inflation—the Federal Reserve targets 2%—universities usually need to hit high single-digit annual returns. To meet those goals and reduce vulnerability to public market volatility, many have shifted more of their portfolios into private equity and other illiquid alternative assets, according to Tim Yates, the president and CEO of Commonfund OCIO, the outsourced CIO of asset manager Commonfund.

“You’re talking about an upper-single-digit return objective,” Yates says. “That’s already hard to do, and in fact, over the last 25 years, most endowments have not achieved that. Add in the extra burden of having to supplement other revenue sources, such as [if] federal grants or tax exemptions go away, [and] it becomes an even greater challenge.”

An “endowment is not constructed to be a liquidity provider to the institution,” Yates adds.

How Universities Are Raising Money

Meanwhile, universities have turned to alternative funding sources to prepare for looming federal funding cuts.

Harvard announced earlier this month that it will issue $750 million in taxable bonds, having already offered $450 million in bonds in March.

Princeton University, which has had $214 million in federal funding revoked, announced it is considering the sale of $320 million of taxable bonds, with the proceeds to be used for general corporate purposes.

Brown, not yet officially faced with cuts, entered into a $300 million loan this month, according to a regulatory filing. The loan matures in 2032 and has a 4.86% interest rate, according to the filing.

“Given the volatility in the capital markets and the uncertainty regarding future federal policy related to research and other important priorities of Brown, the University is fortunate to have a number of sources of liquidity, including commercial paper programs, bank lines and the private and public debt markets that are available to help us manage our finances and priorities during this period,” a Brown spokesperson said in a statement.

Elsewhere, Yale University is reportedly selling up to $6 billion of its private equity portfolio, according to Secondaries Investor. However, a spokesperson for the university disputed the reported figure in a statement to CIO and indicated that the sale will only transact if pricing is attractive.

“The University is exploring a sale of private equity fund interests and is being advised by Evercore in a process that has been in the works for many months,” the spokesperson said. “We remain committed to private equity investments as a major part of our investment program and continue to make new commitments to funds raised by our current investment managers. In addition, we continue to actively seek new relationships with private equity firms in the Endowment.”

Tags: , , , ,

«