Oct. 17, 2009 (United Press International) -- Harvard University, one of the richest and most prestigious U.S. educational institutions, confirms it lost almost $2 billion gambling with its operating fund.

The loss was revealed in Harvard's annual report on the fiscal year that ended June 30, The Boston Globe (NYSE:NYT) said. The report was released Friday.

The university said a large portion of its operating cash was handed over to Harvard Management Co., which handles the endowment. The total value of the endowment dropped 27 percent in the last fiscal year.

"I think that was an interesting way to handle the grocery money,'' said Harry R. Lewis, a computer science professor and former dean. "Did Harvard administration and Harvard Management have the kind of conversation that ordinary households have with their investment managers -- about risk and liquidity and what they need the money for and when?''

Daniel Shore, the chief financial officer, said Harvard made money by investing its operating cash when the market was going up. He said the university would be able to pay its bills.