2012 - 4th Quarter

Endowment Pool Spending Account

By Ryan Rapp, Associate Controller

The University recently changed the Endowment Pool Spending policy in the Collected Rules.  There are several changes that include moving the measurement date for calculating the distribution from June 30 to December 31, going from annual to monthly endowment distributions, using a 28-quarter rolling average instead of a 12-quarter rolling average in calculating the distribution and gradually moving the endowment distribution percentage from 5.0% to 4.5%.  The objective of these changes is to provide stable, consistent year over year growth in the endowment distribution while expanding the purchasing power of each endowed gift over time.

For those who are responsible for financial management and planning of the endowment spending account, they should expect to budget the exact amount of distributions on existing spending accounts for FY 2014.  The spending distribution amounts will be calculated by the Treasurer’s and Controller’s Offices in January of the preceding fiscal year and should be available for budgeting purposes on or before February of the preceding fiscal year.  The reduction in the spending rate over time will be accomplished through either smaller increases in the year over year spending distribution or flat distributions as compared to the prior year.  It will not be accomplished through actual reductions in the spending distribution.  Instead of receiving the entire spending distribution in August, it will be provided to the spending accounts in equal amounts on a monthly basis by the Controller’s Office and negative investment income will not be charged to those spending accounts that go negative due to the timing of when funds are spent.

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