Endowment Budget Policies and Guidelines

Fiscal Year 2007/2008

The Board of Trustees establishes the University's overall use of endowment resources each fiscal year. This overall use is then divided among the University's divisions based on the total valuation of the endowment funds restricted for use by each division. The College must allocate its approved use of endowment among more than 500 endowment funds, while staying within the spending limit imposed by the Board of Trustees.

To meet these requirements, the Deans' Office calculates the budget for each of The College's Ledger 4 endowment accounts. During the annual budget preparation period, an Excel spreadsheet is distributed to each department or program that has endowment accounts assigned to it or restricted for its use. This spreadsheet identifies each endowment account's market valuation data and associated budget that will be available in the coming fiscal year. An explanation of the fiscal year 2007/08-spreadsheet data follows:

A. Purpose Code:

The purpose code designates those funds that are true endowment and those that are funds functioning as endowment. True endowment funds' principal must remain intact in perpetuity. The Board of Trustees designates funds functioning as endowment as such; their principal may be used with Trustee approval. The purpose code also provides a general classification of the restriction pertaining to an endowment account. If you need more specific information about the restrictions and covenants for a particular fund, please contact The Deans' Office.

B. Contributed Value:

This figure is the cumulative, historical dollar value of all additions to the fund principal through December 31, 2006.

C. Market Value:

As gifts for a specific endowment fund are received, shares in the University's endowment pool are purchased at the share value, or price, of the endowment on the date received. The share value is determined by dividing the total market value of the University's endowment funds by the number of shares outstanding. The December 31, 2006 Market Value is the result of multiplying the share value on that date times the number of permanent shares that have been purchased by a specific endowment fund. The Five-Year Average Market Value is the average of twenty quarterly market value calculations for a fund, for the last five years up to and including December 2006. Both of these figures are adjusted to reflect contributions as they are received and the additional shares purchased by those contribution.

D. Budget 2006/07:

The University's investment policy is to maximize total return (income and appreciation) on its endowment funds. The Board of Trustees has instituted a spending policy that permits use of only a specific percentage of the five-year average market value of endowment funds. The budget figure shown is based on The College's spending policy (5.5%) for 2006/07, and any deficit or surplus carried forward from the previous fiscal year. This is consistent with the Board of Trustees spending policy, but is tailored to meet unique endowment utilization needs of The College.

E. Forecast 2006/07:

This column is for projected use of endowment funds in 2006/07. The amount in this column will be estimated based on actual spending through March 31, 2007. If this is not accurate, you may change this amount based on your knowledge of actual year-to-date spending and planned spending during the remaining months of the fiscal year.

F. Forecast June 2007 Surplus (Deficit):

This is the difference between the 2006/07 budget and forecast use and is calculated by a formula in the cell. If a surplus occurs, it will be reinvested in the endowment fund after June 30, 2007. If a deficit occurs, it will automatically be carried forward and will reduce budget availability in 2007/08.

G. 2007/08 Budget per University Spending Policy:

If the December 31, 2006 market value is greater than 120% of the contributed value, this figure is 6% of the five-year average market value and is based on The College's spending policy for 2007/08. If the December 31, 2006 market value is less than 120% of the contributed value, this figure is 2.0% of the market value. If a true endowment (purpose code 100-109) fund has a market value less than its contributed value, this figure will be zero.

H. Estimated Budget Available 2007/08:

This figure will be equal to the Budget per UR Spending Policy, minus any forecast deficit at June 30, 2007.

I. Approved Budget 2007/08:

The Approved Budget will generally be equal to the Estimated Budget Available that is calculated in the previous column, unless there are some special spending restrictions or allowances set by the donor.

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