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June 12, 2014

Endowment share value to increase 5%

While proposed flat-funding from the state is leaving little opportunity for budget-related optimism, the income distribution from Pitt’s endowment will rise 5 percent in the coming fiscal year.

The Board of Trustees investment committee approved distribution of $4.01 per share from the University’s endowment for fiscal year 2015, which begins July 1.

The endowment income distribution has held steady around $3.80 per share since a cut from $3.99 per share took effect in FY11. (See June 24, 2010, University Times.)

The University’s spending policy provides for an annual distribution of the greater of 4.25 percent of the endowment fund’s three-year average fair market value or a “floor” of the prior year’s distribution, provided that the distribution is not less than 2 percent or more than 7 percent of the trailing three-year average.

Arthur G. Ramicone, chief financial officer, presented the endowment distribution proposal at the committee’s June 9 meeting. “For fiscal year 2015, the amount of income to be distributed based on the 4.25 percent of the three-year average fair market value of the assets is an increase to $4.01 per share. That’s above the current income distribution that will continue through this fiscal year-end, of $3.80 per share,” he said.

In recommending the increase for the committee’s approval, Ramicone said the University officers “believe the income percentage of 4.25 percent remains consistent with the long-term preservation of the real value of the consolidated endowment fund.”

The officers recommended no change to Pitt’s spending policy.

Following the June 9 meeting, Ramicone told the University Times: “The deans should be happy. This is a very tough budget year upcoming, so a 5 percent increase in that pool is nice.”

—Kimberly K. Barlow