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November 7, 2002

Endowment losses will not affect income distribution

Pitt’s endowment investment losses last year will not reduce the amount of endowment income — about $50 million — that the University administration had planned to distribute to schools this year to support academic programs, Pitt’s chief budget officer says.

Each year, the University spends income equal to 4.25 percent of the endowment’s average market value during the preceding three fiscal years. But the policy includes a safety net for academic units: It guarantees that the schools’ share of annual endowment earnings won’t be less than it was the preceding year, said Arthur G. Ramicone, vice chancellor for Budget and Controller.

“This means that, even if the stock market continues to perform poorly, the amount of endowment income that is distributed to the schools would remain level at worst — unless the trustees decide to change the policy,” Ramicone said.

Trustees might consider such a change if Pitt investments were to continue declining in value year after year, he said.

— Bruce Steele

Filed under: Feature,Volume 35 Issue 6

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