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February 2, 2006

Endowment up to 30th in national survey

Pitt’s endowment continues to outpace the growth of higher education institutions nationally.

The University’s endowment as of June 30, 2005, was $1.53 billion, up 12.1 percent from the previous year. The national average increase was 9.3 percent, according to a national survey released last month.

Pitt rose a notch to 30th nationally in total endowment dollars in the latest rankings from the National Association of College and University Business Officers (NACUBO), which annually surveys more than 700 institutions. The survey results were printed in the Jan. 27 issue of The Chronicle of Higher Education.

The survey listed the market values of the endowments of 746 institutions. Harvard University, with $25.5 billion in endowment value (up 15 percent from the previous year), again led the nation. Among Pennsylvania institutions, only the University of Pennsylvania, with a $4.4 billion endowment (12th nationally), finished higher on the list than Pitt.

The NACUBO figures also show one-year percentage changes in the market value of endowments. The figures include growth from gifts and returns on investments, as well as reductions from expenditures and withdrawals. However, the percentage change figures do not represent the rates of return on investment, which NACUBO does not disclose. The survey did note that the highest endowment return rate among all institutions was 22.3 percent; the lowest was an 11.4 percent loss.

Among the 56 institutions nationally with an endowment exceeding $1 billion, Pitt’s 12.1 percent increase lagged behind the average increase of 13.8 percent, according to the survey.

In the previous year’s NACUBO survey, covering endowment growth between July 1, 2003, and June 30, 2004, Pitt’s endowment grew by 18 percent, above the national average of 15.1 percent, which was the highest national average growth since 1998.

(The FY 2004 total of $1.4 billion put Pitt 31st nationally in total endowment dollars.)

That FY 2004 national average upswing followed three years of investment losses in 2001 and 2002 and a modest 3 percent return in 2003, according to NACUBO.

Pitt’s endowment bucked the national trend with increases during each of those years: 8.4 percent gain in FY 2001; 4.6 percent rise in FY 2002, and 0.9 percent in FY 2003.

Pitt ranked 41st nationally in FY 2000, the first year it topped $1 billion in total endowment value.

In March 2001, the Board of Trustees adjusted the endowment investment formula to further diversify Pitt’s portfolio and to minimize the effects of a volatile stock market. The main adjustments reduced Pitt’s investment in domestic stocks from 42 percent to 30 percent of the endowment total, while doubling the allocation in alternative investments to 20 percent.

Each year, the University spends income equal to 4.25 percent of the endowment’s average market value during the preceding three fiscal years to fund scholarships, fellowships and professorships, and otherwise support academic programs.

The trustees’ investment policy also 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.

Under the trustees’ formula, the University’s administration should distribute about $57.4 million of endowment income to Pitt schools this year to support academic programs.

Since 1995, Pitt’s endowment has grown from $463 million to more than $1.5 billion, a 225 percent increase, Pitt officials have reported.

—Peter Hart


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