UC endowments distribute student scholarships
The U.S. Senate Finance Committee asked 136 universities, including UC, to provide information about their endowment funds and efforts to make higher education affordable.
In its January response to the finance committee, UC emphasized its commitment to low- and middle-income students. Two-thirds of all UC undergraduates receive some financial support with 52 percent receiving grants or scholarships.
UC endowment funds continue to provide an important part of student aid. In 2006-07, UC’s endowments distributed approximately $350 million, including $69 million in student support. That amount represents the maximum that can be distributed to scholarships since only about 20 percent of UC endowment funds held by the Regents and campus foundations has been designated by donors for student aid.
Most UC endowment donations are earmarked for research, faculty chairs and professorships and specific academic department programs. As a result, these funds cannot be used to provide student financial support. As of June 30, 2007, UC endowments totaled $9.6 billion in contributions and return on investments, an 18.2 percent increase over the prior year’s $8.1 billion.
California’s Uniform Management of Institutional Funds Act requires that endowment distributions be based on the short- and long-term needs of the university and the expected total investment returns. Distributing more would negatively impact the ability of the funds to keep up with inflation and provide support for future generations of students.
UC and virtually all charitable institutions use a rolling average payout formula to provide a stable source of funds. UC’s general endowment payout rate is 4.75 percent of a 5-year rolling average of the funds’ total value. Regents will be conducting their annual review of the payout rate in May. The annualized 10-year total return of the UC endowment is 9.2 percent. Given current market volatility UC consultants are currently assuming a 7 percent return.
More information: www.universityofcalifornia.edu/news/article/17428