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Annual Payout Rate

The primary purpose of the Endowment is to provide a predictable and permanent source of funding for the University’s mission. The spending guideline calculates the amount of the Endowment the University spends for this purpose each year. Starting with the average market value of the Endowment for the previous 12 months, the spending guideline incorporates the following weighted factors to set an annual Endowment payout rate:

The market component is calculated by multiplying the long-term target-spending rate of 4.35 percent by the Endowment's average market value for the prior 12 months. This component carries a weight of 30 percent in the spending rate calculation.

The spending component includes an inflation adjustment over the prior year's Endowment payout plus the annual projected growth of the budget. This change in the annual Endowment payout carries a weight of 70 percent.

The calculated payout rate (including administrative and management fees) was 4.71 percent for fiscal year 2016. Despite two consecutive years of low single-digit returns, the University remains committed to the payout guideline. For fiscal year 2017, the per-unit spending rate will be increased by 3.09 percent. The following table illustrates the spending guideline in practice:

Payout Calculation For FY17

Market Component (30%)
12-Month Average Market Value    $237.69 Actual          
Target Spending Rate          
Weight for Market Component 30%
Total $3.10 Actual
Spending Component (70%)
Prior Year Spending Rate (FY16) $9.71
Fical Year Increase in CPI 100.20% Actual
Budget Growth 101.50%
Weight for Spending Component 70%
Total $6.91 Actual
Payout Rate per Unit
$10.01 Calc                  
Increase Over Prior Year 3.09% Calc
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