Spending Guideline
A Spending Guideline was developed to balance the current needs of the University with its future needs and work within the Investment Objective. The Spending Guideline (approved at the February 10, 2001 Board of Trustees meeting and updated periodically) blends together two elements:
Market element adjusts annual endowment spending to the long-term sustainable target spending of 4.35% of the average actual market value of the endowment for the 12 months ending in October of the previous fiscal year. This component of the spending rate receives a 30 percent weighting in the spending rate calculation.
Spending element increases last year's spending rate by the actual rate of inflation plus budget growth (1.5%). This element of the spending rate receives a weight of 70%.
For Fiscal Year 2010, the Board of Trustees, in conjunction with the Investment Committee and the University's Budget Office, decided to maintain the spending rate per unit at $8.54, the rate for Fiscal year 2009, in order to sustain the long-term earning ability and the liquidity of the fund. The following example is the calculation for fiscal year 2009:
