Spending Guideline
A Spending Guideline exists to balance the current needs of the University with its future needs and work within the Investment Objective. The rate for fiscal year 2011, if calculated using the guideline below, would have been $8.20 per unit, but reflecting confidence in the improving economic environment, the Budget Committee of the Board of Trustees set the spending rate per unit at $8.28 for fiscal year 2011.
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%.