Endowed scholarships may decrease for '09-'10
Chau Nguyen
Issue date: 3/20/09 Section: Front Page
Roughly 1,100 scholarships funded by endowments at Miami University may be cut back for the 2009-10 academic year due to the current financial situation.
Director of Student Financial Assistance Chuck Knepfle said compared to 2008, Miami is projecting a 25 percent reduction in scholarship funds available to award to students.
Prior to spring break, university divisions and departments were provided estimates regarding funds available to award for the 2009-10 school year based on the current market value of accounts.
Since the review process is conducted annually following the conclusion of the fiscal year, June 30, reduced amounts will be effective for the 2009-10 school year, Knepfle said. However, since the deadline is too late to award scholarships, financial assistance is currently providing estimates so departments can begin planning their fiscal year.
"The market could tank today, and that would really hurt us," Knepfle said. "If we've lost money, which is what we anticipate, that's when these cuts will kick in."
As of Dec. 31, 2008, Miami had $303 million in endowments, which is invested to generate a return rate, Knepfle said. Roughly $500 is typically generated annually for every $100,000 invested, which is used to fund scholarships.
Bruce Guiot, director of investments and treasury services, said Miami utilizes a two-part formula for all endowed funds, which is used to determine how much is provided for scholarships from endowments.
The first part of the calculation increases the previous year's distribution per unit (the amount of payments made to individual unit holders of a specified income trust), by the rate of inflation for the one-year period between April 1 and March 31, which accounts for 70 percent of the formula.
The second part of the formula includes a 4.5 percent distribution rate that is applied to the unit's market value as of March 31 to calculate the remaining 30 percent, he said.
Director of Student Financial Assistance Chuck Knepfle said compared to 2008, Miami is projecting a 25 percent reduction in scholarship funds available to award to students.
Prior to spring break, university divisions and departments were provided estimates regarding funds available to award for the 2009-10 school year based on the current market value of accounts.
Since the review process is conducted annually following the conclusion of the fiscal year, June 30, reduced amounts will be effective for the 2009-10 school year, Knepfle said. However, since the deadline is too late to award scholarships, financial assistance is currently providing estimates so departments can begin planning their fiscal year.
"The market could tank today, and that would really hurt us," Knepfle said. "If we've lost money, which is what we anticipate, that's when these cuts will kick in."
As of Dec. 31, 2008, Miami had $303 million in endowments, which is invested to generate a return rate, Knepfle said. Roughly $500 is typically generated annually for every $100,000 invested, which is used to fund scholarships.
Bruce Guiot, director of investments and treasury services, said Miami utilizes a two-part formula for all endowed funds, which is used to determine how much is provided for scholarships from endowments.
The first part of the calculation increases the previous year's distribution per unit (the amount of payments made to individual unit holders of a specified income trust), by the rate of inflation for the one-year period between April 1 and March 31, which accounts for 70 percent of the formula.
The second part of the formula includes a 4.5 percent distribution rate that is applied to the unit's market value as of March 31 to calculate the remaining 30 percent, he said.
Viewing Comments 1 - 2 of 3
Ryan Ruggaard
posted 3/23/09 @ 6:34 PM EST
The university endowment fund is obviously poorly managed if all it can return to students is a mere 0.5% yearly. It is apparent by the market conditions that any portfolio will have losses, but in years of recovery which could technically begin as early as Q3 the typical stock return is 34%. (Continued…)
Stan.Bally
Physics Help
posted 8/03/09 @ 9:43 AM EST
"The market could tank today, and that would really hurt us," Knepfle said. "If we've lost money, which is what we anticipate, that's when these cuts will kick in. (Continued…)
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