KSU endowment rebounds from economy
DetailsCreated on Wednesday, 09 February 2011 02:28 Hits: 2195
Kent State’s endowment has almost fully recovered from the stock market crash in 2008.
As of Dec. 31 2010, the endowment is $109.1 million, according to the Kent State University Foundation. This is quite the increase from $61.6 million – its low point in February 2009, months after the stock market crash. The value of endowment was approaching its high before the crash, $103.1 million in October 2007, if you take out $10 million, which was transferred into the current endowment from capital funds.
“Over the last few years I think they’ve (endowments) done great,” said Jordan Brace, University Foundation Accountant. “2008 was probably our lowest time. Since 2009 and going forward, we’ve been doing pretty well.”
Endowments are donations to the university that are invested in a long-term pool called the university endowment. When the endowments make money, the money is put into a spendable fund that is available at a rate of 5 percent over a 36-month period.
Endowment donors may direct the available money toward a specific purpose such as scholarships, fellowships, department chairs or a department said Yvonne Lee, associate director of financial administration at the University Foundation.
Although the endowment is recovering to its pre-recession levels, disbursements are still catching up. A disbursement is the term for the money spent out of the endowment pool.
Since money is disbursed on a 36-month average, it takes longer to recover, and Lee said it will take time for disbursements to increase from what they were before the stock market crash. Disbursements for fiscal year 2010 were more than a million dollars less than what they were in fiscal year 2008. Therefore, less money is available for scholarships, fellowships and departments than before the recession.
Nationally, other universities are experiencing dramatic improvements on investment returns. A recent article in The Chronicle of Higher Education indicated that 865 institutions received a 12 percent return on investments for the fiscal year ending in June. The institutions were surveyed by the National Association of College and University Business Officers and the Commonfound Institute.
In 2009, institutions had a negative 19 percent return on investments. Kent State’s return on investments has grown from negative 25.6 percent in fiscal year 2009 to positive 16.4 percent for fiscal year 2011.
Mike Strebler, assistant treasurer of the University Foundation, said Kent State was able to gain back the money it lost to the stock market crash by asset allocation and switching managers or companies that manage investments.
Overall, Strebler said Kent State didn’t have to make any large changes to its structure; luckily it was able to recover along with the stock market.
“In a nut shell, we stuck with the things we were doing,” he said. “We didn’t make any dramatic changes and we rode it back up.”
Kelly Petryszyn is an assigning editor.