Board diversifies financial assets, passes new degrees
The UH System Board of Regents approved diversifying University funds in a meeting at UH-Victoria on Thursday.
At a previous committee meeting on Oct. 31, investment consultant Cambridge Associates gave the endowment management committee a presentation on the University’s $300 million in non-endowed investments. At the Oct. 31 meeting, Cambridge Associates representatives said since 1997, the University’s investments have steadily increased.
UH Treasurer Raymond Bartlett said non-endowed investments for the 2007 fiscal year have increased since fiscal year 2006.
Regent Michael Cemo, who chaired the endowment management committee, said non-endowed funds are being diversified to prevent putting all investments in one stock, which raises risks if the stock does not do well.
"We can’t make a ton of money if the stock market is down significantly – that’s why we diversify in competitive markets," he said.
The board voted to divide the non-endowed funds by placing 40 percent in a cash pool, 40 percent in a liquidity pool and 20 percent in a core pool.
"The cash pool is that portion of the non-endowed funds with a one-year time horizon designed to meet the annual operating needs of the system," Bartlett said of the $120 million in non-endowed funds to be invested in a cash pool.
Another $120 million of non-endowed funds will go to a liquidity pool which has a long-term investment period ranging from one to five years and is used as a kind of backup in case the cash pool is not enough to meet the University’s spending needs, Bartlett said.
"The board has elected to invest 80 percent of the funds between the cash and liquidity pools based on its review of our operating cash flows and a recommendation from Cambridge Associates," Bartlett said.
The remaining 20 percent of non-endowed funds will go into a core pool of long-term bonds.
Previously, the board had divided non-endowed funds between 43 percent in bonds and 57 percent in money market funds, Bartlett said.
Another reason to diversify funds is so investments will have an opportunity to make more on financial returns.
"By diversifying the non-endowed funds into other asset classes, we can expect to achieve a higher return over the long term," Bartlett said.
The UH System has $500 million in endowed funds, which are funds donated to the University on which donors can place restrictions, Bartlett said. Usually, endowed funds do not spend the original financial gift donated but instead use the income derived from investment returns to be used as necessary, Bartlett said.
Approved academic degrees
At a previous board meeting on Nov. 1, the academic and student committee approved degrees for biotechnology, American Sign Language and public service leadership. The board approved all three degrees, which now await approval by the Texas Higher Education Coordinating Board.
The University is expected to receive an answer within nine months when the THECB reviews proposed degrees, David Bell, assistant vice president of Academic and Faculty affairs, told The Daily Cougar on Nov. 15.
METRO land negotiations
The board also delegated authority to the UH System chancellor to negotiate a land swap between UH-Downtown and METRO. UHD is attempting to obtain four METRO-owned land parcels along Main Street, totaling 8.4 acres and costing $11.1 million. METRO is also attempting to gain three parcels of land belonging to the UH-Downtown that would cost $6 million.
Preliminary negotiations began in mid-2005, Bradley told The Daily Cougar in a previous interview. Construction on an Intermodal Terminal near UHD is expected to begin in the spring, according to the METRO Solutions Web site.
KUHT and KUFT programming approval
The board also approved purchasing programming and to support operations for both television station KUHT and radio station KUHF.
Houston Public Television KUHT will continue to participate in the Public Broadcasting Service’s national program service, member service and station independence program for the fiscal year 2008.
The total for continued programming will cost $1.9 million and will be mostly funded by a federal grant from the Corporation for Public Broadcasting, which will provide approximately $1.3 million of the $1.9 million needed to continue participation with national programming. The remaining $614,737 of the purchase order will be paid by public donations raised by fundraising, Vice Chancellor of Planning and University Outreach Ed Hugetz said.
As part of the national program service, KUHT will continue airing national programs such as Sesame Street and NOVA that are nationally produced by PBS. The independence program will enable KUHT to gain programming from independent filmmakers and producers, while the member service helps the station market programming through commercials and promotional materials.
As independent entities, the content for both stations is determined by management.
Houston Public Radio KUHF was also approved to continue service with the National Public Radio, which includes affiliate program for 16 shows including "All Things Considered," Debra Frazier, KUHF station manager, said.
The board officially holds the Federal Communications Commission’s licenses for KUHF since 1950 and KUHT since 1969 and must approve transactions over $1 million, according to board bylaws. Both stations are prohibited by law from receiving funds from the state of Texas or any other state agency, including the University, and hold biannual fundraisers to raise donations, Hugetz said.
Additional reporting by Kim Thai