Board may diversify UH assets
Investment consultant Cambridge Associates representatives said in a presentation to the UH System Board of Regents’ Endowment Management Committee on Wednesday the University’s finances have been steadily increasing over the past decade.
"The goal of the committee is to monitor the endowment investments and to make recommendations and approve allocations, make sure it’s working right," regent Michael Cemo, who serves as the endowment committee chair, said.
In the financial performance report, Cambridge Associates representatives Bruce Myers and Hamilton Lee said the University’s non-endowment investments have increased since 1997 mostly because of a bull market, meaning positive stock market trends have helped increase current investments.
Of the $1.1 billion budget for the UH System in fiscal year 2008, $300 million are not endowed, meaning financial gifts or donations are invested only temporarily.
Commodities in which Cambridge Associates invested University funds were not specified.
UH administrators and board members also said they are concerned with student enrollment, as it is part of formula funding – an equation set by the Texas Higher Education Coordinating Board – to determine the amount of funding a state public university receives.
Formula funding goes to different areas of the University such as salaries, academic
advisors and scholarships, among other core operations, according to UH Governmental Affairs.
Regent Calvin W. Stephens said the University is concerned with enrollment, as a 3 percent drop in student enrollment in 2004 negatively affected the amount of funding UH received from the state.
Board members said the period between August and November is the time during the fall semester when the University gains the most funds because of student tuition and fees collected.
The board decided to vote on whether to diversify $300 million of non-endowed funds by dividing them into different areas at the next board meeting on Nov. 15. If the board approves the diversification, it will then decide how and when to divide the funds into investments.
Cemo said the board should meet every three months to determine how the University’s investments are being managed by Cambridge Associates.
At the meeting, the board decided to diversify non-endowed funds in three areas.
Forty percent of non-endowed funds are expected to be placed in bonds; another 40 percent will be left in liquid assets, meaning they will be available to be spent as needed; the remaining 20 percent will be invested in long-term investments for three-to-five years, Hill said.
The committee also reported that endowed assets, which include University-owned property as well as monetary funds, have increased, although the board did not specify by how much.