Board of Trustees approves another 1 percent increase in endowment spending
The Washington University board of trustees has approved an additional one percent spending from the endowment, effective July 1.
This increase, approved at the board’s meeting last week, follows an increase of the same size last year. Chancellor Mark S. Wrighton said he hopes endowment spending will continue to grow in years to come.
The rise in spending comes on the heels of an approximately 21 percent return on the University’s endowment investments this year.
Endowment spending is based on the average value of the University’s endowment over the past five years. Due to negative returns in recent years of economic downturn, this year’s increase in spending is well below this year’s investment returns.
“The aim is to try to increase the spending from the endowment by at least inflation. One percent is lower than inflation. And so that creates a sort of strain for us,” Wrighton said.
The one percent increase accounts for just under $2.5 million in additional endowment spending, and the total endowment spending accounts for 10 percent of the University’s operating budget.
According to Wrighton, most of the increased spending has been predetermined by donors for specific uses, such as endowed professorships, scholarships, research programs and other special projects.
“Where those dollars go is defined by what the endowment has been given to us [for], in terms of purpose, by the donor…There’s no decision. It’s already preordained, if you will,” he said.
The board also began the process of setting next year’s tuition, providing the administration with a range of potential rates. The administration will present a proposal to the executive committee of the board in January, and the committee will decide what tuition will be.
“But because our costs are rising, one percent additional payout is helpful…We’re not keeping pace with inflation in that particular revenue stream. So, we’re hoping that we will have better investment returns in the endowment,” Wrighton said.
Trustees also elected Robert Frick, former vice chairman of the board of Bank of America, to the board of trustees.
The board approved the December graduating class before their Saturday ceremony, as well as new tenure appointments and promotions.
The meeting also addressed innovation and entrepreneurship at the University. Trustees broke into discussion groups that addressed topics such as the economic benefits of research projects and the role of innovation and entrepreneurship in fulfilling what the University refers to as its “educational mission.”