The University’s endowment fund and fundraising efforts were among the primary topics University President Mary Sue Coleman discussed during a question-and-answer session with University of Michigan Health System surgeons yesterday.
Coleman said the University’s endowment is currently worth approximately $7.8 billion — up from its 2010 fiscal year value of $6.6 billion. State-allocated funding continuously dropped throughout Coleman’s 10 years at the University, she said. When Coleman took office in 2002, state contributions to the general fund came in at $368 million — a number that has since fallen to $240 million for this year.
“We have lost a pretty substantial amount of money each (year),” Coleman said. “I’m not under any illusion that we’re going to go back to wonderful funding from the state.”
Coleman explained that the general fund’s “unrestricted money” allows for the pursuit of faculty innovation and entrepreneurship. Most donations to the University can be used only in the method prescribed by the donor, and nearly 96 percent of the endowment is limited in its use by donors or grant regulations, according to Coleman.
Though Coleman said management of the University is becoming increasingly similar to a private institution, she said it will always be a public university.
“We made some very, very important decisions about the endowment and how to manage the endowment,” Coleman said. “(We’ve been) smart about the investments made, but this environment is going to force us to act like a private institution.”
Coleman reported an average 9-percent annual return on investments for the endowment over the past 10 years, despite suffering a negative 23-percent return in 2009. In fiscal year 2010, the University experienced a 12.3-percent return on investments.
Coleman emphasized the importance of a strong endowment to fund faculty projects.
“What keeps me awake at night (is) generating the money that we have to have to fund faculty ideas,” Coleman said. “The faculty always has more great ideas than we have the (money to fund). That’s the end all, be all for me.”
Coleman added that the state cannot regulate the organization of the University’s endowment — unlike funding regulations at other institutions like the University of North Carolina. The endowment at UNC is regulated through “35 budget lines” that manage funding for various beneficiaries within the university.
Additionally, the number of out-of-state students admitted to the University is unrestricted by the state, which Coleman said is unusual for a public university. The ratio of in-state to out-of-state studentsat the University
has traditionally been 65 percent to 35 percent since 2004.
Full-time undergraduate LSA students from out-of-state are paying $18,794 per semester this academic year, while Michigan residents with the same provisions are paying $6,220, according to the University’s Office of the Registrar website.
“Our hands are not tied,” Coleman said. “(However), there may be political realities. We wouldn’t want to go to 70 percent out-of-state because that would be seen as an affront to the state, but right now I think we’re in a very advantageous position.”