The University’s chief investment officer yesterday predicted a significant drop in investment returns this fiscal year on the University’s nearly $8-billion endowment.

Though the University’s endowment has grown by at least 14.6 percent the past four fiscal years, and marked a return of 25.4 percent last year, Chief Investment Officer Erik Lundberg told members of the Senate Advisory Committee on University Affairs that returns this fiscal year would likely be in the single digits.

The endowment, valued at $7.8 billion as of May 31, had grown by 9.8 percent since the end of the previous fiscal year, which ended June 30, 2007. Lundberg said a final endowment figure for the 2008 fiscal year wouldn’t be available until the next University Board of Regents meeting, scheduled for Oct. 23 on the University’s Flint campus.

When asked what the next two or three years will look like for the endowment, Lundberg said, “It’s going to be rough, slow going.”

He also said it was possible the country’s economic woes could discourage potential donors from giving money to the University.

“If they don’t feel particularly wealthy, they’re not going to donate,” he said.

Lundberg was the main speaker at yesterday’s meeting of SACUA, the executive committee of the University’s primary faculty body. He spent the bulk of his time explaining to committee members how the endowment operates and what kinds of investments comprise the endowment’s total value.

The ways U.S. colleges use their endowments have come under scrutiny this year by members of Congress, who have questioned why growing endowments at universities nationwide aren’t being used to curb rising tuition. Some politicians have urged universities to use at least 5 percent of their endowment funds on university operations.

The University currently spends about 5 percent of its endowment each year.

In January, University officials defended their management of the endowment in a letter to U.S. Sens. Max Baucus (D–Mont.) and Charles Grassley (R–Iowa), who have led Congress’s endowment investigation. In the letter, University officials wrote that the University had earmarked $1.4 billion, or about 20 percent of the endowment, for student aid.

Since 1997, the University’s endowment has increased almost four-fold.
According to the National Association of College and University Business Officers, the University’s endowment was the eighth-highest among American universities last year. It was second-highest among public university systems, topped only by the University of Texas System, which reported an endowment of about $15.6 billion.

The University recorded the highest growth, 25.4 percent, among the country’s ten best-endowed universities.

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