Endowment Spending Rate

The University’s endowment spending policy calls for a percentage increase in the annual endowment distribution for Class A (general endowment) shares. If the increase causes the endowment spending to fall outside a range as defined by 3.5% of the market value of the endowment on the low end or 5.5% of the market value of the endowment on the high end then the Finance Committee of the Board of Visitors may recommend increasing or decreasing the spending rate. @

The fiscal year 2006-2007 spending as a percent of the March 31, 2006 market value of the endowment will be below the 3.5% range described above. Accordingly, the Finance Committee recommended and the Board of Visitors approved adjusting the spending rate for fiscal year 2006-2007 for Class A shares to 4% of the March 31, 2006 market value of the endowment. This rate change results in a 21% increase in spending for Class A shares for fiscal year 2006-2007. In addition, the rate change results in the same spending rate for Class A and B shares for fiscal year 2006-2007 and going forward.

For years beyond fiscal year 2007, the endowment spending policy allows for annual increases pegged to inflation as defined by the Higher Education Price Index, initially set at 3.6%. The 3.6% annual rate increase will be reviewed in April 2010 unless the spending falls outside of the 3.5% to 5.5% range described above. For long term planning purposes, below is a chart showing the percentage increase in spending for each fiscal year: