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University Senate: Administration clarifies confusion over finances

Lou Marcoccia, SU's chief financial officer, clarifies financial information at Wednesday's meeting.

Confusion about the definitions of terms used to describe the university’s endowment was cleared up by Lou Marcoccia, Syracuse University’s executive vice president and chief financial aid officer, at Wednesday’s University Senate meeting.

Members of USen expressed concern with the decline in the university’s endowment and the cause of two distributions in one fiscal year. They also were uncertain about what exactly a distribution is. A given fiscal year ends June 30 and distribution is given in August. But in fiscal year 2009, a second distribution was made prior to the usual June 30 due to the market crash in fall 2008. Among other concerns at the meeting was the university’s ability to maintain a high enrollment.

“I’m trying to understand a couple of things that still seem to me not transparent,” said Samuel Gorovitz, a professor of philosophy, at the meeting.

A distribution is a share — called a unit — bought when a donor gives a gift to the university, Marcoccia said.

“If (there’s) a unit value of $500 and someone gives us a gift of $1000, they would buy two units,” he explained.



There are two types of distributions: cash flow and pay-out distributions. Cash flow distributions are those taken from the endowment and moved to the university’s operating funds. Pay-out distributions are the money a donor gives to a school for a faculty member to use. This is placed into a school account and distributed to faculty members to spend.

The endowment decrease is a result of the cash flow distribution, Marcoccia said. Following every fiscal year, money from the endowment fund is moved to the operating fund in August. But since the market was down in fiscal year 2009, rather than waiting until August to take the next distribution out, it was taken out before the fiscal year ended. This allowed for two distributions to occur in one year.

Beginning in the fiscal year 2004, SU’s board of trustees and administration aggressively began to push to increase the endowment through investments. They had the choice of raising money through fundraising or through investments, said Kevin Quinn, vice president for public affairs.

At the time of the market crash, the university’s endowment was nearing its goal of $1 billion, said Chancellor Nancy Cantor. Just as the endowment reached this point, the market started to decrease.

“The university had two years worth of distributions because when the market was increasing, they decided to take endowment out in August, but then it started going down,” Marcoccia said.

Instead of taking money out of the endowment in August, the policy shifted to a monthly distribution in which only some money was taken out at a time in order to prevent greater losses, Quinn said. This was part of the reason why the expected value of $1 billion in endowment funds went down to $708 million.

When the market is increasing, it is better to keep money in the account longer in order to get more back in return, Quinn said. Likewise, when the market is going down, it is better to take money out, he added.

Gorovitz, who had originally asked for the explanation, said he understood where the university’s money was going after Marcoccia spoke.

Robert Van Gulick, a member of the Budget Committee, expressed his concern for upcoming years with regard to budget and demographics as enrollment climbs to a level similar to that of the 1990s. At the time, this resulted in serious budget deficits after the enrollment bubble burst.

Cantor reassured USen that applications have reached a record high this year, and the university can maintain the rising enrollment without causing similar budget deficits. They are ensuring this by expanding their recruitment strategy so that enrollment does not decline. Teams of faculty members and deans are also visiting the best community colleges to attain more transfer students, Cantor said.

Other business discussed: 

* Ran Li, a student advocate for the Asian and Asian American Studies minor that was passed, asked when the administration would begin a faculty search. There cannot be a program without faculty, he said. USen members will have meetings during the next couple weeks to discuss the issue, but they do not know exactly when there will be a new director.





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