While the UA is being forced to make financial cuts in several aspects of student life, those students receiving endowed or university scholarships can rest assured knowing that their scholarships are safe – at least for now.
Students who have previously been awarded a continuing scholarship by the university, such as the Wildcat Excellence Award, will continue to receive that scholarship, said John Nametz, director of the Office of Student Financial Aid.
“”Any awards, certainly, that a student has in hand will be honored,”” he said.
Akhtar Parvez, assistant director of scholarships, agreed with Nametz, saying the university would stand by the scholarships they awarded to students.
“”If we offer, we committed, we’re going to stand by our commitment,”” Parvez said. “”If we tell them it’s a renewable scholarship for four years, we’re going to stand by that commitment, too.””
Endowments will continue to be given for the coming school year, said John Brown, director of communications and marketing at the University of Arizona Foundation.
The foundation’s board of directors voted at the end of January to maintain a 4 percent payout on endowments for fiscal year 2009, which begins July 1, Brown said. Though the payout will be the same, the actual amount of funding will decrease by about 5 percent, he said.
This is where confusion starts to build up, and most people simply want to know, ‘How much will I be getting?’
In order to understand how endowments are currently faring, it’s necessary to start at the beginning of the process.
Created in 1958, the UA Foundation has the responsibility of managing and growing funds donated to the university, Brown said.
Donations are placed into investment portfolios where the original amount is maintained. The foundation invests the money in a number of diverse accounts, through financial advisors. Brown said the goal is to produce an average 9 percent rate of return over a span of 20 years.
Of this 9 percent, 4 percent goes to fund research, faculty or scholarships, 1.25 percent pays financial advisors and 3.75 percent goes back into the original account and is used to grow the funds, he said.
“”Markets are always fluctuating and always cyclical but the need of the university is constant,”” Brown said. “”You set a payout that you can maintain year after year. The hope is that in good years you earn more than you need so you can save, so that when there’s a downturn and you’re having a negative return you can weather that storm.””
During fiscal years 2003 to 2008, the foundation averaged an 11.3 percent rate of return, compared to the 21.1 percent loss that it endured from July 1 to Nov. 30, 2008, he said.
Because the foundation increased the funds in the accounts during past profitable years, it is able to cushion investments and weather today’s difficult economy, Brown said.
“”We want to make sure we can provide opportunities to current students as well as students in the future, so we have to balance what we do. We spend some and save some,”” Brown said.
Although the payout will remain at 4 percent of the value of the account, the actual amount of money given to students will decrease by about 5 percent. The foundation’s investments have taken a hit, and their value has decreased, “”a slight drop but not significant,”” he said.
The UA Foundation currently manages more than 1,200 accounts that had a value of $335 million as of June 2008, Brown said.
Though the economy has been extremely difficult lately, Brown said the foundation received about 3,000 more gifts from July to Dec. 2008 than it has averaged over the past 5 years. Although the numbers of gifts are up, the average value of each individual gift has decreased.
“”Just as every industry has seen a decline, we have, too,”” he said. “”We have a very good donor base of people committed to the university … When the economy turns we have this strong base of support, and we expect the giving to increase.””
Nametz said the university relies on people committed to the students and the school. He specifically mentioned UA President Robert Shelton and his recent decision to donate his $50,000 pay raise.
Nametz said he hopes others will follow Shelton’s example.
“”He (Shelton) says he wants to make sure students are protected. Maybe a lot of people will say that,”” Nametz said. “”I’m hoping he starts a groundswell of that, that he’s the watershed moment. I’m an optimist. Who knows, it could happen.””
