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Fiscal Year 2014 Endowment Payout Process Change

Fiscal Year 2014 Endowment Payout Process Change. Posted July 2013. Drivers of the FY’14 Changes. Collaborative effort involving Office of the VP for Business Affairs Financial Management Services Budget Office Administrative Systems Office of Development Goals

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Fiscal Year 2014 Endowment Payout Process Change

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  1. Fiscal Year 2014Endowment Payout Process Change Posted July 2013

  2. Drivers of the FY’14 Changes • Collaborative effort involving • Office of the VP for Business Affairs • Financial Management Services • Budget Office • Administrative Systems • Office of Development • Goals • Identify the simplest solution that works for the majority of funds • Eliminate “confusing” shortfall process (liquidation of shares) • Better align cash and accounting tracks • Make it easier for fund holders to effectively budget/forecast allocated payout Financial Management Services

  3. What Changed – Payout Timing & Process $12k Annual Payout Process (“Shortfall”) Pre-FY’14 Sep Mar Apr May Oct Nov Dec Jan Feb Jun Jul Aug Sell Shares to Cover Shortfall Annual Payout Allocation to Income Funds ( # shares X payout per share ) Monthly Impact to Share Value No Impact to Spending Flexibility No Sale of Shares $1k $1k $1k $1k $1k $1k $1k $1k $1k $1k $1k $1k Beginning FY’14 Sep Mar Apr May Oct Nov Dec Jan Feb Jun Jul Aug Monthly Payout = # shares X payout per share 12 Financial Management Services

  4. 1,000 X $299 =$299,000 Impact on Number of Shares & Share Value Example: Fund value = $300K (1,000 shares, $300/share). Annual Payout = $12/share; Monthly Payout $1/share 960 X $300 =$288,000 Sept Aug Nov Pre-FY’14 1,000 X $300 =$300,000 1,000 X $300 =$300,000 SellShares To Cover Shortfall Annual $12K Payout Allocation Share value declines by $1/month as payout is distributed $1K $1K $1K $1K $1K Beginning FY’14 1,000 X $298 =$298,000 1,000 X $296 =$296,000 1,000 X $297 =$297,000 1,000 X $288 =$288,000 . . . . . . . Sept Oct Nov Dec Aug Financial Management Services

  5. Summary of Changes Financial Management Services

  6. End

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