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September 10, 1981 - Image 6

Resource type:
The Michigan Daily, 1981-09-10

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Page 6 -ThursdaySeptember 10, 1981--The Michigan Daily

Much like a Wall Street brokerage house, the University
' invests in just about anything that will generate money, in an
effort to help ease tuition hikes and program cuts.
x During the 1979-80 school year, investment income totaled
more than $18.7 million. Student fees for the same period
totalled $83.8 million. Had the investments not been there, a
,:significant increase in student fees would have resulted, ac-
cording to an investment official.,
The University uses two funds to finance the investments,
¢according to Vice-president and Chief Financial Officer
James Brinkerhoff. While revenue from the endowment fund
--must be used for designated purposes, the investment pool
has relatively few restrictions.
ENDOWMENT FUNDS are given to the University for
specific purposes, Brinkerhoff said. The University invests
this money in stocks, bonds, and mortgages. The proceeds
are used for the purposes designated by the donor, such as
student aid, research, or instruction, he said.
The other source of money for investments comes from the
University's investment pool. Consisting largely of student
fees not used to cover immediate expenses. Residence Hall
fees and tuition are not needed in their entirety immediately,

'estments bolster 'U' inco

so while waiting to be spent, they are invested, Brinkerhoff
Investment funds also come from the state. "About one-
twelfth of the state appropriation become invested the day
we get it," said Brinkerhoff.
When a donation earmarked for investment comes into the
University, it is invested the same day. The staff in the
University Investment Office works daily to keep up with the
investment decisions, Brinkerhoff said.
The University has investments in various government and
municipal bonds, stocks, mortgages, industry, and
securities. Short-term investments for tuition fees and state
appropriations include certificates of deposit, commercial
paper, and money markets.
Earlier this year, the Board of Regents came under fire for
attempting to add five weapons manufacturing companies to
the University's master list of common stocks. Many studen-
ts contended the investments were morally wrong and
demanded they be withdrawn.
The Regents voted at their February meeting to accept the
companies for possible future investments. "I don't agree
that the way to peace is through reducing defense," said
Regent Thomas Roach (D-Saline).

Jon Feiger, Michigan Student Assembly vice president for
legislative relations at the time, told the Board that "it is
morally wrong for the University to invest its funds in any
military corporations." The five companies in question were
the Loral Corporation, Sanders Associates, General
Dynamics Corporation, McDonnel-Douglas Corporation, and
Northrup Corporation.
A recommendation to add the companies to the master list
of investments was only part of the full National Bank of
Detroit Report on Investments at the Regent's meeting (the
University conducts its financial business through NBD's
Trust Department). NBD also proposed adding hospital
management industry, natural gas industry, and railroad
stocks to the list.
Not every stock on the master list will be added to the
University portfolio. The list only provides potential cor-
porations. The NBD report also presented a very en-
couraging view for investments in the stock market.
Revenue from investments has increased with time,
especially during the last few years. Income was $7 million in
the '72-'73 academic year and only rose to $11 million in fiscal
year '77-'78. The following year, however, income rose to $14
million, and the year after it reached $18.7 million, according
to Brinkerhoff.

The income from the endowment funds is designated fc
specific programs, but investment pool profits often fin
themselves in the general fund. This reduces the need for a
equal amount of tuition or state appropriation.
Among the University's bond holdings are suct
organizations as the United States Treasury, th(
Bank America Corporation, AT&T, Detroit Edison, Marquet-
te Michigan Municipal, and the Alaska Pipeline Company.
Stock holdings include General Motors, DuPont, and Tex
Instruments. The book value of all the Common Stock is {e
$49 million, with a market value of almost $66 million, accor-
ding to the 1980 Schedule of Investments, for the year ending
June 30, 1980.
Total investments-endowment and other invested fun-
<s-held by the University were valued, according to the 1980
Schedule, at $114.5 million with a market value of over $128.7
There is money working for the University in all these in-
vestments, Brinkerhoff said. Even though the University i
not out to make a profit, he added, the advantages of inves
ment outweigh the costs.
Daily staff writers Pam Fickinger and Barry Witt
filed reports for this story.




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