The Michigan Daily - michigandaily.com
Thursday, March 19, 2009 - 7A
The Michigan Daily - michigandailycom Thursday, March 19, 2009 - 7A
ing cuts - Princeton University
ENDOWMENT recently announced it could trim
From Page 1A as much as $82 million from the
next fiscal year's budget - the
The University of Michigan has University of Michigan has large-
experienced similar difficulties. ly shielded itself from the imme-
Here, the school's endowment has diate impact of the financial
temporarily lost about 17 percent crisis, and is poised to weather
of its June 30 value, down to $6.3 the ongoing financial storm bet-
billion from $7.6 billion, according ter than most.
to a March investment report filing So far, the University's capital
made by University Chief Invest- projects are progressing on sched-
ment Officer Erik Lundberg and ule, and no major budget cuts, lay-
Chief Financial Officer Timothy offs or hiring freezes have been
And that $6.3 billion figure uses Looking back on the lucrative
values for the endowment's illiq- years preceding the financial cri-
uid assets from Sept. 30 - illiquid sis, smart investing decisions and
investments that are likely worth foresight on the part of the Uni-
much less now. Lundberg estimat- versity's investment team appear
ed in a recent interview that the to have gone a long way toward
endowment has likely lost 20 to 25 protecting the endowment and
percent of its value so far this fiscal the money it pays out to University
year, which began on July 1, and colleges, schools, departments and
could end the fiscal year with total other operations from the worst
losses in that same range. financial crisis since the Great
But while other universities Depression.
have been forced to make spend-
the michigan daily
AVOIDING THE SUBPRIME
The cause of the current eco-
nomic meltdown can largely be
attributed to the subprime mort-
gage crisis and the bursting of
the housing bubble in 2007. Dur-
ing this time, years of high-risk
lending practices came to bear
as mortgage delinquencies and
foreclosures soared and subprime
mortgage-backed securities tum-
bled in value.
"It started as a credit crisis -
it was small," Lundberg said in a
January interview at his downtown
Ann Arbor office. "And now we've
ended up with a full-blown credit
But whereas other colleges and
universities had significant invest-
ments in the kinds of mortgage-
backed securities that lost so much
of their value, University investors,
Lundberg explained, chose not to
invest very much in those securi-
"We chose not to invest in those,
because we didn't think the reward
associated with the risk was worth
it. We didn't get paid enough for
taking that risk," he said. "So we
steered away from the subprime
and a lot of these spread products,
and focused the investments other
As the financial crisis has grown,
the damage inflicted by the sub-
prime crisis has spread throughout
the financial world like a contagion,
crippling many other investments.
And the University's endowment,
Lundberg conceded, has not been
completelyimmune from its effects,
given the breadth of investments
comprising the endowment.
Nonetheless, the University
investment team's decision not
to sink significant amounts of
money into doomed subprime
mortgage-related investments has
in part prevented the endowment
from suffering more losses than it
A SHIELD AGAINST
The smartest and more prescient
move made bythe investment team,
University officials and Investment
Advisory Committee members say,
was changing how the endowment
pays out money to University col-
leges, departments, schools and
other campus operations.
Just over twoyears ago, the Uni-
versity paid out5 percent of its total
value each year to University oper-
ations, and it calculated that payout
amount using a three-year average
value for the endowment, meaning
it took into account three years'
worth of endowment values when,
determining how much to pay out
to University operations.
But around that time Lundberg
suggested to Chief Financial Offi-
cer Slottow that the average value
of the endowment used to calculate
the payout should be extended from
three years to seven years.
A rolling payout using a seven-
year average value for the endow-
ment, Lundberg explained, would
better take into account market vol-
atility, and ensure that the annual
payout to academic departments
would remain steady. In other
words, the seven-year payout would
help to better compensate for spikes
- either up or down - in the mar-
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bus fate again?1
why not do the
while you wait?
II _ymket much better than a three-year
period because it uses many more
And with a seven-year payout,
those receiving funds from the
endowment could count on a certain
WORK ON MACKINAC Island this amount of funding each year and not
Summer - Make life long friends. The have to adjust their budgets depend-
Island House Hotel and Ryba's Fudge
Shops are looking for seasonal help in
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Staff, Sales Clerks, and Baristas. Hous-
ing, bonus, and discounted meals avail- EYE DOCTOR
able. Ca 1Ryan 1(800)626-6304. From Page 1A
wwwet& eislandhouse "Eye care is a verygood specialty
for this kind of work because much
of what we do is surgery," Monte
said, "and many times with a single
operation we can cure a blinding
eye problem or straighten crooked
, T AV E eyes or do something very impor-
tant that will prevent blindness."
Duringthis trip, in addition to per-
Book your flight to Europe forming surgeries on local patients,
Monte helped teach Peruvian doc-
for the summer during tors new skills and techniques.
March, and get your 1st Before the Flying Eye Hospital
hostel night free! arrived,thelocaldoctors pre-select-
ed 28 patients with specific eye
STA Trace!, Inc. problems about which they want-
Ann Arbor MI48109 ed to learn more. Everyone then
T (734) 769.2555 examined the patients together and
UMI@statravel.com picked nine who would be good for
surgical teaching purposes.
Monte said the intent is to cure
announCements the patient's eye problems, while
demonstrating tolocal doctors "how
to do a certain kind of an operation
better or maybe a new operation
SOXALOT.COM that they have never done."
Socks and Such with Each of the four volunteering doc-
sophistication & whimsy tors on the mission - hailing from
around the country - were assigned
perf sonaltwo Peruvian pediatric eye doctors.
"They would alternate scrubbing
in with us on cases, and they were
right there when we were doing
examinations," Monte said.
A BABY IS OUR DREAM. Monte performed two surgeries
Help fill our home with laughter andi.
love! We are young, happily married & in the operating room in the back of
hoping to be parents. We care about the plane, which were videotaped
you, please call us anytime. Toll free and shown to a classroom full of 30
(177) 533-3117. Erin and Tim. local doctors and residents in the
front ofthe plane.He also performed
Horoscope_ five surgical operations in the local
I I I I * eye hospital, with local doctors and
nurses present to observe how to
perform new techniques.
During free time in the after-
SCORPIO noons, Monte and the three doctors
(Oct. 23 to Nov. 21) gave lectures pertaining to their
Because you're gung-ho to get a lot specialties. While Monte taught
done, make big plans. Give yourself the
right tools and support equipment to do a about pediatric eye muscle prob-
ing on the ups and downs of the mar-
kets - acrucial componentfor annual
budgeting in an academic setting.
When asked why he decided to
institute a longer rolling payout,
Lundberg said he saw the period
of high returns before the onset of
the financial crisis as an opportu-
nity to be proactive and protect the
endowment for the future.
"In good times, you get very
large increases year over year in
spending, and then when markets
go down you have (spending) cuts
the following year - we saw some
of that in the tail end of the tech
bubble (in 2000 and 2001)," he
said. "And so finding an opportu-
nity to make the change is when
the markets go up, because you
will have an increase in spending
anyways, and then you can take
"You know," he added, "just kind
of being proactive."
More than anything, the Uni-
versity's rolling payout has shield-
ed the school from the painful
budget cuts taking place at other
prominent colleges and universi-
ties, many of which, like Texas
Tech University and the Univer-
sity of Texas at Austin, use three-
year rolling payouts to calculate
their endowment payouts.
Still, like many other college
and university endowments, the
University's will surely end the
2009 fiscal year having suffered
significant losses across all its
And only when credit begins to
flow more freely in the global finan-
cial markets will endowment per-
formances pick up once again.
lems, other specialists discussed
glaucoma and retina diseases.
Monte's son, Derek del Monte,
also volunteered on the medical
mission. A University undergradu-
ate and Medical School alum, Derek
volunteered onthemissionas aresi-
dent physician.Besides helping with
pre-op and post-op care, Monte
taught the local doctors Western-
style cataract surgery techniques
using donated pigs' eyes.
Derek said he loved working
with his father and watching the
joy it brought him to help others.
"In medicine, a lot of who you
Derek said."I think he's an excellent
role model. He's making me into the
doctorI hope to be one day."
with the Flying Eye Hospital last
spring when he traveled to Da Nang,
Vietnam along with nine other doc-
tors from Big Ten schools.
He said his work helps build a
global prospective for the Univer-
sity and contributes to the global
reach program which encourages
medical students and faculty to do
"It also provides for me an oppor-
tunity to learn how medical care is
delivered in Peru, and before then
Vietnam, and before that Spain and
all over the world," Monte said. "I
can bring some of their ideas back
and help with the teaching of our
He said it's also important to
participate in medical missions and
help those who don't have access to
good medical care like people do in
the United States.
"In these developing countries
there's nobody else that can do this
(kind of work)," Monte said, "and if
I didn't go there, or somebody like
me, these patients would never get
these kind of blindness-prevent-
ing surgeries or the local doctors
wouldn't learn how to do (proce-
dures) on future patients."
For Friday, March 20, 2009
(March 21 to April 19)
Finally! It's your turn to recharge your
batteries for the rest of the year. In the
next four weeks, put yourself first. Yay
(April 20 to May 20)
Because your birthday is just a month
away, give yourself some private
moments to think about what you want
your new year (birthday to birthday) to
be all about. What do you want to hap-
(May 21 to June 20)
The next six weeks are unusually pop-
ular for you. Join classes, clubs and
organizations. Accept all invitations.
Enjoy the company of others.
(June 21tto July 22)-
This is the only time all year when the
Sun acts like a spotlight on you. This is
why others, especially important people,
(July 23 to Aug. 22)
In the month ahead, grab every oppor-
tunity to travel and explore new ideas,
new places and meet new faces. You're
hungry for adventure!
(Aug. 23 to Sept. 22)
You're going to feel passionately
intense about many things in the next
month. This includes shared property as
well as hot and heavy romance.
(Sept. 23 to Oct. 22)
Get more sleep in the coming month,
because the Sun is now far away from
your sign. Because it is the source of
energy, you need more rest and healthy
bang-up job. You can become better
organized in the next six weeks..
(Nov. 22 to Dec. 21)
What a fun-loving month ahead to
look forward to! Plan for a vacation.
Enjoy sports activities, playful times
with children, the arts, movies, music
and love and romance!
(Dec. 22 to Jan. 19)
Your attention now turns to home,
family and real estate matters.
Discussions with parents or family
members could be significant in the
(Jan. 20to Feb. 18)
Fasten your seatbelt! The next six
weeks will be full of short trips, running
errands, talking to neighbors and rela-
tives, plus increased reading and writing.
(Feb. 19 to March 20)
Because you're focused on earnings
and your possessions and your assets in
general, you want to feel on top of
things. You'll likely feel attached to
something you own.
YOU BORN TODAY Many of you
are unusually talented and gifted. You
can explore the arts; nevertheless, you
also have a logical, rational, scientific
mind. You're both dreamy and realistic.
Many of you are drawn to music (song
and dance). It takes a while to find your
niche in the world. Make sure you allow
enough time in the coming year to study
and learn something important.
Birthdate of: Kathy Ireland, model;
SpikeLee, film director; David Thewlis,
One shy young man
discovers that virtue
leads to a night of
A comic opera in three acts
Music by Benjamin Britten - Libretto by Eric Crozier
University Opera Theatre - Directed by Robert Swedberg
University Philharmonia Orchestra conducted by Israel Gursky
Sung in English with supertitles
Mar. 19at7:30pm-Mar. 20 & 21 at 8pm
Mar. 22 at 2pm.Mendelssohn Theatre
Tickets $24 and $18 . Students $9 with ID
League Ticket Office- 734-764-2538 . www.music.umich.edu
a 2009 King Features Syndicate, Inc.