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 Slottow. announced. 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 CONTAGION 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 crisis." 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- ties. "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 (mortgage-backed investments) and a lot of these spread products, and focused the investments other places." 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 already has. A SHIELD AGAINST FINANCIAL VOLATILITY 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- IMMEDIATE & FALL Occupancy Great Location: 1320 S. 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UNDERGRAD & MBA admission es- says wanted, Will pay up to $65/appli- cation package. www.buymyessays. bus fate again?1 bus stop why not do the croooword puzzle while you wait? II _ymket much better than a three-year period because it uses many more endowment values. 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 all areas: Front Desk, Bell Staff Wait 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 action then. "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 assets. 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 become istherolemodelsyouhave," Derek said."I think he's an excellent role model. He's making me into the doctorI hope to be one day." TheelderMonte alsovolunteered 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 international work. "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 residents." 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 ARIES (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 me! TAURUS (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- pen? GEMINI (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. CANCER (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, notice you. LEO (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! VIRGO (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. LIBRA (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 food. bang-up job. You can become better organized in the next six weeks.. SAGITTARIUS (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! CAPRICORN (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 month ahead. AQUARIUS (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. PISCES (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, actor. One shy young man discovers that virtue rewarded unexpectedly leads to a night of adventure, with hilarious consequences. 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.