ENDOWMENT
SPENDING POLICY
Effective for FY 2014-15
Investment Policy
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Board of Trustees Investment Committee
approved significant changes to the
Endowment Investment Policy on December
10, 2012. Other changes have been made to
the investment policy since that time, but the
section regarding spending has not changed.
Investment Policy located on the Endowment
Services website at
http://www.uky.edu/EVPFA/Controller/files/endow/POLICY.pdf
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Spending Policy

Implementation of Spending Policy
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FY 2013-14 has served as a transition year
with spending based on 4% of the trailing 60
month endowment market value.
Hybrid policy will be fully implemented in
FY 2014-15.
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Spending Policy

60/40 hybrid spending policy
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60% based on prior year spending +/the annual change in inflation
40% based on 4.0% of the trailing 36
month average endowment market
value
Calculated spending rate must fall within
3.0% to 6.0% of the current
endowment market value.
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Benefits of Hybrid Policy


Better smoothing of spending
distributions to campus
Directly linked to inflation, which is one
of the spending criteria set forth by the
Uniform Prudent Management of
Institutional Funds Act (“UPMIFA”)
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Underwater Endowments
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Endowments >20% underwater
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Spending distributions and management fee
withdrawals will be suspended.
Endowments >10% & <20% underwater

Office of the Treasurer will review with each
College Dean to determine appropriate level
of spending based on the spending criteria
set forth by UPMIFA.
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UPMIFA Spending Criteria

The following factors must be considered when
making endowment spending decisions:
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the duration and preservation of the endowment fund;
the purposes of the institution and the endowment fund;
general economic conditions;
the possible effect of inflation or deflation;
the expected total return from income and the appreciation of
investments;
other resources of the institution;
the investment policy of the institution.
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New Endowment Funds


Spending distributions are delayed on new
endowment funds for at least one year in
order to build a spending reserve.
Implemented in FY13-14
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Questions?

Feel free to contact any of the following
individuals if you have questions on the
spending policy


Donna Counts
Kim Lush
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