Short-Term Investment Pool (STIP) Income
UCSD Campus Notice and Clarification Regarding STIP Interest
DATE: June 28, 2002
SUBJECT: Gift and Private Grant Funds - Earnings Return Changes
A top priority for this growing campus has been to build UCSD's endowment and gift funds. Such private support represents the best opportunity for UCSD to augment its limited State revenues, and buffer the effects of cyclical State budget cuts. In 1998, after consultation with Academic Senate, a 4% earnings cap on current gift and grant funds held by The Regents and the UC San Diego Foundation was implemented. Earnings over the cap are allocated to the Development Office for staff and infrastructure expenses needed to increase private support.
The UCSD Budget Committee, composed of the Vice Chancellors and representatives of the Academic Senate, students and staff, have determined that beginning July 1, 2002, no earnings on current gift and grant funds will accrue to these funds. This action was dictated by two factors: The expenses associated with UCSD's five-year, one-billion dollar capital campaign, and the State budget shortfall which will reduce needed general fund support for next year and quite possibly the next few years as well. Effective July 1, 2002, the first 2% of earnings on current gift and private grant funds held by The Regents and the UC San Diego Foundation will be allocated to the Vice Chancellor units associated with the individual funds for use as needed to support the academic mission. Current gift and private grant fund investment earnings in excess of 2% will be transferred to the Vice Chancellor- External Relations to assist in funding the capital campaign.
In response to questions raised by the Campus Notice, we are providing the following information to clarify which funds are affected by the revisions to PPM 410-10.
Endowment Funds (held by The Regents or the UCSD Foundation)
Endowment fund payout is a set calculation by both The Regents and the UCSD Foundation policy and is entirely separate from expendable fund (current fund) earnings. The payout on endowment funds and funds functioning as endowment in either the UCSD Foundation or held by The Regents is NOT affected by this policy. In addition, any funds invested in the Foundation's Intermediate Total Return Fund are NOT affected.
However, once endowment payout has been transferred to the campus and is available for use, the payout balance becomes a current fund. Earnings on unused accumulated endowment payout balances ARE affected by this policy, and will not accrue STIP. (Many think of this as the "interest on the interest")
Campus Held Current Use Funds
Campus held (Regental) current use (expendable) funds within the following ranges are subject to the revised PPM 410-10 and no longer accrue STIP earnings.
Endowment payout funds
- 34100-39799 (except 34619, 35480, 38070, 38220, 38756)
Private gifts and grants
- 45000-59996(except 57604, 57605, 57606, 59590, 59600, 59601, 59605)
Several departments may have previously incurred 'negative STIP' due to timing differences between expenditure and gift funds draw-down from their respective Foundation fund. To the extent that these timing differences continue, departments can expect to incur negative STIP. This may be avoided by drawing-down funds in parallel with planned expenditures.
Foundation Current Use Funds
All current use (expendable) Foundation funds are subject to the revised PPM 410-10 and no longer accrue STIP earnings. The UCSD Foundation never permits a fund to go into a deficit; therefore, Foundation funds will not accrue negative STIP.
Additional information can be found at UC/UCSD STIP Policy and Process.