Board committee approves flat endowment distribution rate

Pitt will not increase the payout from its endowment for fiscal year 2021, a board committee unanimously voted Tuesday.

The vote comes as Pitt faces an uncertain budget outlook for the fall, due to the ongoing COVID-19 pandemic. Chancellor Patrick Gallagher said last Thursday that tuition and fees are expected to remain flat for students, and the University was looking into all possible savings. Several deans told their faculty and staff last month to prepare for budget cuts of as much as 10%.

The board of trustees’ investment committee sets the distribution rate, or the percentage of the endowment to be sent each year to the budget. For nearly all endowments, the rate currently stands at 4.25% of a three-year moving average of the endowment. The committee set a higher rate of 4.75% of a three-year moving average of the endowment in June 2019 for the Operating Funds Quasi-Endowment to support financial aid programs. The committee approved the same rates Tuesday.

Some have argued that Pitt should increase the payout in order to protect faculty and departments. Others have said budget cuts would provide an opportunity for the University to take a hard look at its costs and tighten its belt.

Chancellor Patrick Gallagher said in May that he would not support utilizing Pitt’s endowment to offset any operating losses. The portion of Pitt’s financial aid which is not donor-controlled is currently used to assist in paying for student financial aid.

“Using it for offsetting these costs would have a negative impact on money going to students,” Gallagher said. “We think it’s sort of robbing Peter to pay Paul.”