College student dollars dwindle
Legislation might help scholarships Scholarship dollars could be jeopardized next fall as area universities cope with endowments that took a huge hit when the stock market fell. New legislation being introduced in North Dakota this session would ...
Legislation might help scholarships
Scholarship dollars could be jeopardized next fall as area universities cope with endowments that took a huge hit when the stock market fell.
New legislation being introduced in North Dakota this session would give university foundations, and other nonprofits, more flexibility in spending endowments.
For the past few years, the North Dakota State University Development Foundation has paid out 4 percent of its endowment to the university.
That amounts to $2.7 million for the current academic year, including $1.6 million for student scholarships.
But it's unknown how much the foundation will be able to provide in scholarship dollars in the next academic year, said Jim Miller, the foundation's executive director.
In 2008, the NDSU foundation's endowment lost $7.7 million, or about 25 to 30 percent of market value, through the fiscal quarter that ended Sept. 30. Year-end figures are not yet available.
The foundation uses revenue from the endowment to pay for scholarships, teaching professorships and other support for NDSU.
But this year there will be less money available.
Other area universities are in the same situation.
Endowments at Concordia College and the foundations of Minnesota State University Moorhead and the University of North Dakota also lost at least 25 to 30 percent of market value in 2008.
However, Concordia and MSUM officials say they're not going to reduce student scholarships.
"We'll find sources for it, even if our endowment funds are not earning like they've done before," said Joan Justesen, vice president of the MSUM Alumni Foundation.
At Concordia, officials will make budget reallocations so the loss in endowment revenue doesn't affect student scholarships or programs, said Eric Johnson, vice president for advancement.
The UND Foundation will find funding sources to honor four-year scholarship commitments that have already been made, said Tim O'Keefe, executive director.
But new scholarship dollars may have to be reduced, O'Keefe said.
The North Dakota campuses are in a unique position because they are governed by a restriction that limits how much they can spend from their endowments during a time like this.
North Dakota nonprofits follow the Uniform Management of Institutional Funds Act.
This act restricts foundations from spending from the principal of the endowment if the value of the endowment falls below historical costs, or is "under water."
A bill that will be introduced in the Legislature this session would bring North Dakota under an updated act called the Uniform Prudent Management of Institutional Funds Act.
The new set of guidelines, already adopted by 25 states including Minnesota, gives nonprofits more flexibility.
If approved, the new legislation would take effect Aug. 1.
North Dakota foundation officials would like to see the legislation become retroactive to July 1, 2008, Miller said.
In the meantime, foundations will continue to operate under the current restriction, Miller said.
Once the year-end numbers are available, an investment committee for the foundation will meet to determine what percent the foundation can pay to NDSU, Miller said.
Committee members will evaluate how the foundation can do the most good for students and faculty without jeopardizing the endowment in the future, Miller said.
Readers can reach Forum reporter Amy Dalrymple at (701) 241-5590