University of Arizona Transfers Endowment Payouts to Itself

The University of Arizona plans to transfer $70 million to itself from the university’s foundation, effective June 30, the Tucson Spotlight reported.

Payouts for all non-scholarship endowments will also be transferred to the university from this summer onward, but still in accordance with donors’ “specified charitable purpose,” according to a letter to donors from the foundation’s president and CEO, John-Paul Roczniak.  

“The university believes this proposal will provide it with more direct insight into the availability and use of these funds, supporting timely and appropriate expenditures of donor resources,” Roczniak wrote. The shift is also intended to help the university maintain the amount of cash on hand required by the Arizona Board of Regents and the university’s bond rating agencies.

The university has struggled to hit cash-on-hand targets before, reportedly losing track of millions of dollars through accounting errors and flawed financial projections a few years ago. The university’s budget woes resulted in steep cost-cutting measures at the time. Last summer, the university reported 77 days’ worth of cash on hand, according to the Arizona Luminaria.

The university’s new proposal is a departure from how the University of Arizona Foundation has historically handled donor funds, Roczniak noted in the letter. The foundation currently doles out monthly endowment payouts at an annual rate of 4.25 percent with a three-year moving rate to a separate foundation account for that purpose. Then it gives money to the university as the institution spends, or documents plans to spend, the funds in the next 90 days. Each request for distribution is reviewed by foundation staff.

Donors have option to opt out of the university’s proposed changes for their individual endowment accounts, according to the letter.