Long-term investments grow 8.4% to $6.47 billion

After suffering substantial losses, the University’s investments have started to gain ground.

As of Dec. 31, the University’s long-term pool of investments was valued at $6.47 billion, up 8.4 percent for the calendar year, Executive Vice President Tallman Trask said. The long-term pool includes the University’s endowment and other investments managed by the private firm Duke University Management Company.

Although the long-term pool is up from the June 30, 2009 figure of $5.97 billion, Trask said the University still has a long way to go in eliminating its $125 million deficit. The long-term pool reached a high of $8.1 billion at the end of June 2008.

“I want to be cautiously optimistic, but I don’t want people to be complacent,” Trask said.

The University is on track to significantly reduce its shortfall if it continues to manage vacant positions effectively, Vice President for Human Resources Kyle Cavanaugh said. He added that the two retirement initiatives, overtime management and natural attrition have eliminated more than 400 full-time employees, which has saved the University more than $25 million.

Trask said if Duke does not fill between one-fourth and one-third of vacancies, the University could meet its budgetary goals, but he added that vacancies will not all occur in the ideal places.

In the 2009 fiscal year, investment returns provided 18 percent of Duke’s operating revenue.

Despite the recent positive returns, the University still needs to spend prudently, said Board of Trustees Chair and Democratic state Sen. Dan Blue, Law ’73.

“We need to make sure the University is operating as efficiently as possible, and where we can squeeze out savings we still need to be doing that,” Blue said.

Trask said he is “reasonably confident” that the University is beyond the need for centrally administered large-scale layoffs.

“What I was worried about a year ago was that we would have to stand up on the quad and say 500 people had to go away. We’re past that,” he said.

Going forward, Trask said the University is considering a flat endowment payout instead of making a small cut. Endowment payouts—$250 million in the 2009 fiscal year—were projected to fall through at least 2012, Vice President for Finance Hof Milam said last October.

 Still, the increase is “not only encouraging but reassuring,” Blue said. A change in the long-term pool’s direction could mean that some new endowments supporting initiatives such as financial aid and DukeEngage, which are currently underwater, could resume paying out funds.

“The endowment is certainly important and is extremely important to Duke’s ability to provide the opportunity that it provides for its students to be a place of research and inquiry and a place of new ideas for the betterment of human kind,” Blue said. “So it’s critical the endowment be in the positive territory so you can benefit from the increasing value and the revenue it creates to support... the priorities.”


Share and discuss “Long-term investments grow 8.4% to $6.47 billion” on social media.