Existing Funds to Eliminate Deficit, Balance Advancement Division's Budget Moving Forward
Private funds will be used in the future to repay university reservesThursday, January 30, 2014
FAYETTEVILLE, Ark. – The University of Arkansas will use existing reserves to fully fund the Advancement Division’s annual operating expenses moving forward and eliminate the division’s previously accumulated deficit – all during the current fiscal year.
The reallocation of $2.3 million will come from the university’s contingency reserve fund, intended to meet necessary expenses that surface after the end of the traditional budgeting process. These funds will be used to fully fund the division’s annual budget for an interim period.
The university is in the quiet phase of a major fundraising campaign that is expected to dramatically increase its endowment. Growth of the endowment over the next few years will create substantial additional revenue, a fraction of which will go to the Advancement Division to balance its annual budget and repay the contingency reserve fund.
Also during the current fiscal year, the division will eliminate what remains of its accumulated deficit from 2011 and 2012, now $3.2 million, with a combination of university reserve and private funds. The private funds will come from the Advancement Division’s annual portion of distributions from the endowment.
The Advancement Division receives funding from several sources including annual distributions of a half a percent of the total endowment amount, so the division’s revenue grows as the endowment grows. For example, the division’s annual distribution grows by $1 million for every $200 million in endowment growth based on a 36-month rolling average. The endowment is currently worth more than $825 million.
The University of Arkansas is currently ranked No. 21 among public universities in private giving support, due to the generous support of its alumni and friends and the work of the Advancement Division. The university has recorded more than $100 million in private giving support the past three years and is on pace to do that again this fiscal year. This support continues to be a critical component of the university's success, as it adds to the academic opportunities available to faculty, staff and students on campus, including merit-based and need-based scholarships; technology enhancements; new and renovated facilities; undergraduate, graduate and faculty research; study abroad opportunities; and innovative programs.
The Advancement Division includes several diverse units including the Arkansas Alumni Association, Arkansas World Trade Center, and the offices of university development, donor relations and special events, and university relations.
Mark Rushing, director of strategic communications