President reflects on economic downturn, offers hope for UF's future
October 11, 2008
To The Gator Nation:
With the ongoing uncertainties in the economy, I am writing to you today (Oct. 11, 2008) to give you an update, and possibly some hope, on related matters here at the University of Florida.
Let me start by addressing employees’ concerns, particularly about their retirement savings. As you may know, most state employees are enrolled in the Florida Retirement System pension plan. Pensions are, of course, guaranteed to those who qualify. And beyond that, the state plan’s investments are highly diversified, and thus as protected as possible from the failure of any single corporation or institution or small group of corporations or institutions. For example, just 1.76 percent of the pension plan’s funds were invested in Lehman Brothers, AIG, Washington Mutual, Merrill Lynch and Bank of America combined.
Employees’ investments in individual retirement accounts, like all stock mutual funds, are under tremendous pressure. Even so, we have been assured that the transition at AIG should not concern account holders with VALIC, as its capital and surplus are separate from AIG.
UF’s working capital is stable and is invested in a state-guaranteed conservative fund. The university’s bonds are at a fixed rate and protect us from the difficulties other institutions are experiencing due to variable rate bonds.
With the decline in the stock market, however, our endowment is not performing as well as it has in recent years. The UFICO endowment investment returns are down 8.2 percent year to date through Sept. 30.
However, this return does not take into account the results of the stock market over the last week, which will affect our endowment along with the rest of the country’s economy.
At the state level which is suffering from a sluggish housing sector, revenues remain well below estimates. We will not know exactly what to expect until the November Revenue Estimating Conference. But brace yourselves because we anticipate we will have to make significant additional cuts.
I’ve encouraged Gov. Charlie Crist to use the state’s rainy day fund to help get the state’s universities through this academic year. And in spite of everything, we will aggressively pursue the university’s agenda in the spring legislative session.
The good news is that fundraising efforts continue with success. We kicked off the public phase of the Capital Campaign a year ago with $502 million. As of Sept. 30, our total was $758 million – a $256 million increase. That means we’re past the halfway point to the $1.5 billion goal well ahead of the campaign’s chronological halfway mark. Again, it is unclear how the recent events on Wall Street will impact our campaign.
Thanks to the continued state support of a capital projects fund along with generous private donations, UF’s building program continues to make impressive strides. We completed Nanoscale Research Facility this summer. That followed Steinbrenner Band Hall and Pugh Hall earlier this year.
Next year, we expect to finish the Shands at UF Cancer Hospital, the Biomedical Sciences Building and the Pathogens Research Facility. Soon, we expect to break ground on the Harn Museum Asian Art Wing and Hough Hall, the new business graduate studies building.
Eligible faculty and staff received pay raises in their checks this week, a measure made possible through recent tuition increases approved by UF’s Board of Trustees and with revenue from fees. It was a modest raise aimed at recognizing their committment to educational excellence.
Florida, like the rest of the country, has experienced downturns before, but has always come back. As UF economist Dave Denslow has noted, baby boomers will retire and relocate to Florida in greater and greater numbers in coming years. At the same time, the state’s economy is more diverse than it has been in past years. I am confident we will persevere, and in the final analysis be stronger than ever.
Sincerely,
J. Bernard Machen
President
University of Florida