Endowment investments fall short of projections
By George Aguilar
Staff Writer
In a time when the university seems to be busting piggy banks everywhere to come up with added revenue, the income from investments of endowments has fallen short by approximately $18 million for this fiscal year.
University President James H. Zumberge stressed this point in his speech to faculty members last Saturday. In the $365-million 1981-82 university operating budget, the endowment investment income will be approximately $7.2 million, or two percent of the total budget. Zumberge said the endowment income should be closer to seven percent or approximately $25 million.
The large loss of revenue has led university administrators to reconsider their strategy in investing income received from donors. Part of the money collected from private donors and fund-raising campaigns is invested to provide the university with added revenue.
The bulk of the investments are handled by Western Asset Manage-
ment Co., a firm which is responsible for buying, selling and selecting securities in the university portfolio. However, university administrators are less than satisfied with the recent results of the investment company.
“Their performance is less than what we had hoped for,” said Jon Strauss, senior vice president for Administration. He added that the rate of return on university investments is only 4.5 percent.
“That just is not good performance,” the vice president reiterated.
When asked what might have happened to cause this low rate of return, Strauss said, “There was a lot of emphasis on oil and energy investments when the markets have been depressed,” adding that there were heavy investments in the bond market. That market has also seen a severe slump.
“This, of course, is hindsight, but there is something definitely wrong,” he said.
However, the university is not prepared to leave Western Asset Management Co. as of yet. “We are reluctant to change, because looking over
a long period of time, their performance has been good,” Strauss explained. He mentioned, though, that the university is considering other possible firms and a study is being conducted now with recommendations to be made to the trustee’s finance committee when it convenes next month. The university has hired A. G. Becker as a consultant to help manage endowment funds.
Peter Cheung, university treasurer, feels the university must keep a closer watch on the investments of endowment funds. "We have not been working our endowment funds harder than the regular funds. A closer supervision is needed on a number of investments,” he said, adding that he would like to see the investment strategy become more aggressive.
The university administrators agree that the potential less of $18 million is not the fault of the university. “The president and Mr. Strauss and myself are in perfect communication,” Cheung said. “The problem is getting other people to move at the same pace we are moving.”
As far as raising money from alumni and the enlistments of outside endowments, Strauss is quite pleased. “The issue has not been raising the endowments,” he insisted, "it is the proper performance once we receive the endowments."
The short-term investments are handled by the treasurer's office, and according to Strauss, they have done a great job. In fact, the amount of revenue collected by the short-term investments have equaled the amount from the endowment investments, which should be at least three times that amount. “ The treasurer’s office has been remarkably successful,” Strauss said.
However, in Western Asset Management’s defense, they are not responsible for all endowments. Some donations come in the form of prop- -erty, and the university handles that aspect. The firm only handles securities, which can be risky.
Although administrators at the university believe they have missed out on $18 million, the endowment
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Transfer enrollment increases noticeably
By Barry Sloan
Staff Writer
Enrollment in the university by students who transferred from other colleges increased this fall by nearly 18 percent nationally and 45 percent internationally over last year’s figures, reported Peter Brown, director of Marketing and Publications.
As of the second week of the fall semester, 1,565 domestic transfer students had enrolled here, up from the 1980 level of 1,328. The numbers for international transfer students showed an increase from 109 last fall to the present total of 159.
Brown called the figures preliminary, but noted that December totals should indicate an even greater increase in transfer student enrollment.
While the director said it is too early to arrive at a conclusive interpretation of the increase, he offered three explanations for it.
“Some of it is due to increased activity in the university's relationship with two-year colleges," he said. For the first time, Brown noted, the university has a full-time articulation officer whose responsibility is to assist students at other colleges in planning and coordinating procedures for tranferring here.
Pasadena City College, Orange Coast College,
Los Angeles City College, El Camino College and Santa Monica City College consistently have been among the top two-year institutions for supplying the university with sophomore or junior transfer students.
Jay Berger, director of Admissions and School Relations, has been trying to secure budgetary funds for stepping up recruitment at these institutions, Brown noted.
Secondly, financial considerations have forced many students to acquire their general education background at state universities, where school costs are much lower than at a private institution, Brown commented.
Cal State Los Angeles, UCLA, Cal State Long Beach, Cal State Northridge and UC Irvine usually provide the university with the largest number of transfer students from four-year colleges.
UCLA people will transfer here because the campus is smaller, and a number of students often come to the business school after receiving a background in it at Long Beach State, Brown said.
Thirdly, Brown credited the recruitment efforts of Joann Stedman, director of International Admissions, for the increase in foreign transfer students coming to the university.
On a specific basis, the director cited a new awareness of the university among students at other schools and the post-educational opportunities enhanced with a university degree as two reasons people transfer here.
Brown used the Department of Cine-' ma/Television and the schools of Business, Public Administration and Engineering — all rated in the top 10 nationally — as examples of the drawing power that the university has for students.
Brown looks upon transter students as a way of adding diversity to the university.“We want students from over 100 countries, 50 states, and all ethnic backgrounds. It gives the university one more dimension.”
(oknflw trojan
Volume XCI Number 12 University of Southern California Thursday, September 17, 1981
Bookstore sales top $10 million
Profits less than five percent
David Wharton
Staff Writer
“We feel the students deserve the best we can provide. We want to be of service to the students and we do things for them whenever we can,” said Stephen Crossland, director of the University Bookstore.
Crossland discussed the strengths and weaknesses of the bookstore.
"People don’t hate us (the bookstore). Some like us and some don’t like us. I know students are not going
Staff photo by Alexis Ignatieff
INFORMATION PLEASE - Students gathered in Alumni Park Wednesday at the Activities Alive fair, which was held to familiarize students with various university organizations. See story page 3.
to say,
‘Hey, I think the bookstore is great! I love it when they take my money!'
“We are in a neutral position and I like to keep it that way,” Crossland said.
Addressing students' complaints about high prices, Crossland said that although the bookstore raked in over $10 million in gross sales last year, only
4.7	percent of that translated into profits after the deduction of operating costs.
“The bookstore is an income-producing center, which means that we have to pay all of our charges, even those things provided by the university — rent, lights, heat . . . you name it. We are totally self-supporting,” Crossland explained.
"If we are not paying our nut, we are going to get canned. I’m like a baseball player, my tenure with the university is only as good as my last season."
The director said more than 70 percent of last year’s $ 10-million gross income was used to pay for the cost of the actual goods sold in the store, 13 percent went to salaries and wages and six percent was used for direct costs — advertising, telephone costs and shipping. The remainder of the $10 million was split between indirect costs and profit.
Much of the annual profits are used to make modifications in the bookstore facilities, and remaining funds go into a reserve that will someday pay for -construction of a new, larger booksjfere, Crossland said.
The bookstore loses money annually in its textbook section because of high transportation costs, unsold inventory and a low price margin, the director said.
Part of that loss is made up by profits from the buy-back and subsequent resale of used books. The profitable gift store and school supplies section also help to recover money lost through the sales of texts. Crossland explained.
He argued that although the gift store operates on a profitable level, gift store prices are not unreasonably high. Gift (Continued on page 16)