The University of New Mexico is going to dip into the principal of one of its endowment accounts this year, but the university president said she intends to avoid such spending practices in the future.
Regents on Tuesday unanimously approved spending up to $1 million from the principal of the Regents’ Endowment account this year. About $650,000 will go to a “Grand Challenges” initiative, and about $350,000 will be spent on an enrollment push.
“I’d like to see the funds managed in ways in which we don’t have to go into the corpus to fund university initiatives,” said UNM President Garnett Stokes, who proposed the spending plan. “Our intention is to completely get away from doing that in the upcoming years.”
The Regents’ Endowment is one of several endowment accounts available to UNM. It’s considered a “quasi endowment,” according to the university’s website. Regent policy says that the university can spend from the principal of the account but that such expenditures should “generally be limited” to buying property.
The fund began in 1983 when UNM sold land near Louisiana and Constitution to Albuquerque for $600,000, said Jennifer Kemp, a spokeswoman for the UNM Foundation, which manages the endowment account.
Regent President Doug Brown said Tuesday that the account is around $27 million. The account’s market value reached $36 million in 2006-07 and dropped to as low as $25 million in 2018-19, according to university records.
This year’s spending from the account’s principal will be the ninth time the university has used the account’s principal since 2005. It will be the fifth straight year the university has made a withdrawal from the account, according to UNM Foundation officials.
The account’s principal was used on a $2 million student investment project in 2005-06. More than $1 million from the account went toward a baseball field in 2012-13. The account funded a $1 million branding campaign in 2016-17. In the past two years, $814,207 and $798,039 from the account went to the athletic department, Kemp said in an email.
UNM officials said the efforts that will be funded this year with the principal from the account will be an investment in the university. The enrollment effort is needed to address a significant drop in student population over the past six years. The student population was 24,393 last fall, down from 29,100 in 2012, according to prior Journal reports.
The university is optimistic about its Grand Challenges initiative, which is receiving a jump start in funding from the Regents’ Endowment fund. The school is bringing together resources in a concerted effort to address three challenges facing New Mexico: sustainable water resources, successful aging and substance abuse disorders.
Brown said the university should benefit by receiving grant money and other funding sources as the initiative moves forward. That’s not to mention the benefits from improving those issues statewide, he said.
“On this occasion, it is very worthwhile to make what is truly an investment into the future in the Grand Challenges and enrollment” initiatives, Brown said Tuesday.
Kemp said in an email that the foundation supports the university “using their quasi-endowment as they see fit.”
Regents did express some concerns about using the endowment account’s principal to fund the initiatives, but the measure to authorize the spending passed unanimously.
“They are wonderful expenditures, and they are something we ought to do this year, given the status of the university and the immediate need,” Regent Rob Schwartz said. “But as a general matter, I would hope we would not dip into the principal.”