I simply said a majority of the endowment is unrestricted, which is counter to what many people think.
We have people educating others on how endowments work, who actually have no idea what they're talking about.
Pitt Master Plan
- Thread starter pittchagg
- Start date
I simply said a majority of the endowment is unrestricted, which is counter to what many people think.
We have people educating others on how endowments work, who actually have no idea what they're talking about.
It's actually the only modern building of any real architectural note on Pitt's campus, which isn't saying a lot.
But it isn't as important as the Gardner Steel Conference Center (former Central Turnverein) and O'Hara St Student Center (former Concordia Club) which are US Historic District contributing properties and on the chopping block. The former is also a PHLF landmark. Their loss will destroy the historic feel of the O'Hara Street corridor.
No doubt, Pitt needs more space and these low buildings are an inefficient use of those plots, but no other university would even consider removing those two buildings without at least preserving the facade of the former and maintaining the latter largely in its current state or incorporating it largely intact into a new facility, as has been done at nearly any other university I've visited with similar historic buildings. Heck, Pitt just undertook a historic renovation of the Concordia Club not even a decade ago. What Pitt is proposing is to take the south side of O'Hara and replace everything remotely architecturally interesting and special on that part of campus with what is essentially a giant office building with no deference to historic composition or campus environment. Not that I'd argue Pitt shouldn't build there, but at present it is an aesthetically and historically horrific plan to just demo those buildings without preservation and/or incorporation into the new facilities. Someone relatively plugged into the administration told me, and I'm not joking, the facilities was being led by someone with a Nitter background and no real depth of Pitt connection, and I have no idea if that is true or not, but it wouldn't surprise me considering the complete lack of forethought about those buildings and how the fit into the overall Pitt campus.
https://www.utimes.pitt.edu/archives/?p=41485
The architectural details of the historic Gardner Steel Center are unique, and noteworthy for their period, and should be preserved as part of the facade of any new complex.
Now look at the O'Hara St Center, particularly the interiors with its dark oak paneling and ball room. Pitt did a fabulous job restoring, preserving, and re-purposing this building just ten years ago. It would be one of the nicer buildings on many other university campuses. It is just insane to rip this down, not to mention an affront to local Jewish heritage.
Why they wouldn't at least incorporate this into a new facility, like many other universities do with their older buildings, can only be speculated.
Unfortunately when you are cash strapped and not able to acquire new property to build upon, you have to make tough choices if you want to modernize and grow the facilities for the needs of the school, faculty and students. You may recall, Pitt tore down Pitt Stadium which was also architecturally significant [not to mention the center piece of its athletic programs]. These are tough decisions...but without enough money to purchase more property...some of these old buildings will have to go. I agree with you on the Concordia Club facility....it will be a travesty to tear it down....especially after pouring money into its restoration. But Gardner Steel, LRDC or Information Sciences Buildings are hideous and do not make good use of the valuable ground they cover. I applaud the University thinking a bit out of the box and attempting to build for the future needs of the University. Hail to Pitt!
I’m not suggesting they don’t build on those plots, I’m saying they should preserve the facade of Gardner Steel (which is not hideous) as is done at many schools and cities. DC is an example of a city that preserves streetscape facades to front completely new, and larger buildings to preserve the historic aesthetic of neighborhood streetscapes. It is very common practice at many places outside Pittsburgh.
Gardner Steel does not have interiors worth preserving. I’m only talking about 2 sides of the shell of the facade for that building (the north and west sides covering the corner of O'Hara and Thackeray). Quite different than Pitt Stadium and not an impingement on that plot’s repurposement. What Gardner Steel does have, that Pitt Stadium never had, is a listing as a contributing property to the Schenley Farms National and City historic districts, and status as a PHLF historic landmark. If Pitt doesn’t consider some sort of preservation of at least the facade, it is likely to run into substantial resistance from the city and Schenley Farms historic review boards, which previously prevented Pitt from modifying one of its entrance ways because of its historic value. Incorporation of its facade into a new building makes sense for multiple reasons including appeasing historic preservationists. It’s a slight added cost, probably minuscule in the overall cost of the project, and not really an impingement on new square footage (especially since it has no existing setback).
Now the Concordia Club does have interiors worth preserving and could be incorporated en masse, wholly connected to a new facility and serving as an elegant engineering-dedicated meeting/conference center for the new facility. You’ve probably seen this done many times at other universities on you road trips. The new building could be built right into and over it, with a slight setback to preserve the appearance of the original roof line from the street view along the east and north sides from the corner of University Place and O'Hara.
Once these architectural examples are gone, they’re gone forever. Pitt made previous mistakes not preserving the facade of the Logan Armory as an entrance to Benedum and obliterating Thaw Hall’s main entrance. Those mistakes shouldn’t be repeated.
LRDC isn’t significant enough to preserve. The IS building probably isn’t either. The Music Building is for multiple reasons...and the facade and stonework should at least be preserved along 5th ala what I discuss above for Gardner Steel. Pitt can do this right and have the best of both worlds, preserve important and interesting architectural history and the historic streetscape feel, and make everyone happy, including the city historic commissions, or it can be shortsighted. All it has to do is require these elements be incorporated by the architectural firms. These are forever decisions.
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Glad that many of us are now in agreement of this reality. In addition, there is likely endowment principal that Pitt invested themselves, which can be reallocated at any time.
First, you manage an endowment with a long term view. You don't get crazy because one year you have a return of 15% because you know there will be years the market is down and that return will be low or negative. You manage for a return based on a full market cycle.
Second, endowments in Pennsylvania are governed by the state. The annual expenditure percentage of an electing charity may not be less than 2 percent or exceed 7 percent of the charity's endowment fund value. Most entities are in the 4% to 5% range as that is what has proven to be sustainable long term
Third, Pitt's employees run the endowment (Treasurer's office). Their compensation is not based on the endowment returns. Now they do use outside managers to invest portions of the overall fund. Those managers do receive a fee for their services. Depending on the investment vehicle, those fee arrangements can vary
Big difference between unrestricted and available to do whatever the hell you want with.
Here is an example
Joe Donor donates $1 million to the endowment to help fund financial aid. using Pitt's spending policy, at 4.5% it will generate $45,000 annually. Given that the University will spend much more on financial aid than the $45K this endowment will fund, this $1 million corpus would be classified as unrestricted for endowment accounting purposes because its purpose is being met. But that means you can't use it on anything but financial aid. Unrestricted does not in this context mean what you may think it does
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Here is a different scenario. Jane Donor passes away and a leaves a percentage of her estate to Pitt. Let's say Pitt's portion equals $1 million. Pitt decides to use that $1 million (or a portion) for the endowment. The funds are placed into the endowment unrestricted funds, and can be used for whatever purposes Pitt chooses. We don't know how much of the endowment is made of these funds.
And Pitt should not be reporting endowment financial aid funds as unrestricted.
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Part of the problem, too, is that Pitt has all of these wonderful historic properties that all have similar functions. Take, for example, the O’Hara Student Center and the University Club. Both are essentially conference/ballroom facilities located a few hundred feet from each other. The University Club has upper floors with a density that’s more suitable for the area, but they’re currently being used for the very good use of housing families visiting hospital patients from out of town. While that’s a noble use, it also presents challenges for Pitt - if those floors could be renovated and repurposed into classroom or academic office uses, it would be to Pitt’s benefit. O’Hara is a beautiful facility that they spent a lot of money renovating, but a 2-3 story ballroom structure just isn’t a great use for that plot of land given the density needs Pitt has - especially since O’Hara’s use is already duplicated at the University Club. Gardner Steel is a nice building, too, but again - a 2-3 story academic building isn’t the best use of space there. Pitt appears to be pretty forward-thinking with this master plan as far as being architecturally significant, so I don’t see any reason why they couldn’t build an interesting structure or series of structures on O’Hara where Gardner Steel and the O’Hara Student Center are that would better suit Pitt’s current and future academic needs while still maintaining the history of the block. Public consciousness as far as historic preservation has come a long, long way in the past decade or so.
While I’m not sure about UPMC’s master plan with the new hospital, I would think it’s possible for them to build their own facility to house patient families - which would give Pitt more flexibility to operate in that part of campus.
While I’m not sure about UPMC’s master plan with the new hospital, I would think it’s possible for them to build their own facility to house patient families - which would give Pitt more flexibility to operate in that part of campus.
Someone who leaves a $1M bequest is documenting that well in advance and specifying where it's going.
It depends. Not everyone does it that way. Pitt also receives money without intended purposes. They likely put some of those funds into endowment.
Sure. They obviously get unrestricted donations. But a $1M bequest is not likely to fall into that category unless it was made without any solicitation.
How does money donated with the stipulation that it would be used to fund financial aid get classified as unrestricted?
At the end of the day, if you, or any of the large donors want the money to be focused specifically for athletics, donate to the athletic endowment funds.
Pitt already dumps a lot of non athletics funds into athletics.
Pitt already dumps a lot of non athletics funds into athletics.
pittdan77
Athletic Director
Is Pitt paying any tax on their endowment? There were some changes to the tax law could put schools with bigger endowments in that territory. I do know that other schools face local tax issues if there is a belief that the money isn't being spent correctly or is somehow being sheltered. My point is, you have to be careful with "designated" funds or any kind of gains that aren't directly related to your stated purpose. That could limit some of the ways the money is handled.
Right, but plenty of people die and leave their alma mater in their wills without any solicitation. Or they are solicited and just tell the fund raisers that "Pitt is in the will". Sometimes these donations turn out to be $5000. And sometimes they turn out to be $5 million. Pitt likely has a policy for these donations where a certain percentage (or all) is put into endowment and then Pitt picks what the earnings are used for. I have no idea how much, but it doesn't matter because Pitt isn't likely to use any endowment money for the purpose of a stadium.
what I'm getting at is why delay capital projects if you need them today? Spend more from the 'charity' and get the construction started. You wait too long and you end up paying far more for the real estate and construction.
Yes, the scenario you state could occasionally happen, but not often. That said, the draw on those funds is currently already earmarked as part of the budget. So you would have to rob from somewhere else in the budget to reallocate to what you want them to use it for
As to Pitt reporting endowment financial aid funds as unrestricted, they are simply following proper endowment accounting practices if the purpose "restriction" is a given to be met
The accounting rules for endowments are complex. It has to do with their "restricted" purpose being a given. Kind of hard to explain and grasp if you haven't worked with endowments and the accounting rules surrounding them
Or you cripple yourself long term if you overspend today. The university has a fiscal responsibility to not only ensure today but also the future.
They need to push for a successful capital campaign.
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anon_vmuicqnzlyp3u
Guest
That would be great if they were actually doing but I seem to recall tuition going up
How is Pitt paying for Victory Heights? Unless Tepper strokes a $100M check, how does Pitt plan on financing it. Endowment monies? Floating a bond? Relying on Pitt fans who dont donate to begin with? But we can wait another 30 years until Fitzgerald falls down on her own right?
And the Pitt Athletics department has been over spending since the beginning of time. How much money did the department lose last year and the year before that and the year before that. They lose close to $10M every year. Taking from the general fund to balance their budget. Who is paying for that fiscal irresponsibility? Students thats who.
Use it for other things. You could play soccer, lacrosse, maybe even baseball and softball there if you design it in some out of the box manner? Have offices, gyms and classrooms in it that are used on the other 358 days.
Tepper told us no for now so obviously paying for it will be an issue. The $15 million PSC addition is coming from the general fund so that gets the ball rolling, and I'm sure that the "Sports Performance Center" will be tied to UPMC so they may pay for all or most of it. Also, the wrestling/gymnastics/volleyball arena could be a corporate sponsor if no one kicks in a big private donation
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They actually have plans to build a new student rec center over by Posvar to make up for the proposed loss of student meeting space at the Concordia. There actually isn’t nearly enough meeting/event space on campus already.
But I agree that the current low structures as they are currently construed, are not an optimal use of scarce real estate. I’m not suggesting that plot isn’t developed with a larger modern engineering facility, just that they don’t obliterate the special historical features when they really don’t have to. I’m also in no way suggesting that these buildings be kept in their entirety. I see this type of retention of low building historical architectural features incorporated into much larger modern development in tight urban grid settings every single day. 100s of examples just four hours away.
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And again-
The intent is to use the interest from those funds to pay for operating budgets -
Not the money itself.
It’s how endowments remain sustainable.
You spend the base funds you end the endowment .
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anon_vmuicqnzlyp3u
Guest
Thank you, I was and Econ Major and Finance. You said portions of the endowment were to offset tuition cost. I really don't see the endowment offsetting anything. I see the rate rising. Show me where the endowment helps to offset rising cost. Yes maybe for certain students but not the whole.
If the endowment isn't there, where do you think the $136 million portion of the annual budget that it funded would come from? There is only one annually scaleable source of revenue to make up for that. Unless you think it is okay to cut all the scholarships (including athletic), faculty, and research positions supported by the endowment.
Again, the endowment is not that big considering the size of the university with four campuses, over 32K students, and 14K faculty, researchers and staff. Endowment per students+faculty is the measure that is meaningful, not just total endowment funds.
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And again, if Pitt designates certain dollars towards the endowment, then they can decide to use the principal for those specific dollars however they want at a later date.
And again-
You spend the principle you don’t have a sustainable revenue stream.
The endowment either grows or it Shrinks .
It’s a compounding interest principle.
If your 403b grows 8% this year- so you spend 5% from it and reinvest your 3%
Will you have more money or less money in your account in 10 years?
And again, I'm not saying Pitt will or should spend the principal. The argument is that they can spend some of it if there wanted. And they could likely use some of the earnings on whatever they want.
They have to spend a certain amount each year from unrestricted funds, to retain tax-free status. Last I looked the amount was 4.5%. Not sure what it is.
The plan is for Athletics to raise a big piece of the funds...and what is not raised, they intend to float bonds to cover costs. Pitt Athletics is stepping up and into the big leagues under our new AD when it comes to fundraising. Will be a tough climb, requiring some significant changes in attitudes and culture among fans, friends and alumni. I have my fingers crossed that it can be done. Hail to Pitt!
Look, it is a pretty rare day when someone leaves a significant amount of money to any charity without stating a purpose for what the money is to be used to support. You can also be certain, when Pitt does receive such money...it very likely is not placed in the endowment. All charities love to spend unrestricted money on an annual basis--hence why annual giving is so important to most charities. Simply put, those that are looking to Pitt's endowment as a source for funding buildings or athletics [to the extent those endowment dollars are not already so tagged]...is misplaced and simply lacks understanding of real world realities. Hail to Pitt!
