University Daily Kansan, August 29, 1983
Page 13
KU association stays ahead of economy
By PAUL SEVART Staff Reporter
The roller-caster path of interest rates and the speculation that surrounds them have sometimes been a point of contention for experienced investor a case of vertigo.
While interest rates rise and fall, the Kansas University Endowment Association must keep growing enough in an unpredictable economy to keep up with the cost of education, which is going nowhere but upward.
The most visible way the association gains is through contributions, which were $14.4 million for the year ended June 30. But an additional $14 million was raised without ever asking for a contribution, through investments ranging from farm land to U.S. Treasury bills.
That investment fund, the cash management pool, earned 11.98 percent for the funds that held shares, the lowest ever, Rosenfeld said. The average is 14.17 percent. Once again, interest rates were blamed: lower short-term rates pushed the yield down.
Getting a high yield with maximum security on the association's $123 million in assets isn't easy easy, says Beverly Rosenfeld, actuarier of the association. For instance, one of the association's investment funds, which has $26 million, reported its lowest monthly earning percentage in July.
The cash management pool compris shares backed by short- and long-term securities issued by the government and by government agencies, which are readily convertible to cash; in essence, they are loans to the government. The pool bought some longer-term securities about a year ago, when the interest rates were fairly
high, in the 14 percent to 16 percent range. The July return might have been worse if not for the rates on the long-term securities. Rosenfeld said.
"These rates are higher and hold up the rest of the pool," she said. "I wish they would last forever. I'm afraid the water is not buying at that high of a level now."
Though they won't last forever — the last one will mature in 1988 — the association will again buy longer-term, securities if they are offered, she said.
Rosenfeld said 92 percent or 93 percent of the $26 million in the cash-management pool was invested in government and government agency securities, and the rest was in certifying companies. The banks in multiples of $100,000. Both investment vehicles are considered to be very secure, she said.
In August 1982, Rosenfeld said, a system was begun to "swap" cash into the cash management pool each night. The managers were sitting idle when it could be earning.
Not long-term solution
Although higher interest rates would help the earnings of the cash management pool, she said, they are not a long-term solution.
"In the long run," Rosenfeld said, "the lower the government deficit and the lower the interest rates are, the higher the taxation down and the better for everyone."
The market is guided a great deal by psychology, she said. For instance, when short-term interest rates are fairly low, investors often think they are able to make a better return on their money in the stock market, and the stock market will be more successful, she said.
But when short-term rates are increasing, as they had been until the past few weeks, stock prices tend to fall as investors seek higher rates of return outside the market. Those rates are now falling again.
Though most large commercial banks raised in late July their prime lending rate, an indicator of the interest rate they charge their largest borrowers, interest rates are market that become optimistic about weekly money supply figures that have been lower than expected, Rosenfeld said.
The other large investment fund at the association is the merged investment pool, which accounts for about 550 million of the association's assets. It is similar to a mutual fund and is backed almost entirely by stocks and a few bonds, Rosenfeld said. The portfolio is managed by Rice, Hall and James, a money-management firm with offices in San Diego and New York.
Those shares earned 14 percent in income and capital gains for the funds that held them in fiscal '82; all of that gain was distributed June 30 to the shareholders. That was the largest gain
Individual funds, such as for departments or endowments, can buy shares in the investment pool, just as in the cash-management pool; those shares may fail in value depending on the value of the stocks that back the shares.
A share in the pool gains value through income from dividends paid by the stocks, through capital gains realized by selling stocks at a profit and by a general appreciation in the value of the stocks that back the pool.
Earned 14 percent
ever for the fund, in a banner year for the stock market, she said.
"We feel that in that type of fund there is a chance for appreciation over time," Rosenfeld said. "What we try to do is to ensure that in the future these endowed accounts will still be able to give people who get scholarships the same kind of help they've been getting all along.
"Our belief is that if you pick the right combination of stocks the yield will go up even in a down market, and do it in a safe and prudent manner."
Between the cash-management pool and the merged-investment pool, then, the association earns no matter where the interest rate goes. If interest rates go up, the cash-management benefits; if they fall, the merged-investment pool benefits. Only in rare situations such as low interest rates and pervasive market pessimism would that not hold true, Rosenfeld said.
The fluctuations of the economy had little to do with the 26 percent increase in contributions in fiscal '82, said Todd Seymour. Endowment Association president The increase, from $11.4 million to $14.4 million, was caused mostly by an increase in bequests, an unpredictable source, he said.
“If we had a crystal ball, we’d do it better.” “Summer said. ‘But we don’t.’
better," Seymour said. "But we don't." Some college endowments have become involved in venture capital projects, in which they help provide start-up money for a new corporation which may or may not make a profit. But Seymour says KU will probably not be invested in such ventures because of the risk.
"You have to be extremely careful." Seymour said. "We have fiduciary responsibility for the money that has been given. Any gambling to that degree is awfully dangerous."
Democrats, Republicans vie for Sen. Tower's post
By United Press International
WASHINGTON — Political strategists from both parties say the decision by Sen. John Tower, R-Texas, not to seek re-election will endanger Republican chances of holding on to him. Slim five-vote majority in the Senate.
With Tower out of the picture, odds favor the Texas seat swinging to a Democrat, although both parties are expected to go through bitter — perhaps politically fatal — primaries to pick candidates for the seat.
"It certainly doesn't make things any easier," said William Greener, communications director of the Republican National Committee, referring to the effect of Tower's retirement on the party's chances of holding the Senate.
"To a large extent he is the father of the modern Republican Party in Texas. He looked to be in a stronger position than six years ago," Greener said.
Republicans already faced the prospect of losing the Tennessee seat that GOP leader Howard Baker is giving up. Democratic Rep Albert Gore JR., a strong lead in all the polls over any potential Republican contender.
Democratic National Chairman Charles Manatt already had targeted the Tower seat before the senator's decision not to run. But that meant only
that the Democrats saw Texas as a battleground, not necessarily a good prospect, said a party spokesman.
The Democrats now are moving both the Tennessee race and the Texas seat up to their two top prospects, and think the additional three seats they need for control of the Senate will come from a list of seven or eight states where they have at least an even chance of defeating GOP incumbents.
High on the list is Iowa, where Republican Sen. Roger Jepsen is in trouble and trailing in the polls to Democratic Rep. Tom Harkin.
Also on Manatt's list are GOP Sens. Thad Cochran of Mississippi, Charles Percy of Illinois and Jesse Helms of North Carolina.
Cochran, the first Senate Republican from Mississippi since Reconstruction, faces a close race in which thousands of newly registered blacks will vote for the first time.
opposition primary. Six years ago, Percy saved his seat only through a last-minute campaign blitz that turned around the polls.
Helms, the darling of the conservatives, is fighting for his life in a battle with popular Democratic Gov. Jim Hunt. Millions of dollars from outside the state are being poured into the race by both sides.
Percy faces a primary challenge from a conservative in his own party. And, if he survives that, he will face one of several strong Democrats in the
At this point no Democratic incumbents appear vulnerable, most strategists agree.
FOOTBALL CONTEST
Watch For It Tomorrow Tuesday, August 30
FOREIGN LANGUAGE
STUDY SKILLS PROGRAM
Monday, August 29
7:30 to 9:30 p.m.
Jayhawk Room, Kansas Union
Presented by the
Student Assistance Center.
GET IT ON! Join College Republicans
Informational Meeting
Wednesday, August 31
7:00 p.m.
Pine Rm, Student Union
BRING A FRIEND!
By JANELLE MARTIN Staff Reporter
Band prepares in heat
You have to be dedicated to voluntarily march up and down a football field in the middle of the afternoon in 100-degree weather. You haven't been doing that for the past 10 days have been doing for the past 10 days as a part of the Marching Jawhacks.
“It’s never been hot like this before that we can remember.” Robert Foster, director of bands, said yesterday. “We’ve been taking a couple of water breaks each day and I’ve been trying to get the job done as quickly as we can.
Angela Thomas, Leavenworth junior, said, "It's been hot, real hot. But they've been bringing water for everyone and if you feel it you're going to get a drink. The water revives you and you just come back and march."
"We've been taking a long break in the middle of rehearsals, five to 10 minutes, for everyone to get a drink," said Thomas Stidham, assistant director of bands. "We have carried water out in jugs every day and usually 40 gallons of that is gone at the first break.
Foster said the marching band, which had its first full band practice Aug. 18, was right on schedule for its first performance for Band Day, Saturday, when the Jayhawks play Northern Illinois University.
High school bands from Kansas and Missouri are invited each year to participate in a parade and balltime performance.
The 1983 version of the Marching Jayhawks has been learning the fundamentals and pre-game show quickly. Foster said.
Band members have survived the early pressure and heat so far with the help of precautions taken by band directors.
THE BAND HAS had to learn its routine a week earlier this year because of the date of the first game. The game was moved up because of scheduling conflicts between the two schools.
"We haven't had any problems yet with the heat getting to people too bad, knock on wood."
DIFFERENT DRESS HAS also helped the heat-exposed students through practices, which are scheduled during the hottest part of the week.
One thing that will not be changed this year is the parade down Massachusetts Street. The parade, which was canceled last year because of a change in kick-off time to accommodate television, will begin at 9 a.m. at Central Park, Seventh and Kentucky streets.
Headbands, hats, T-shirts and shorts are the type of clothing band members have turned to in fighting the heat.
Thomas said she had been wearing half-shirts with the sleeves cut out and shorts to keep cool.
"Most people have been wearing shorts and t-shirts, but some don't have a chance to change before practice so they have to wear what they've worn to class, usually pants and a shirt." she said.
Approximately 35 bands are scheduled to participate this year in the parade and halftime activities.
David Shay, Cameron, Mo., senior, said the dress for band members this fall was more casual than in previous years.
"Band Day is the smallest it is been in a long, long time." Stidham said. "Many aren't coming because they're so busy with their start classes until after Labor Day."
WHILE THE BAND members can seek relief from the heat with different styles of dress, when Saturday comes they will wear their wool uniforms for the annual Band Day parade and football game.
"You rarely see long pants at practice," he said. "Most guys just wear shorts and no shirts and a lot of them are wearing different things on their heads.
Stidham said he had cautioned all band directors to check the weather forecast for game day and come as prepared as possible.
Sidhams said that for now, the KU Band did not plan to make any changes in its dress for the day. But he is concerned about what to do if it
"If we think it's absolutely necessary, we'll make some adjustments." he said.
K U TAEKWONDO CLUB
Taekwondo is a Korean form of unarmed combat which offers excellent physical conditioning, self-defense techniques, and sport competition. It is a tremendous discipline for men and women alike.
Taekwondo Sign-Up:
Monday Aug. 29
Wednesday Aug. 31
6-7:30 pm
Rm. 102 Robinson Gym
Everyone welcome!
Students and faculty,
men and women-
for further information,
cell 842 1582
KU Taekwondo Club head instructor:
Master Choon Lee
7th degree black belt from Korea
Associate instructor:
Master June Park
5th degree black belt from Korea
call 842-1583
IS THIS ANY TIME TO THINK ABOUT ARMY ROTC?
Coors
DELTA UPSILON
presents
kLZR 106
"3rd Annual Drink-Up"
(for Muscular Dystrophy)
featuring
"THE OPINIONS"
$3 Advance
Thursday, Sept. 1
$4 Donation
Potter's Pavillion 7:30 p.m.-12
Student Special 2 for 1 Green Fee
Alvamar
ORCHARDS
GOLF CLUB
(with coupon and KU ID)
9-Hole Course
2 for 1 Green Fee
Tee-off between 8 a.m. and 12 noon Offer good on weekdays only.
Must present KU ID with coupon.
Alvamar
ORCHARDS
Expires 9/2/83
ORCHARDS 843-7456
GOLF CLUB
GOLF CLUB