Magazine article American Libraries

Bear Market Claws at Trust Funds. (Briefs)

Magazine article American Libraries

Bear Market Claws at Trust Funds. (Briefs)

Article excerpt

A volatile stock market has eroded one California library's trust fund by nearly $100,000 and is indirectly threatening acquisitions budgets-- often funded by endowment investments--at Utah colleges and universities.

The Lodi (Calif.) Public Library board ignored advice earlier this year to diversify its trust fund's portfolio-- which is heavily invested in utility and energy companies--and the fund has dropped nearly $100,000 since March, the Stockton Record reported July 23.

Board members said the stocks given to the library in 1978 at a value of $50,000 had paid well so far. "They've gone through bear markets before, so this is not uncommon," board President Thomas R. Goad Sr. said.

The board generally uses interest and dividends for one-time equipment purchases, but it hasn't set an official objective for the fund, which local financial planner Christopher Olsen told the Record is a mistake. "If it's for expanding or building a new library 20 years down the road, it might be a great portfolio," he said. "If it's for six months down the road, it's not an appropriate portfolio. It's very bard to invest a portfolio without a stated goal."

In Utah, colleges and universities are also feeling the effects of a bear market, as endowments that pay for such costs as scholarships, salaries, and library acquisitions are losing money for the second year in a row. According to the National Association of College and University Business Officers, the average university endowment lost 3.6% on investments last year, the Salt Lake Tribune reported July 24.

Because some expenditures, such as faculty salaries, are fixed, other areas will be more vulnerable to cutbacks. Fred Hunsaker, vice president of finance at Utah State University, said it won't be easy. "We're pretty strapped as it is," he lamented.

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