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Resolution on Rate of Return on Housing Investments

WHEREAS, it is the responsibility of the University administration to invest university funds in assets that provide a healthy rate of return; and

WHEREAS, the Manoa Faculty Housing reserves are approximately $9.8 million that are currently invested at a 1.2% per year rate of return; and

WHEREAS, the CAB Subcommittee on Auxiliary Services/Facilities/CIP undertook a detailed life cycle analysis of the Manoa faculty housing operations and discovered that by 2050 the balance on hand of Manoa faculty housing operations will be $20.1 million at 1.2% per year interest; $27.8 million at 2% per year interest; $41.9 million at 3% per year interest; and $63.3 million at 4% per year interest; and

WHEREAS, it was discovered that the interest rate is the sole factor that can make this difference, all other cash inflow and outflow following their own trends; and

WHEREAS, it is obvious that the difference between a 1.2% interest rate and 4% interest rate is $43.2 million for faculty housing operations, which represents a substantial sum of money for UH Manoa over the next 45 years; and

WHEREAS, it is common knowledge that return rates of 3% and 4% are easily available in the current market, and

WHEREAS, the matter of having a financially healthy institution is no small matter; therefore be it

RESOLVED, That the Manoa Faculty Senate urges the UH Treasury, UH Administration, and Board of Regents to look into this issue of low investment return rates by faculty housing operations and UH Manoa, and ensure that attractive and healthy investments are made for the benefit of UH Manoa and its stakeholders; and

That the Manoa Faculty Senate wishes UH Administration to provide them, within two months, a detailed rendering of all university investments, to satisfy themselves that healthy investments are, indeed, being made for all university funds.


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