Measure 95 could let UO invest in stock market and unlock a new revenue stream
The Nov. 8 election presents Oregon residents with a ballot measure that would allow public universities to invest in the stock market.
The University of Oregon asked state legislators to amend Article XI of the Oregon Constitution, which prohibits state organizations from investing in stocks, to make an exception for Oregon’s public universities. Oregon lawmakers passed a bill placing Measure 95 on the ballot, letting voters decide whether to allow public universities to invest in equities.
UO President Michael Schill is one of three Oregon university presidents to sign an argument in favor of the measure, stating that investing in equities would bring in additional revenue and decrease reliance on student tuition and donations.
It is estimated that in 2016, UO will receive 46 percent of its funds from tuition and fees and 18 percent from donations. Meanwhile, the university receives 7 percent from the state.
“At a time where all of our universities are strapped and there are finite resources available, what we are trying to do is leverage every investment tool we can to generate more revenue to support access to education,” said Anna Richter Taylor, a communications manager contracted by the UO Foundation to advocate for Measure 95.
Currently, the university invests in fixed income securities — where short-term returns on investments are the same. According to an estimate from UO Treasury Operations, investing in equities could bring $10 million in five years.
The argument, which was printed on the Oregon Voters’ Pamphlet, also states that allowing public universities to invest in equities would reduce financial risk by diversifying investments.
“If you invest 10 percent, you increase your expected return by 10 percent, but you don’t increase your risk by 10 percent, so that’s the idea of diversification,” said UO business professor Roberto Gutierrez.
UO manages its investments into three tiers. Tier 1 funds go toward the university’s daily activities and contain $50.2 million. Tier 2 funds are put into one-year fixed income securities and hold $3.1 million. Tier 3 has a $4 million balance and, if Measure 95 passes, is where the university hopes to invest in stocks. Tier 3 will be managed partly by a member of the UO Foundation — a separate non-profit which manages funds from donors.
Unlike the UO Foundation, which keeps its investments private and is not subject to state public records laws, university administrators plan to publicly discuss investment decisions during quarterly Board of Trustees meetings.
However, it remains uncertain what level of detail on its investments administrators would provide: UO would pool its Tier 3 investments together instead of investing in specific stocks.
UO senior Lisa Smith is hopeful that if Measure 95 passes, administration will be specific in its reports of investments. Smith also left a statement supporting the ballot measure on the state voters’ pamphlet, trusting the university would use revenue to increase tuition affordability.
“We as students have been bearing the brunt of tuition increases,” she said. “This is a way for universities to potentially get returns on money that is invested and use those returns to reduce tuition increases — which have been so detrimental to students.”
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