Dreifuss proposes new investment strategy; administration balks
Bennett Kuhn
Issue date: 10/12/07 Section: News
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The treasury puts around $500,000 a year in low-yield certificates of deposit that generate revenue for on-campus programming. This is the surplus money brought in by the yearly activities fee, currently at $258, that each student pays.
But Dreifuss feels that at least some of the money would be better placed in brokerage firms. The current return on the funds is around 4.7 percent, and he is confident that with the switch, it could be between 7.5 and 10 percent.
"Although we did earn over $6,000 in our CDs last fiscal year, I am certain that had we been allowed to plunge into the equity and fixed-income markets ... our returns would have been substantially higher," he said in a report to the TCU Senate last month.
Dreifuss first brought this idea to the attention of the administration last year, where he failed to get the support of Associate Treasurer Darleen Karp.
Brokerage firms require certain documents from investors, and Karp declined to give them to Dreifuss because she feels that the treasury should continue to use CDs, which represent the safer option.
"These are student activities funds [that] are collected from the students to pay for activities that occur during the year," she said. "These are working capital funds - they're not investment funds - so we wouldn't want to take any risks at all with this money."
Economics Lecturer Christopher McHugh agreed that CDs are the more secure choice, but that they are not as profitable as investments in brokerage firms.
"CDs are good savings - they're secure," he said. "You're going to get an okay rate of interest, but it's not going to be a really high rate of return."
While the university prefers to play it safe, Dreifuss said that the Senate should have more autonomy. Because the body already has discretion over where to spend the money, he said that this should extend to leeway over where it is invested.
"I felt like this was really a swipe at the students," he said. "If the university is going to entrust us with the responsibility of allocating this money, [we should] manage it at our own discretion."
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