Topic: Questions about the budget and Peter Roselli's interview

[Rhys Lucero]

Thank you for the interview Peter.  I have a few questions.  I am perfectly aware that you have dealt with these issues, and I realize that I am simplifying the situation somewhat, but I think it would be helpful to the membership if you clarified some points regarding what I believe to be USAW's largest fiduciary assets.
 

Simply stated, the first items budgeted are these two funds – Contingency at $128,000 and Rainy Day at $100,000.

 
   
What is the difference between these two funds?  Why not have one fund worth $228,000?  Also, since these funds are held as a last resort and are supposedly hardly touched, are they held as cash, or is the USAW earning some sort of interest on these funds to mitigate inflation?  
   

The Foundation remains at the $2,000,000 level, yielding an 8% - 10% earning level each year, of which 50%, or approximately $100,000 is budgeted in the USAW appropriation for operations each year. It is a tribute to Murray Levin, Dr. Pursley, and the Foundation Board that we have been so successful over many years in maintaining our Foundation principal at the $2 million level, while supporting a substantial contribution to the annual operating budget each year.

   
   
If 50% of the annual return is spent on operating expenditures for USAW, where does the other $100, 000 of interest go.  Also, it is reported that the Foundation has remained at the $2.0 mil dollar level for many years.  But inflation has increased by 2.4% - 2002, 1.9% - 2003, and 3.3% - 2004 in the last three years, not to mention that as of  July 2005, the 12 month inflationary rate was estimated to be 3.2%.  Compounded annually, this means that since 2002 the Foundation has decreased in real dollars by $148,280.  And according to the inflation report as of July, this year may be another 3.0%+ year decreasing the fund by $209,387 dollars by the end of this year.  How is the Foundation committee keeping pace with inflation?    
   
Can you provide a breakdown of asset allocation for the Foundation?  Are there government rules which dictate the way that the Foundation  assets are allocated?

Thank you again.
Rhys Lucero