FIN A NCI A L S: FUNDING THE HPA E X PERIENCE
Endowment The endowment is an important resource for HPA, providing more than 13% of the revenue needed to run the school. It is made up of externally-managed endowed trusts, funds designated by our board to function as a permanent endowment, and approximately 80 funds established by alumni, parents, and friends to provide permanent support to the school. The total value of HPA’s endowment is approximately $45 million. Of this, $24 million is controlled by HPA and its board of trustees, and $21 million is managed externally. HPA is also one of four designated beneficiaries of the Parker Ranch Foundation Trust. The total market value of HPA’s share is roughly $35 million, and the annual distribution in FY2019 was approximately $385,000. A majority of the trust’s assets are composed of undeveloped pasture land, which accounts for distributions at a level under typical market returns. Investments for donor restricted and board designated funds are overseen by HPA’s Investment Committee, which is made up of trustees with significant investment and financial expertise. The investments of the endowment are managed to provide for the long-term needs of the school. HPA’s endowment spending policy and investment strategy share a goal of minimizing the volatility of endowment revenue available to fund operating expenses. The amount spent in any one year is based on the market value of the endowment (as determined by a twelve-quarter trailing average) multiplied by our endowment draw rate of 4.5% but within a range not less than 95% of the amount spent in the prior year, or greater than 105% of the prior year spending. This formula slows down or buffers the effect of any market rise or fall on what is spent from the endowment to support operations. In a volatile year for markets, the HPA endowment returned -.24% for the fiscal year, reflecting the impact of global economic influences. HPA’s endowment asset allocation represents diverse holdings focused on value preservation over time, including investments in domestic and international equities, fixed income, alternative investments, and cash.
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