The University of Michigan plans to slow its annual endowment distribution from 5 percent to 4.5 percent, the U-M Regents decided today.

The goal is to make a more stable source of income in the long run and should not affect short-term aid and programming, officials have said. It should help avoid faculty hiring freezes, furloughs, program cuts and construction delays during the recession, according to a statement from the university.

U-M's endowment was valued at $6 billion as of June 30, 2009. Roughly 7,000 separate funds make up the endowment. Its investment proceeds are used to support operations, including scholarships, professorships and educational programs.

Regents Julie Donavan Darlow and Denise Ilitch both voted against slowing the endowment.

Darlow said she was concerned the proposal "sends the wrong message to the public" by slowing the spending rates in times of economic stress, which could be seen as hoarding public money. 

"This is not the time to redistribute what we distribute for financial aid and instruction," she said.

Other regents said the 5 percent spending rate was unsustainable.

During the 2008-2009 school year, U-M distributed $244 million from its endowment to support operations. U-M officials base the endowment's annual payout on a seven-year trailing average market value.

Tina Reed is a reporter at AnnArbor.com. She can be reached at tinareed@annarbor.com or at 734-623-2535.