The University of Michigan is expected to slow its annual endowment distribution rate, pending approval by the school's governing board Thursday, officials announced today.

Roughly 7,000 separate funds make up the endowment. Its investment proceeds are used to support operations, including scholarships, professorships and educational programs.

Officials say the move to lower the distribution rate of the fund from 5 percent to 4.5 percent would help U-M in the long-term because more money could be invested, which would boost continued growth, university spokesman Rick Fitzgerald said.

"The whole design is meant to provide a stable source of income for a very long time," he said.

How might that move impact aid and programming in the short term? It shouldn't, Fitzgerald said. The reduced rate would be implemented over time.

"Even though we're reducing the percentage of distribution, it would maintain a stable flow of dollars, so that it wouldn't reduce the funding," Fitzgerald said. "There shouldn't be any cuts."

U-M's endowment was valued at $6 billion as of June 30, 2009.

University officials said in a press release that the move will allow U-M to avoid faculty hiring freezes, furloughs, program cuts and construction delays during the recession.

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.

Juliana Keeping covers higher education for AnnArbor.com. Reach her at julianakeeping@annarbor.com or 734-623-2528. Follow Juliana Keeping on Twitter