University of Rochester
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Transcript of University of Rochester
University of Rochester
Board of Trustees OrientationFinancial Overview and Issues
October 15, 2008
The Stewardship Role
“In the context of this dynamic and challenging environment, a governing board’s responsibility is to chart an institution’s course and ensure it [the institution] has the resources it needs to fulfill its mission. ...the board must sustain the institution over the long term…”
Source: Association of Governing Boards of Universities and Colleges – Financial Matters.
The Stewardship Role
“For many reasons, colleges and universities have become subject to intensive scrutiny not only by the public, the press, governmental agencies, and financial institutions but also by alumni, donors, faculty and students.”
Source: Association of Governing Boards of Universities and Colleges – Effective Committees
How is the Stewardship Role Fulfilled?
Maintaining equity between generations Monitoring strategic and financial planning Monitoring risk management Preserving facilities Monitoring investments and endowment
Source: “Financial Responsibilities of Governing Boards”, by William S. Reed.
Key Financial Concepts in Higher Education
Intergenerational Equity - maintaining an appropriate balance between the present and the future
Key Financial Concepts in Higher Education Financial equilibrium
> Complementary short-term and long-term financial plans
> Quality of programs maintained> Physical assets preserved> Endowment purchasing power preserved> Human assets developed and maintained
Trustees’ Role and Board Involvement in Financial Matters
Review and approve strategic plans Annual approval of operating and
capital budgets Approval of major capital projects Tuition rate approval
Trustees’ Role and Board Involvement in Financial Matters
Establishment of endowment investment and spending policies
Review of major benefits program changes (intergenerational emphasis)
Approval of debt issues and overall debt policies
Review of reports on financial position and institutional performance
Trustees’ Role and Board Involvement in Financial Matters Approval of executive compensation Review of annual financial statements Assessment of institutional risk and
compliance Appointment of the external auditors Guidance and participation in the
institution’s development efforts
Board Participation Financial Planning Committee Committee on Audit and Risk Assessment Personnel Committee Facilities Committee Committee on Compliance and
Compensation Strategic Planning Advisory Committee
Operating Revenues
Hospital & Faculty Practice Patient
Care Activities 63%
Net Tuition & Fees7%
Gifts & Pledges 4%Other 1%
Grants &Contracts 15%
Long-TermInvestment
Income 3%
AuxiliaryEnterprises
3%
Educational Activities 1%Royalty Income 3%
Scale of the Enterprise and the Financial Overview – FY2008
$2.4 Billion
Operating Expenses
Total Compensation
62%
Business &Professional
9%
Maintenance &Facilities 4% Depreciation
Expense 5%
Other 3%
Interest Expense 2%
Supplies 13%
Utilities 2%
Scale of the Enterprise andFinancial Overview – FY2008
$2.3 Billion
Key UR Issues
Decentralization Exposure to Health Care Institutional Resources Aggregate Rate of Endowment Use College Financial Position and Endowment Use Eastman School of Music and Simon School
Financial Position and Revenue Trends Limited Debt Capacity Strategic and Campus Master Plan Prioritization Implication of the Current Economic Crisis
Endowment Market Values by Division ($ in millions)
Total value as of June 30, 2008 = $1,530.8
Nursing $21.7
Other $43.6
(includes University General & Memorial Art Gallery)
The College $405.4
Simon $86.0
Warner$26.7Eastman
$263.6
Medicine & Dentistry/Health Sciences $683.8
Strong MemorialHospital
43%
Eastman 1.7%
Warner0.4%
Simon 1.6%
The College15.1%
Medical Center 80.9%
Other 0.3%
Medicine & Dentistry/Health Affairs
20.7%
Nursing1.0%
FY2008 Total Budget – Composition by Divisions
Medical Center Faculty Practice/Eastman Dental Center
16.1%
The College School of Medicine& Dentistry
Gifts & Other 19%
Indirect Cost Recovery 32%
Endowment 18%
Net Tuition & Fees9%
Gifts/Transfers & All Other 8%
Indirect CostRecovery 15%
Endowment 19%
Net Tuition & Fees58%
FY2009 Divisional Budgets – Core Sources of Funds
Transfers 22%
Eastman School of Music School of Nursing
Gifts, Transfers & All Other 10%
Indirect Cost Recovery 8%
Endowment 7%
Net Tuition & Fees75%
Gifts & All Others 5%
Endowment 54%
Net Tuition & Fees41%
FY2009 Divisional Budgets – Core Sources of Funds
Simon School Warner School
Endowment 15%
Net Tuition & Fees85%
Gifts/Transfers & All Other 7%
Endowment 20%
Net Tuition & Fees73%
FY2009 Divisional Budgets – Core Sources of Funds
Financial Informational Resources
Audited Consolidated Financial Statements Operating Budget document (see page 3 for
budget entity chart) Capital Budget document
University Financial Administration
Ronald J. PaprockiSenior Vice President for Administration & Finance & Chief Financial OfficerSalim M. AlaniDirector, Office of University AuditHolly G. CrawfordAssociate Vice President for Budgets & Planning & Deputy to
the Sr. V.P. for Administration & Finance & CFOKathy A. King-GriswoldTreasury ManagerDouglas W. WylieUniversity Controller
Medical Center Financial Administration
Michael C. GoonanMedical Center Vice President & Chief Financial OfficerLeonard J. ShuteSenior Director of Finance & Chief Financial Officer,Strong Memorial Hospital