Yale releases 2014-2015 financial report
The university has published its financial report for 2014-2015, reporting $3.2 billion in operating expenses for the year ending June 30, 2015, an increase of 4.6% over the previous year. Yale also reported capital spending on facilities of $302 million.
“Yale’s operations remain strong thanks to prudent financial management practices and the generous support from alumni and friends that have allowed Yale to carry out its mission of teaching and research with excellence for over three centuries,” Stephen Murphy, vice president for finance and chief financial officer, wrote in the report.
The largest source of revenue to meet Yale’s expenses for the year was the endowment, which provided more than $1 billion, or nearly one-third of operating funds.
“The Yale Endowment provides important funding to every school and department on campus, supporting the widest array of activities: financial aid, faculty salaries, residential colleges, classrooms, laboratories, lab supplies, journals, artwork, health care and retirement benefits, utilities, administrative support, and many other costs of teaching and research,” Murphy stated in the report. “Yale’s policy for spending from the endowment balances the needs of current and future students and scholars. It provides a stable flow of income to the current operating budget; and it protects the real value of the endowment over time so that future generations of scholars can benefit from a similar stable flow of income.”
Provost Ben Polak said the endowment’s recovery since 2009 and a university-wide effort to control costs had put Yale on solid financial footing. “By keeping costs down, we are able to spend more money on new initiatives,” he said.
Personnel costs were the largest expense category for the university, with more than $2 billion, or 63%, of resources devoted to compensation for Yale’s 14,800 faculty, postdoctoral associates, and staff.
The financial report also noted the university’s ongoing commitment to meeting the full demonstrated financial need of all students in Yale College.
“The average cost of attendance for a Yale College student on financial aid was $17,328 per year in 2014-2015 or approximately 27% of the ‘sticker price’ — an amount lower in inflation-adjusted terms than a decade ago,” Murphy wrote. “Only 17% of Yale College students chose to take out a loan during their undergraduate careers, and the average loan amount upon graduation was less than $16,000.” During the 2014-2015 academic year, 2,787 undergraduates, representing 50.2% of eligible Yale College enrollment, received financial aid from the University.
Grant and contract income to Yale increased by 0.4% increase from $671.0 million in 2014 to $673.7 million in 2015. Income to the Yale School of Medicine, which received 78% of the university’s grant and contract income in 2014-2015, was roughly equal to the previous year, while income to the remaining university units increased by 2.0%. The federal government funded $507.1 million, or 75.3% of 2015 grant and contract income, in support of Yale’s research and training programs.
The university’s capital spending of $302 million represented an increase of 11.6% compared to 2013-2014. The largest share of the university’s capital spending was used to fund projects related to undergraduate residences. The expansion of Yale College, through the construction of two new residential colleges scheduled to open for the 2017-2018 academic year, will be the first additions to the residential college system since 1961. Charles Johnson, a 1954 graduate of Yale College, gave the university $250 million, the largest gift ever received by Yale, toward the cost of the new residential colleges.
“On a Management View basis — the way Yale looks at financial information for internal discussion and decision-making purposes — Yale generated a surplus of $17 million from operations,” Murphy wrote. He also explained that the gift for the new residential colleges, announced in 2013, was officially recorded for accounting purposes as part of the 2014-2015 financial report. This resulted in a $194 million surplus in the year-end financial results. As a result, much of this amount, which appears as a surplus in the report, is actually to be used for the construction of the colleges and thus not available for other types of spending.
As Murphy noted, “Without the extraordinary item related to the residential colleges, the 2014-2015 operating surplus on both a GAAP and Management View basis was in line with last year’s results.”