Fiscal Year 2003 Budget: Report to the University Council

---

The annual presentation of the FY 2003 budget (July 1, 2002 through June 30, 2003) was made at the April 9 Council meeting. It included expenditure and revenue perspectives as well as a look at the indirect cost recovery rate and sponsored project activity. Also discussed was the endowment as compared to peer institutions and changes in undergraduate financial aid. The text, charts and pies are from the slide presentation.

Components of the Consolidated University Budget

- Schools (including the School of Medicine)
- Resource Centers
- Auxiliaries
- Central Service Centers

• The Health Services budget includes all components of Penn Medicine except for the School of Medicine:

  - Hospital of the University of Pennsylvania (HUP)
  - Presbyterian Medical Center (PMC)
  - Pennsylvania Hospital
  - Phoenixville Hospital
  - Clinical Practices of the University of Pennsylvania (CPUP)
  - Clinical Care Associates (CCA)

  FY 2003 Consolidated Expenditure Budget
  Total=$3.544 Billion

  

   

Penn's Financial Planning Approach

How the University's Budget Supports Goals and Priorities

Growth in the University's Revenue Sources (Other Than Student Charges) Will Be Constrained in FY 2004 and Subsequent Years

• The federal ICR (grant overhead) rate is likely to decline in the coming years, limiting the growth in grant ICR income

  - Rate has fallen from 65% in FY 1992 to 58.5% in the current fiscal year
  - Current rate of 58.5% is guaranteed only through FY 2004
  - The five-year doubling of NIH funding has been completed. We can expect future growth to be modest

• For FY 2004, the Governor is proposing a 5.0% decrease in the University's original FY 2003 Commonwealth Appropriation
• Penn's spending rule provides for a 5.0% decrease in spendable investment income for FY 2004, following a 1.0% decrease in FY 2003
• Most University business services either break even or generate narrow margins in sales and service income after meeting all operational and programmatic requirements

 

FY 2003 Academic Budget Sponsored Program Indirect Cost Recovery

• Total direct and indirect Sponsored Program revenue represents approximately 34% of the FY 2003 Academic Revenue Budget
• The School of Medicine accounts for about 64% of Sponsored Program dollars awarded to the University
• According to data from the University's most recently submitted Facilities and Administration Rate Proposal, Penn's total ICR is nearly $40 million less than the actual overhead required to support our annual research effort

 

FY 2003 Academic Budget Total Revenue by Source
Total = $1.746 Billion

Illustrative Needs for Academic Investment

Continuing major investment is needed to maintain the quality of Penn's academic and co-curricular programs. Some examples:

Estimated 5-Year Investment Required
• Additional funding--Faculty recruitment/retention	$ 25 Million
• Undergraduate and graduate financial aid	$ 100 Million
• Continued investments in information technology (Research System, Student System, Advancement System, Undergraduate System)	$ 30 Million
• Skirkanich Hall	$ 38 Million
• Bioengineering program	$ 19 Million
•Life Sciences building (Phase I)	$ 57 Million
• SVM teaching & research building	$ 51 Million
• Bennett Hall renovation	$ 13 Million
• Harnwell & Harrison College Houses	$ 55 Million
• Other student housing	$ 29 Million
• Facilities Renewal (additional funding -- next 5 yrs.)	$ 25 Million
• Increased property/casualty insurance costs	$ 10 Million

 

Federal Indirect Cost Recovery Rate by Fiscal Year

 

 

Commonwealth Non-Preferred Appropriation
($000)

 

Annual Growth in Spendable Endowment Income under the Spending Rule
(Excluding Earnings on New Gifts to Endowment)

Peer Institution Endowment/Student

Rank	Institution	Assets ($B)	($/Student)
2	Princeton	8.32	1,266,301
3	Yale	10.52	955,475
4	Harvard	17.17	907,301
13	Stanford	7.61	577,529
15	M.I.T.	5.36	539,992
23	Dartmouth	2.19	403,136
26	Washington U.	3.52	330,307
32	Chicago	3.26	273,010
47	Columbia	4.21	217,780
53	Northwestern	3.02	203,359
58	Brown	1.41	187,124
67	Penn	3.39	168,085
76	Cornell	2.85	146,949

* FY 2002 NACUBO Endowment Study

 

FY 2003 Financial Aid BudgetGeneral Operating, Gift, and Investment Income Funds ($000)

	FY 2003 Projection	FY 2004 Budget	% Change
Undergraduate Student Aid	65,700	70,600	7.5%
Graduate Student Aid	74,100	79,600	7.5%
Total Student Aid	139,800	150,200	7.5%

• Fundraising for financial aid endowment remains a top priority
• Undergraduate need-blind policy is a competitive necessity
• Penn remains significantly under-endowed relative to peers
• Student Health Insurance premiums for eligible graduate students are reflected in the Graduate Student Aid figure

Note: Figures exclude Sponsored Program Funds

 

Undergraduate Financial Aid Budget

	FY 1999	FY 2003	Change
Endowment & Gift Income	$ 3.6M	$ 7.7M	114%
General Operating Funds	$ 49.1M	$ 58.0M	18%
Total	$ 52.7M	$ 65.7M	25%
Endowment & Gifts as % of Total	6.8%	11.7%

Note: Figures exclude Sponsored Program Funds

 

Recent Financial Aid Trends

-- % of aided freshmen in 2001-02 rose from 39.2% to 40.2%
-- % of aided freshmen in 2002-03 increased from 40.2% to 42.6%
-- Freshman grant dollars were up 14.7% from last year (from $15.2M to $17.4M)

• Average freshman loan decreased 25% over the past five years (from $4,520 to $3,388), due in part to increased no-loan packages

  -- About 30% of matriculating grant recipients in 2002-03 have no- loan packages

• Average freshman grant increased 39% over the past five years (from $13,350 to $18,604)

 

FY 2003 Academic Budget
Expenditures by Responsibility Center Category
Total = &1.746 Billion

 

 

FY 2003 Academic Budget Expenditures by School
Total = $1.217 Billion