Financial Plan

Transcription

1 Financial Plan OPERATING AND CAPITAL [ MAY 2011 ]

2 FINANCIAL PLAN OPERATING AND CAPITAL PUBLISHED BY The Division of Planning and Budget Cornell University CONTACT 440 Day Hall Ithaca, New York DESIGN Zanzinato May 2011 Copyright 2011 Cornell University. All rights reserved. Additional copies of this document are available at: Cornell University is an equal-opportunity, affirmative-action employer and educator.

3 Contents FROM THE VICE PRESIDENT... OPERATING PLAN HIGHLIGHTS... Composite Operating Plan... Operating Plan Details... Ithaca Campus Summary... Ithaca Campus Detail... Weill Cornell Medical College Plan Detail... REACCREDITATION AT CORNELL... IMPLEMENTING ADMINISTRATIVE EFFICIENCIES THE CORNELL BUDGET MODEL REVISION... A DECADE OF CAPITAL EXPANSION... CAPITAL PLAN Approved Capital Activity... Sources and Uses of Capital Expenditures... Sources of External Debt Financing... Debt Service by Operating Unit... SPACE PLANNING APPENDICES A Academic Year Tuitions B Student Fees and Other Tuition Rates C Enrollment Assumptions D Undergraduate Tuition and Fees, Room and Board: Ivy League, Peer, and Common Acceptance Institutions E Undergraduate Tuition and Fees, Selected Public and Land-Grant Institutions F Average Nine-Month Faculty Salaries, Selected Research Institutions G Undergraduate Financial Aid H New York State Appropriations I Facilities and Administrative Costs and Employee Benefits Billing Rates J Investment Assets, Returns, and Payouts K Endowment per Full-Time Student, Selected Institutions L Gifts/Contributions through March 31, M Campaign for Cornell Gifts through March 31, N Projected Maintenance Funding Ithaca Campus 55 O Work Force Ithaca Campus P Room and Board Rates Ithaca Campus Q Ithaca Campus Faculty Peers by College R Capital Project Spending Guidelines S Division Directory... 60

4 Figure 1. FY Revenues From the Vice President 2 Figure 2. FY Expenditures

5 OVERVIEW From the Vice President TO THE CORNELL UNIVERSITY BOARD OF TRUSTEES The Cornell University financial plan contains detailed budgets for the two operating divisions of the university and a summary capital plan. Operating revenue is expected to increase by 1.1 percent for the Ithaca campus in and increase by 6.4 percent for the Joan and Sanford I. Weill Medical College and Graduate School of Medical Sciences (including the Weill Cornell Medical College in Qatar). Across the university, revenues are planned to increase 3.1 percent from the current-year forecast, to $3.24 billion, and operating expenditures are expected to increase 4.3 percent, to $3.24 billion. This growth partly reflects activity in the faculty renewal program and the increased use of operating reserves to fund capital project activity. Figures 1 and 2 on the facing page provide a functional overview of revenues and expenses. As we continue to work to contain administrative costs, reallocate resources, and invest in strategic priorities, both academic and administrative, we are reminded that our models reflect a significant reduction in New York State operating budget appropriations at 9.3 percent ($12.6 million). We expect comparable decreases in other state support for special programs and Bundy Aid. Together with the Administrative Streamlining Program (ASP) targets, the Ithaca campus is incorporating $17.8 million of expenditure reductions and reallocations in its fiscal plan. Units continue to use operating fund balances to bridge activities curtailed during the economic recovery and to fund capital projects. This budget contains over $64 million in fund balance transfers. I believe we have made substantial progress during my first full year as Vice President in establishing better practices in budgeting and planning. Several key staff positions were filled, including an assistant vice president, the university budget director, and the director of institutional research and planning. The Administrative Streamlining Program office was established and is now fully engaged in ensuring that the campus-wide effectiveness initiatives, identified from the Ithaca campus collaboration with the external consultants, continue to move forward. Streamlining programs have resulted in over $43 million in expenditure reductions and reallocations to date. With the fiscal implementation, an additional $14 million is planned. Efforts are underway to replace the aging financial and budget system with Kuali modules. Most importantly, the division s Institutional Research and Planning group has worked cooperatively across the university to bring the university s decennial reaccreditation process to completion. More details on these efforts and initiatives are recorded in the pages that follow. We continue to benefit from the extraordinarily generous support of our alumni, advisors, and friends as well as the success of our investment strategies. This support has been significant enough to merit a change in our planned payout strategy; we will maintain the endowment payout at current levels for rather than reduce it as originally planned a few years ago. This year we have chosen to feature the last decade of our capital program, highlighting the significance of these investments in positioning Cornell to realize the goals enumerated in its Strategic Plan. The summary and detail level budget formats for the Ithaca campus and Weill Cornell Medical College, along with space and capital plans, remain unchanged. The appendices have been expanded to include annually updated comparisons with our faculty peers. Together with the President and the Provost, we continue to depend on your guidance during these challenging but exciting times. Elmira Mangum, PhD Vice President for Planning and Budget From the Vice President 3

6 Operating Plan - Highlights Operating Plan Highlights 4 COMPOSITE OPERATING PLAN Cornell s composite operating plan for is based on the plans of its two main divisions: the Ithaca campus and the Weill Medical College (with campuses in New York City and Doha, Qatar). The schedule on the facing page shows the overall university plan, with summary and detail plans for each campus immediately following. Resources Revenues are projected at $3.24 billion, an increase of 3.1 percent from the forecast. Tuition and fee revenues are planned to increase 4.9 percent, based on approved tuition rate increases and overall enrollment growth. The net increase in investment distributions is expected to be 1.1 percent, primarily due to new gifts to endowment. The combination of unrestricted and restricted gifts for general operations is expected to increase from the forecast, with the Ithaca Campus planning increases in the campaign and faculty initiatives offset by a decline at Weill. Direct costs of grants and contracts for sponsored programs are expected to decrease 4.6 percent, while recoveries of facilities and administrative costs related to those programs are projected to increase 2.1 percent. Qatar sponsored revenues is planned to increase by 20.4 percent. Sponsored direct and facilities and administrative recovery is planned in total at $626.1 million. State appropriations are planned at $132.7 million, including a $12.6 million base reduction from the forecast, as well as additional reductions in special program funding. This projection is considered to be final based on projections provided by the State University of New York (SUNY) and the New York State Executive Budget (See Appendix H for additional details on state appropriations). Revenues from the Physician Organization are projected to increase $50.5 million over the forecast due to expansion of current programs and more recently implemented practices. Enterprise sales and services are projected to increase 3.9 percent, reflecting rate increases for student housing and dining services. Uses of Resources Expenditures are planned at $3.24 billion, an increase of 4.7 percent from the forecast for Salaries, wages, and benefits are projected to increase $65.9 million or 3.9 percent, due to compensation increases and the introduction of the faculty renewal program. Undergraduate financial aid is expected to increase by $19.5 million or 9.5 percent over the forecast. The annual growth rate since to has been 13.1 percent. Graduate and professional financial aid remains nearly flat, projected to increase by $2.2 million or 1.4 percent over the forecast. General expenses are projected to increase $22.5 million or 2.9 percent over the forecast for due to increases in contractual, facilities, and one-time expenditures, and continued use of fund balance reserves to bridge activities. Qatar expenses in support of the academic program and research are expected to increase $25.5 million due to academic programs in Qatar and the Biomedical Research agreement. Other expenses, including capitalized equipment and books, are projected to decrease $1.1 million or 2.1 percent. Debt service is projected to decrease by 5.0 percent, or $5 million. Transfers To/From Fund Balances Net transfers to non-operating funds are planned to total $2.2 million, with $6.9 million transferred in from funds functioning as endowment to support operations, $68.8 million transferred to plant funds to support non-debt financed capital project expenditures and equipment renewal and replacement, and $64.1 million transferred in from unit reserves to support one-time expenditures.

7 Table 1: Composite Operating Plan (dollars in thousands) Resources Actual Budget Forecast Change from Forecast to Plan Plan Dollars Percent 1. Tuition & Fees 741, , , ,047 38, % 2. Investment/Endowment Distribution 303, , , ,712 3, % 3. Unrestricted Gifts 61,426 47,189 47,697 52,732 5, % 4. Restricted Gifts 106,490 98, , ,784 3, % 5. Sponsored Programs (Direct) 501, , , ,188 (20,816) -4.6% 6. Sponsored Programs (F&A) 133, , , ,622 2, % 7. Sponsored Programs (Qatar) 12,044 39,891 45,070 54,247 9, % 8. Institutional Allowances 31,929 33,182 33,493 36,330 2, % 9. State Appropriations 158, , , ,652 (15,429) -10.4% 10. Federal Appropriations 16,888 18,542 18,542 19, % 11. Physician Organization (PO) 558, , , ,007 50, % 12. NYPH (Purchased Services) 95,258 94,690 96,726 98,391 1, % 13. Enterprise Sales & Services 148, , , ,013 6, % 14. Qatar Foundation 67,843 78,541 67,472 83,622 16, % 15. Educational Activities and Other Sources 167, , , ,789 (4,677) -2.6% 16. Subtotal In-Year Revenues 3,105,212 3,115,031 3,139,105 3,237,503 98, % Operating Plan Highlights Uses of Resources 17. Salaries & Wages (Including Benefits) 1,660,684 1,696,491 1,701,591 1,767,493 65, % 18. Undergraduate Financial Aid 183, , , ,502 19, % 19. Graduate Financial Aid 149, , , ,636 2, % 20. General Expense 724, , , ,488 22, % 21. Qatar 78, , , ,069 25, % 22. Other Expenses 58,756 49,524 49,524 48,468 (1,056) -2.1% 23. University Cost Redistributions (63) 0 (5,300) 0 5, % 24. Subtotal Expenditures 2,855,843 3,009,877 2,974,840 3,114, , % Interest Expense on Taxable Debt 106,800 24,500 24,500 24, % 26. Debt Service 34,475 89, ,685 98,540 (5,145) -5.0% 27. Subtotal Debt 141, , , ,191 (4,994) -3.9% 28. Net Before Transfers 108,094 (9,167) 36,080 (344) (36,424) Transfers (to)/from Fund Balances 29. Endowment (7,118) 9,919 16,486 6,869 (9,617) 30. Plant/Project Support (110,430) (61,267) (61,267) (68,754) (7,487) 31. Reserves 29,503 32,497 32,497 64,145 31, Subtotal Transfers (88,045) (18,851) (12,284) 2,260 14, Net from Operations 20,049 (28,018) 23,796 1,916 (21,880)

8 Operating Plan Highlights Table 2: Composite Operating Plan - by Division (dollars in thousands) Resources Ithaca Campus Medical College 1. Tuition & Fees 792,182 28, , ,774 38, % 2. Investment/Endowment Distribution 241,121 41, , ,686 3, % 3. Unrestricted Gifts 50,422 2,310 52,732 47,697 5, % 4. Restricted Gifts 54,378 49, , ,762 3, % 5. Sponsored Programs (Direct) 305, , , ,004 (20,816) -4.6% 6. Sponsored Programs (F&A) 88,880 47, , ,828 2, % 7. Sponsored Programs (Qatar) 0 54,247 54,247 45,070 9, % 8. Institutional Allowances 0 36,330 36,330 33,493 2, % 9. State Appropriations 132, , ,081 (15,429) -10.4% 10. Federal Appropriations 19, ,367 18, % 11. Physician Organization (PO) 0 648, , ,499 50, % 12. NYPH (Purchased Services) 0 98,391 98,391 96,726 1, % 13. Enterprise Sales & Services 135,738 23, , ,005 6, % 14. Qatar Foundation 0 83,622 83,622 67,472 16, % 15. Educational Activities and Other Sources 129,687 44, , ,466 (4,677) -2.6% 16. Subtotal In-Year Revenues 1,949,779 1,287,724 3,237,503 3,139,105 98, % Plan Change from Forecast to Plan Forecast Dollars Percent 6 Uses of Resources 17. Salaries & Wages (Including Benefits) 1,053, ,065 1,767,493 1,701,591 65, % 18. Undergraduate Financial Aid 224, , ,000 19, % 19. Graduate Financial Aid 134,853 18, , ,445 2, % 20. General Expense 397, , , ,038 22, % 21. Qatar 0 137, , ,542 25, % 22. Other Expenses 48, ,468 49,524 (1,056) -2.1% 23. University Cost Redistributions (1,896) 1,896 0 (5,300) 5, % 24. Subtotal Expenditures 1,856,669 1,257,987 3,114,656 2,974, , % 25. Interest Expense on Taxable Debt 24, ,651 24, % 26. Debt Service 78,868 19,672 98, ,685 (5,145) -5.0% 27. Subtotal Debt 103,519 19, , ,185 (4,994) -3.9% 28. Net Before Transfers (10,409) 10,065 (344) 36,080 (36,424) Transfers (to)/from Fund Balances 29. Endowment 4,893 1,976 6,869 16,486 (9,617) 30. Plant/Project Support (66,154) (2,600) (68,754) (61,267) (7,487) 31. Reserves 64, ,145 32,497 31, Subtotal Transfers 2,884 (624) 2,260 (12,284) 14, Net from Operations (7,525) 9,441 1,916 23,796 (21,880)

9 Operating Details by Campus Operating Plan Highlights 7 We continue to benefit from the extraordinarily generous support of our alumni, advisors and friends as well as the success of our investment strategies.

10 Operating Plan - Details Operating Plan Details 8 ITHACA CAMPUS Resources Revenues are planned at $1.9 billion, an increase of 1.1 percent from the forecast. Tuition and fee revenues are planned to increase $37.2 million, or 4.9 percent, from the forecast based on increases in tuition rates for the Ithaca campus (see Appendix A). Investment resources are projected to increase $2.3 million from the forecast. Distributions on endowment and other funds experienced a slight growth due to an increase in the number of shares invested, and the payout rate will remain at $2.20 per share for a second year. Other planned investment activity includes a continued withdrawal of $35 million for undergraduate financial aid and the retirement of taxable debt. Unrestricted and restricted gifts to current operations are anticipated to increase over projections, totaling $104.8 million, due to gifts targeted for the faculty renewal initiative. Sponsored program direct and facilities and administrative costs are projected to total $394.4 million in , a decrease of 2.4 percent over the forecast due to a decline of other research activity. Some of this decline is due to reductions in sponsored activity in the colleges of Veterinary Medicine and Human Ecology. State appropriations, including special purpose appropriations, are planned at $132.5 million, reflecting a net decrease of 10.4 percent from the forecast. This estimate is considered to be final based on the projections provided by the State University of New York (SUNY) and the New York State Executive Budget (see Appendix H). Uses of Resources Expenditures are planned at $1.9 billion, an increase of 3.4 percent from the forecast for Salaries and benefits are projected to increase $35.0 million or 3.4 percent. Some colleges have already started hiring replacement faculty under the faculty renewal program. There is also a planned 3 percent salary improvement program and 1 percent increase in fringe benefit rates. Undergraduate financial aid is planned to increase by $19.5 million or 9.5 percent over the forecast. Graduate and professional financial aid is projected to remain flat compared to the forecast due to a small decline in enrollment. General expenses are planned at $397.3 million, showing a slight increase over the forecast. Significant components of the total plan include $114 million for sponsored research activities; $82.6 million for utilities, rent, and taxes; and $60.7 million for planned repair and maintenance costs. Additionally, $12 million that will be supported by unit operating reserves is planned for one-time investments in academic programs, faculty start-up, and other initiatives. Other expenses are projected to decrease by $1.1 million from This category includes capitalized equipment, books, and other expenses. Interest expense on taxable debt is planned to remain comparable to the forecast, $24.7 million in accordance with the planned repayment schedule for $500 million of taxable debt secured in Debt service is projected to decrease by $5.3 million, or 6.3 percent. Transfers To/From Fund Balances Net transfers from non-operating funds are planned to total $2.8 million, with $4.9 million transferred in from funds functioning as endowment to support operations, $66.2 million transferred to plant funds to support non-debt financed capital project expenditures and capitalized equipment, and $64.1 million transferred in from unit reserves to support one-time expenditures.

11 Table 3: Ithaca Campus - Summary (dollars in thousands) Resources 1. Tuition & Fees 715, , , ,182 37, % 2. Investment/Endowment Distribution 257, , , ,121 2, % 3. Unrestricted Gifts 56,759 45,397 45,397 50,422 5, % 4. Restricted Gifts 55,469 49,079 49,079 54,378 5, % 5. Sponsored Programs (Direct) 370, , , ,475 (14,525) -4.5% 6. Sponsored Programs (F&A) 87,558 83,597 84,000 88,880 4, % 7. Institutional Allowances % 8. State Appropriations 158, , , ,529 (15,431) -10.4% 9. Federal Appropriations 16,888 18,542 18,542 19, % 10. Enterprise Sales & Services 128, , , ,738 4, % 11. Educational Activities and Other Sources 129, , , ,687 (8,766) -6.3% 12. Subtotal In-Year Revenues 1,976,123 1,898,110 1,928,781 1,949,779 20, % Uses of Resources Actual Budget Forecast Change from Forecast to Plan Plan Dollars Percent 13. Salaries & Wages (Including Benefits) 1,017,191 1,026,334 1,018,400 1,053,428 35, % 14. Undergraduate Financial Aid 183, , , ,502 19, % 15. Graduate Financial Aid 130, , , ,853 (147) -0.1% 16. General Expense 371, , , ,314 2, % 17. Other Expenses 58,756 49,524 49,524 48,468 (1,056) 0.0% 18. University Cost Redistributions (1,828) (1,841) (7,141) (1,896) 5, % 19. Subtotal Expenditures 1,759,823 1,817,696 1,795,274 1,856,669 61, % Operating Plan Details Interest Expense on Taxable Debt 106,800 24,500 24,500 24, % 21. Debt Service 22,096 75,828 84,147 78,868 (5,279) -6.3% 22. Subtotal Debt 128, , , ,519 (5,128) -4.7% 23. Net before Transfers 87,404 (19,914) 24,860 (10,409) (35,269) Transfers (to)/from Fund Balances 24. Endowment (7,118) 6,641 13,456 4,893 (8,563) 25. Plant/Project Support (107,930) (58,717) (58,717) (66,154) (7,437) 26. Reserves 29,503 32,497 32,497 64,145 31, Subtotal Transfers (85,545) (19,579) (12,764) 2,884 15, Net from Operations 1,859 (39,493) 12,096 (7,525) (19,621)

12 Operating Plan Details 10 Table 4: Ithaca Campus - Details (dollars in thousands) General Purpose Budget Agriculture & Life Sciences Architecture Art & Planning Arts & Sciences Engineering Resources 1. Tuition & Fees 398, ,948 6, ,140 40,866 42, Investment Distributions 77,981 13,425 1,664 7,655 11,907 2,450 2, Unrestricted Gifts 12,756 8, ,354 2,475 1, Restricted Gifts 4,000 14, ,115 2,626 1,722 1, Sponsored Programs (Direct) 0 72, ,699 44, , Sponsored Programs (F&A) 53,545 18, , Institutional Allowances State Appropriations 16,881 47, , Federal Appropriations 0 11, , Enterprise Sales & Services Other Sources 6,558 15,907 1,349 1,967 1,266 16,823 1, Inter-Unit Revenue Transfers 26,770 (838) 936 (3,083) (682) (5,021) (2,110) 13. Subtotal In-Year Revenues 596, ,524 10,687 41,031 84,492 58,040 76, General Purpose Allocations (824,328) 19,393 13, ,224 56, Total Resources (227,348) 346,917 24, , ,218 58,050 76,785 Uses of Resources 16. Salaries & Wages 0 149,594 12, ,263 72,103 25,114 37, Employee Benefits 0 15,360 3,639 31,158 18,796 8,163 3, Undergraduate Financial Aid 0 1, , Graduate Financial Aid 0 16,178 2,582 19,861 18, , General Expense 0 49,025 3,733 15,882 25,776 8,542 8, Purchased Services 0 7,969 1,114 1, , Utilities, Rents & Taxes 0 3,009 1, , Repairs & Maintenance 0 10, , Capital Expense 0 4, ,441 3, Subtotal Expenditures 0 258,293 25, , ,043 44,902 56,923 Hotel Admin Human Ecology 26. Accessory Instruction 773 3, (1,747) 1, Administrative & Support (117,487) 46, ,695 11, Financial Aid (63,430) 38, ,857 11, Subtotal Cost Redistribution (180,144) 87, ,805 24, Debt Service , Interest Expense on Taxable Debt Subtotal Debt , Net Expenditures (180,144) 346,592 26, , ,043 60,700 81, Net Before Transfers (47,204) 325 (1,949) 285 (1,825) (2,650) (4,595) Transfers (to)/from Non-operating Support 35. Endowment 0 (98) Plant/Capital Project Support 0 (27) (2,098) (4,550) (21) (500) (3,805) 37. Reserves 0 (21) 4,047 9,210 3,940 3,201 8, Subtotal Transfers 0 (146) 1,949 4,915 3,997 2,701 4, Net from Operations (47,204) ,200 2,

13 Industrial & Labor Relations Johnson School Law School Veterinary Medicine Research Centers Other Academic Programs Centrally Recorded Financial Aid Student Services Admin & Support Physical Plant Ithaca All Other Total Ithaca Campus 34,699 50,236 35,761 15, , ,182 1,655 5,229 4,689 6, ,280 61,636 1, ,350 24, ,121 1,574 3,220 1,883 2, ,502 5, , ,545 50,422 2,031 3, ,900 4,035 6,057 3,700 2, ,378 5, ,105 92,458 11,108 3, , ,475 1,331 (67) 0 10, , , , , , , , , ,292 23,316 7, ,738 10,717 1, ,784 6,893 20, ,208 3,908 6, ,687 (2,219) (4,951) (9,098) (2,503) (4,318) (12,678) 101 (11,723) 13,920 17, ,910 58,581 34, ,548 99,682 67,721 73, ,478 44,539 60,301 28,282 1,949, ,271 13,414 87, ,643 32, , , ,393 58,667 34, , , , , , , ,321 28,282 1,949,779 27,476 28,307 16,111 63,378 38,361 66, , ,920 51,411 (6,000) 846,510 1,750 8,772 5,412 4,837 12,380 18, ,376 44,592 16,783 (2,040) 206, , ,502 2,328 7,706 2,808 6,089 3,851 10,253 40, ,853 6,900 9,501 3,736 21,675 36,381 36, ,283 30,444 (67,877) (11,340) 202,261 4,284 2, ,916 2,151 4, ,487 12,739 3, ,656 1,411 3, ,268 2, ,563 5,180 49, , ,702 2,016 2, ,999 7,229 26, , ,406 13,124 15, ,090 2, ,468 44,995 61,454 30, , , , , , ,243 82,638 (19,380) 1,858,565 Operating Plan Details (4,473) (300) ,645 5,976 4,395 15, ,708 2,636 6,855 (1,896) 9, (2,297) ,358 1,503 4,095 15, (2,297) 6,708 2,636 6,855 0 (1,896) , ,279 1,118 50, , ,603 24, , ,279 1,118 51,015 24, ,519 63,555 63,293 34, , , , , , , ,508 5,223 1,960, (4,626) 420 (2,442) 1, ,328 (9,125) 31,813 23,059 (10,409) (152) 2,950 (150) ,893 0 (914) (13) 0 (2,830) (161) 0 (12,981) (2,495) (35,759) 0 (66,154) 0 2, ,600 1,016 1, ,390 11,620 8, ,145 (152) 4, ,478 (1,679) 2,538 0 (4,557) 9,125 (27,570) 0 2, , ,243 23,059 (7,525)

14 Operating Plan Details 12 WEILL CORNELL MEDICAL COLLEGE Resources Resources for the Joan and Sanford I. Weill Medical College for are projected to reach $1.3 billion, an increase of 6.4 percent over the forecast for Tuition and fees are budgeted at $28.9 million, an increase of $1.1 million, or 3.9 percent from the forecast. Tuition at the Medical School will increase by 1.0 percent to $46,000. Graduate School tuition will increase by 2.8 percent to $29,282. Restricted gifts are expected to total $49.4 million, a decrease of 4.4 percent from the current year forecast. The plan includes a modest increase of 2.5 percent in annual giving of gifts to the Medical College for restricted initiatives. It also includes anticipated gifts to be received to support strategic plan operating programs, including the campaign for Discoveries That Make a Difference. Direct Costs of Sponsored Programs are planned to decrease 4.6 percent, or $6.3 million from the forecast, to a total of $129.7 million. The plan includes no change to current NIH support and $5.0 million (compared to $13.9 million in the forecast) in funding from the federal stimulus plan of Recoveries for facilities and administrative costs, or indirect costs from sponsored programs, are also expected to decline 4.2 percent in conjunction with the direct costs. The federal indirect cost recovery rate will stay at 69 percent. Sponsored Programs (Qatar) will increase $9.2 million or 20.4 percent reflecting program support of the Qatar Biomedical Research Agreement. Physician Organization (PO) revenues are projected at $648.0 million, a $50.5 million or 8.5 percent increase from the forecast. This plan includes baseline growth of existing programs and new or recently implemented practices, specifically Gastrointestinal and Digestive Care, the Oncology/Infusion Center, Interventional Neuroradiology, MOHS Surgery (in Dermatology), and Pediatric ENT. New York Presbyterian Hospital (NYPH): Revenues for services purchased by NYPH are expected to total $98.4 million, $1.7 million or 1.7 percent greater than the forecast. These services include professional costs related to hospital services and supervision and training of NYPH residents. Qatar Foundation reflects support of $83.6 million to operate the academic program in the Weill Medical School in Qatar. Uses Of Resources For the fiscal plan, expenditures are expected to total $1.3 billion, an increase of 6.6 percent, or $78.4 million over the forecast. Plan expenditures for salaries and wages including benefits, are expected to grow 4.5 percent or $30.9 million from the forecast. The majority of the growth is due to increases in compensation payments to faculty resulting from clinical activities. The plan also includes a 2 percent increase in merit awards to faculty and staff. The fringe benefit rate for faculty, exempt and non-exempt staff is expected to increase from 29.9 percent to 31.5 percent. Graduate financial aid costs, totaling $18.8 million, include financial aid support for the Medical School, Tri Institutional MD/PhD and Graduate School programs. General Expenses, totaling $386.2 million are projected to increase $19.6 million, or 5.4 percent from These costs include rent, facility costs, insurance, and laboratory supplies as well as routine operating supplies. Qatar expenses include two components: expenses related to the academic program in Qatar and the research expenses of the Biomedical Research Agreement. The plan is expected to increase 22.9 percent or $25.5 million to $137.1 million. Debt Service payments are expected to remain relatively level with the fiscal forecast at $19.7 million. Transfers To/From Fund Balances Transfers of $2.0 million from departmental balances are expected to be used to partially offset the decline in investment income payout that began in fiscal Fiscal is projected to be the final year of such activity as the payout continues to stabilize. Transfers to plant reserves of $2.6 million will be used for capital acquisitions and renovations by the Physician Organization.

15 Table 5: Medical College (dollars in thousands) Resources 1. Tuition & Fees 26,827 28,220 27,774 28,865 1, % 2. Investment/Endowment Distribution 46,031 41,520 40,865 41, % 3. Unrestricted Gifts 4,667 1,792 2,300 2, % 4. Restricted Gifts 51,021 49,522 51,683 49,406 (2,277) -4.4% 5. Sponsored Programs (Direct) 130, , , ,713 (6,291) -4.6% 6. Sponsored Programs (F&A) 45,849 47,135 49,828 47,742 (2,086) -4.2% 7. Sponsored Programs (Qatar) 12,044 39,891 45,070 54,247 9, % 8. Institutional Allowances 31,929 33,182 33,493 36,330 2, % 9. State Appropriations % 10. Federal Appropriations % 11. Physician Organization (PO) 558, , , ,007 50, % 12. NYPH (Purchased Services) 95,258 94,690 96,726 98,391 1, % 13. Enterprise Sales & Services 20,413 21,079 21,476 23,275 1, % 14. Qatar Foundation 67,843 78,541 67,472 83,622 16, % 15. Educational Activities and Other Sources 37,679 37,354 40,013 44,102 4, % 16. Subtotal In-Year Revenues 1,129,089 1,216,921 1,210,324 1,287,724 77, % Uses of Resources Actual Budget Forecast Change from Forecast to Plan Plan Dollars Percent 17. Salaries & Wages (Including Benefits) 643, , , ,065 30, % 18. Undergraduate Financial Aid Graduate Financial Aid 19,374 16,716 16,445 18,783 2, % 20. General Expense 352, , , ,174 19, % 21. Qatar 78, , , ,069 25, % 22. University Cost Redistributions 1,765 1,841 1,841 1, % 23. Subtotal Expenditures 1,096,020 1,192,181 1,179,566 1,257,987 78, % Operating Plan Details Debt Service 12,379 13,993 19,538 19, % 25. Net Before Transfers 20,690 10,747 11,220 10,065 (1,155) -10.3% Transfers (to)/from Fund Balances 26. Endowment 0 3,278 3,030 1,976 (1,054) 27. Plant/Project Support (2,500) (2,550) (2,550) (2,600) (50) 28. Subtotal Transfers (2,500) (624) (1,104) 29. Net from Operations 18,190 11,475 11,700 9,441 (2,259)

16 Reaccreditation at Cornell Reaccreditation at Cornell 14 CORNELL S REACCREDITATION Cornell University has been accredited by the Middle States Commission on Higher Education (MSCHE, or Middle States ) since 1921 and is due for renewal in Our decennial accreditation process involves an in-depth institutional selfstudy and a site visit by a team of external peers. The university recently completed both these steps, and expects to receive notice of reaccreditation for another 10 years this summer. What is accreditation? Accreditation is a form of self-regulated external quality review. Strictly speaking, university accreditation is entirely voluntary, but since the ratification of the Higher Education Act of 1965, federal financial aid dollars go only to institutions accredited by federally recognized accrediting agencies. Cornell is accredited through Middle States, the accrediting agency for educational institutions in the mid- Atlantic region. In addition to the large regional accrediting agencies that review entire institutions, there are numerous specialized and professional accreditors. At Cornell University, there are over twenty programs that have received specialized accreditation. This type of accreditation is separate and distinct from university-wide accreditation. The Decennial Self-Study and Team Visit Both regional and specialized accreditors undertake the task of accreditation in similar ways: each typically requires a self-study by the institution or program under review, a review by peers (including a site visit in most cases), and a judgment about accreditation status. The self-study is a significant effort. In the present case, planning for the self-study was underway by January The 300-page report was completed just over two full years later in February Scores of individuals students, staff and faculty contributed to the document, now available on the university s web pages. 1 The submission of the self-study report was followed in March by a visit from a team of eight peer evaluators, representing universities such as the University of Pennsylvania, Georgetown, Johns Hopkins, and Princeton. These peer evaluators were on the Ithaca campus for four days, and members of the team visited Weill Cornell Medical College in New York City as well as the Cornell-Nanyang Institute of Hospitality Management in Singapore. At the conclusion of the visit to Ithaca s campus, the chair of Cornell s evaluation team summarized the team s findings, stating that All the evidence we ve reviewed indicates that Cornell s programs in research and teaching are of the highest caliber and that the university s fiscal and physical resources are nurtured and used responsibly. In speaking to the Faculty Senate on April 13, Provost Kent Fuchs characterized the evaluation visit as phenomenally successful. Next Steps After the visit, the evaluation team writes a formal report of its findings; subsequently, the university will have a chance to respond in writing to the conclusions of that report. These two documents will then be discussed and considered at a June meeting of the Middle States Commission on Higher Education. Cornell University should be informed of its status vis-à-vis reaccreditation by early July. 1

17 Implementing Administrative Efficiencies A critical strategy for the financial plan and balancing the budget has been the continuation of a targeted and aggressive review of major support functions with the objective of realizing significant on-going cost reductions while ensuring these support activities work effectively with fewer resources. Funds captured from these support activities through fiscal year 2011 total $43 million. The total on-going reductions from this effort are currently estimated to exceed the original plan, but capital investments of approximately $2 million (excluding energy conservation projects) are needed during this period to fully realize these cost reductions. The specific initiatives are listed in Table 6, with estimated reductions from cost savings that can be generated through fiscal year Implementing Administrative Efficiencies 15 Table 6: Program Initiatives (dollars in millions) Original Target Actual and Projected Results to Date (Net of Investments) FY11 Recovered to Date FY12 Budget FY13-FY15 Projected Dollars Procurement $30.0 $2.7 $5.8 $17.7 Spans & Layers Information Technology Provost Facilities Centers & Institutes Student & Academic Services Finance Human Resources (0.6) Communications Totals $78.0 $43.2 $14.1 $25.9

18 Implementing Administrative Efficiencies 16 Initiatives By Project Procurement: This initiative is proactively managing spending particularly the selection of vendors and the negotiation of commodity pricing while improving processes, tools, and analytical abilities. This initiative is estimated to generate reductions of $25-$30 million by fiscal year This program is under the direction of the Vice President for Finance and Chief Financial Officer (CFO) and has identified $2.7 million of recoverable funds for the general operating budget. Additional expenditure reductions of $1.7 million have been realized and identified for restricted fund sources. Facilities: This initiative will streamline and better integrate facilities support operations across campus and simultaneously drive savings through energy conservation programs. Service restructuring is estimated to yield approximately $6.7 million by the end of 2015, and energy conservation projects will generate additional savings beyond These initiatives are being managed by the Vice President for Facilities Services. To date, the facilities group has pushed $6.4 million in reductions out to the university community for recovery to the general operating budget. Information Technology: This initiative will pursue cost reduction opportunities in areas such as enduser support and application development and will strengthen processes for managing campus-wide IT activities and investments in the future. The initial start was delayed due to a planned change in leadership; campus-wide efforts will begin in fiscal year The initiative s reductions potential is estimated to be $10-$15 million by fiscal This initiative is under the direction of the Vice President for Information Technology and Chief Information Officer (CIO). Finance: This initiative centers around implementing the new Kuali financial system to improve integration and provide more responsive tools for users. Financial Transaction Centers (FTC) have been created to better coordinate financial activities and gain transaction processing efficiencies. Estimated savings of approximately $1.3 million are expected following the Kuali system implementation. This program is under the direction of the Vice President for Finance and Chief Financial Officer (CFO). Human Resources: This initiative focuses on implementing the new HR/Payroll management system (HRMS/Workday), which will provide more efficient human resource service delivery. The team has also successfully implemented an On-Boarding (OB) Center to manage the new hire experience for regular and temporary hires. Spans & Layers: This initiative analyzed the administrative overhead structure by assessing the depth and width of the organization and identified ways to optimize the effectiveness and efficiency of support activities. Units were able to drive efficiency by eliminating redundant supervision and correcting under-utilization of resources. Total reductions of $14 million have been achieved primarily from position reductions resulting from organizational restructuring across the Ithaca campus, enabled largely by the staff retirement incentive program. Units were able to streamline their organizations by increasing average spans from 4.9 to 6.0 employees per supervisor and by consolidating depth, with some units fully reducing 1 or 2 layers. This initiative is being monitored by the Vice President for Human Resources and the Vice President for Planning and Budget. Provost: The provost s office has reorganized central operations and reduced the spans and layers of the central organization through restructuring. In addition, in consultation with deans and vice presidents, an item-by-item review of commitments without fixed termination dates is underway. Further, the elimination or phase-out of investments that do not align with the university s strategic plan is also in progress. These efforts have generated approximately $12 million in expenditure reductions.

19 Student & Academic Services: This initiative is designed to optimize financial performance for housing and dining operations and to develop longterm funding strategies for elements of the athletics and health services operations. The initial start was delayed while impact studies and policy changes were completed, allowing campus-wide efforts to begin in fiscal year Estimated cost reductions of approximately $2 million are expected once the initiative is fully implemented. The Vice President for Student and Academic Services has responsibility for the implementation of actions resulting from this initiative. University Communications: Communications support activities campus-wide are being examined. Operational efficiencies will be achieved by sharing resources with academic units and consolidating production and distribution services. These efforts are estimated to reduce expenses by $0.5 million, when implemented. Centers & Institutes: This initiative involves developing a university-wide protocol for centers and programs to assist in determining effectiveness, efficiency, and mission relevance. Reducing dependency on the general purpose operating budget and eliminating duplication of other university functions has resulted in savings of approximately $5 million. The Administrative Streamlining Program Office, under the direction of the Division of Planning and Budget, leads implementation efforts by coordinating and tracking the execution of each initiative s plans. The office has developed metrics and measures to monitor results to achieve full savings expectations. The Office of the Vice President for Human Resources is guiding the change management functions, integrating adjustments as needed across the university community to establish appropriate operating standards for quality. Figure 3 below shows the projected savings expectations from each initiative. The Administrative Streamlining Program has already achieved over 50 percent of plan expectations and is expected to exceed the original plan target by fiscal year Implementing Administrative Efficiencies 17 Figure 3. Administrative Streamlining Program Results by Initiative

20 The Cornell Budget Model Revision The Cornell Budget Model Revision 18 Last summer, Provost Fuchs asked the Division of Planning and Budget to assess the feasibility of implementing the budget model recommended by the Budget Model Task Force in the winter of The goal is to replace the three existing Ithaca campus models with a single, coherent approach that will allow for strategic planning and provide appropriate incentives and resources to enhance Cornell s academic excellence. Budget Model Redesign The Review Process During the academic year, Vice President Mangum led a budget model redesign process that engaged over sixty-five members of the Cornell community, including a stakeholder executive steering committee, to provide guidance to the subcommittees charged with recommending solutions for the following areas: 1) Pooling undergraduate instruction: A Cost of Instruction Subcommittee was charged with determining how to distribute net tuition dollars to the undergraduate colleges. 2) Managing space costs: The Space Use Subcommittee was tasked to recommend policies to incentivize more efficient use of space on campus. 3) Simplifying internal recharge operations: The Recharge and Cost Recovery Operations Subcommittee was asked to determine the proper methodology for allocating costs from on-campus service units (CIT, Facilities, Communications) to campus customers. 4) Distributing central costs and revenues: The Cost Allocation Methodology (CAM) and University Support Subcommittee was formed to identify the most efficient means of distributing central support costs while ensuring the availability of sufficient discretionary resources in a university support pool (USP) to address strategic priorities. 5) Review of the historical distribution of New York State appropriations: The New York State Appropriation Subcommittee was asked to recommend alternatives to the current distribution of state funding to the contract colleges for operations, utilities, and plant expenditures. This activity sparked a great deal of thoughtful discussion across the campus. Each subcommittee presented a formal report to the executive steering committee. Three retreats involving deans, vice presidents, and vice provosts further informed the budget model redesign, identifying areas of agreement and highlighting unresolved issues. These issues and concerns were packaged and presented to Provost Fuchs for resolution. Results and Next Steps The intent is to phase in several components of the new budget model in fiscal and fully implement a new budget model by fiscal In fiscal , we will replace the administrative component of the self-funded income model for Cornell Abroad with an allocated budget, and transfer the endowments for college-specific named professorships away from the provost office to the appropriate colleges and units. Provost Fuchs will lead a new task force for implementation, which will complete its work by the end of this summer.

21 A Decade of Capital Expansion by John C. Adams, Assistant Vice President Since Cornell s founding, several eras of building expansion have occurred, from the early part of the 20th century, during and after World War II, and most recently over the past twenty to twenty-five years. The 2008 Campus Master Plan for the Ithaca Campus lists five distinct periods of growth and physical development: , , , , and The result is a legacy of historic and modern buildings and open spaces that will define the University s future development. 2 Perhaps the largest capital expansion has occurred since 1965, continuing to the present. Jane Pedersen, Associate Dean of Administration for the College of Arts and Sciences, has watched the progression of change across the campus. She began her career at Cornell University in the early 1970 s and will retire in the coming months. In a recent interview, she recounted some of the changes she has witnessed during her tenure at Cornell: Closure of Central Avenue and the subsequent creation of Ho Plaza East Avenue acquiring a row of new front doors, with substantive additions to Lincoln and Sage Halls, and new construction: Duffield Hall and the Physical Sciences Building Creation of an open plaza in front of Bailey Hall Infill of open space surrounding Uris Hall, from the initial construction of the Statler Hotel to recent additions to Ives Hall Construction of the Schwartz Center for the Performing Arts on College Avenue, as well as myriad other changes in the Collegetown landscape Addition of the Biological Sciences sector, beginning with Corson-Mudd, followed by Comstock Hall, the Biotechnology Building, and Weill Hall Following the economic downturn in 2008 and 2009, the university entered a period of retrenchment within a constrained fiscal environment. Today, annual capital spending for new construction is beginning to decline with restrictions on the ability to issue long-term debt, and capital spending guidelines are now in place. As a result, the university will begin to strategically shift spending toward maintenance of existing facilities and investments in energy conservation projects. This phenomenon is certainly not unique to Cornell as universities and colleges across the country are experiencing similar fiscal complications. Figure 4 provides a view of the annual expenditure budget for capital projects, separated by funding source. In this chart, university funds represent unit funds, enterprise funds, and General Purpose funds; SUCF represents those capital funds provided via State University of New York (SUNY)/State University Construction Fund (SUCF); Gifts & Other represents gifts, investment income, and other government funds. A Decade of Capital Expansion 19 2 For details, see the Master Plan online at

22 Figure 4. Funding Sources - Annual Expenditure Budget (dollars in thousands) A Decade of Capital Expansion 20 While enrollment on the Ithaca campus has been relatively stable over the past ten years and is predicted to remain flat or show slight growth in graduate program enrollment and number of faculty, demand for additional space has developed since fiscal year Much of this demand has been and continues to be generated by increased crossdisciplinary areas of study and new technologies. The tremendous growth in annual capital expenditures for both Ithaca and WCMC campuses has occurred in the past decade, from less than $100 million per year through fiscal year to over $300 million per year for the past seven years. Many of these expenditures have been in support of badly needed renovations and upgrades to existing facilities. For example, Olin Library is nearing completion on a $10 million project to provide critical fire safety improvements, and Barton Hall received $8.9 million in upgrades to the exterior of the building, addressing water penetration problems that have existed for years. There are too many additional renovation and upgrade projects of smaller dollar amounts to list here, some funded through SUCF and others funded through university operating funds. Many new buildings have been erected on campus as well. Figure 5 shows the Ithaca campus layout, with new facilities added in the past ten years highlighted in green. The following narrative provides details for many of these new facilities.