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Organization and Deployment of Resources

FINANCIAL RESOURCES

Budgets and expenditures

The financial resources of the University of Michigan are reported on and published annually in the Financial Report which is the audited report of the financial profile of the institution at year end. The Financial Report is a public document, approved and adopted by the Board of Regents, serving as the University’s official report to the people of Michigan, legislators and state officers, and to interested parties and supporters of the University. The figures in the Financial Report are for the University as a whole, including all three campuses.

A review of the 1988-89 and 1998-99 Financial Reports show that the University continues to build upon its strong financial foundation. This financial health reflects the prudent utilization of its financial resources over the years, including the management of its endowment, the conservative utilization of debt, and the careful protection of its physical plant.

The operating activities of the University are reported in four main funds: general, designated, expendable restricted, and auxiliary activities. These operating funds account for transactions related to instruction, research and public service, including departmental programs, contracts and grants, and the auxiliary activities that serve the students, faculty, staff and public. The non-operating funds and their functions are as follows: the Student Loan Fund is used to account for transactions related to loans to students; Endowment and Other Invested Funds account for gifts which allow only the income thereon to be expended, and other invested amounts from gifts which allow both principal and income to be expended; Plant Fund includes the transactions relating to investment in institutional properties, including indebtedness incurred in the financing thereof; the Agency Fund is used to account for amounts withheld from payrolls, employer portion of payroll taxes and various payroll benefits and for amounts held in custody for University related organizations.

The tables below illustrate the operating funds revenues by fund type and source of funding for the University for fiscal years 1989 and 1999. Current operating fund revenues have almost doubled in the ten years from $1.5 billion in 1989 to $2.9 billion in 1999. The University’s auxiliary funds have increased slightly more rapidly than the general, designated, and expendable restricted fund. While the annual state appropriation of $375M continues to be a cornerstone of the University’s strength, there has been an increased reliance on student fees, gifts, and departmental activities. State support for the University in 1999 was 13% of the University’s overall operating revenue, or 37% of the University’s general fund operating revenue. Over the ten-year period from 1989 to 1999, the state appropriation has only increased 38.5% while student fees, gifts and departmental activities have increased at a much higher percentage.

1988-89	1988-89	1998-99	1998-99	% Change
$ Amount	% of Total	$ Amount	% of Total	FY89 - FY99
General Fund	552,027	36.0%	1,004,310	34.8%	81.9%
Designated Fund	50,975	3.3%	84,856	2.9%	66.5%
Expendable Restricted Fund	268,505	17.5%	504,675	17.5%	88.0%
Auxiliary Fund	663,876	43.2%	1,294,115	44.8%	94.9%
Total Revenues	1,535,383	100.0%	2,887,956	100.0%	88.1%

1988-89 1988-89 1998-99 1998-99	% Change
$ Amount % of Total $ Amount % of Total	FY89 - FY99
Student Fees	244,360 15.9% 512,705 17.8%	109.8%
State Appropriations	270,877 17.6% 375,266 13.0%	38.5%
Government sponsored programs	213,975 13.9% 400,407 13.9%	87.1%
Private gifts and sponsored programs	86,584 5.6% 167,092 5.8%	93.0%
Income from investments	41,211 2.7% 52,141 1.8%	26.5%
Departmental activities	44,768 2.9% 95,385 3.3%	113.1%
Auxiliary operations activities	84,353 5.5% 162,438 5.6%	92.6%
Hospitals and Health Centers	567,695 37.0% 1,131,677 39.2%	99.3%
Change in restricted revenues held for future expenditures	(18,440) -1.2% (9,155) -0.3%	-50.4%
Total Revenues	1,535,383 100.0% 2,887,956 100.0%	88.1%

The following tables display the operating fund expenditures and transfers by fund type and function for the University for fiscal years 1989 and 1999. Over this ten-year period, total expenditures have nearly doubled going from $1.6 billion in 1989 to $2.8 billion in 1999. The expenditures in the designated fund have increased at twice the rate of the general, designated and expendable restricted funds. The University has seen large increases in spending in almost all areas.

1988-89 1988-89 1998-99 1998-99	% Change
$ Amount % of Total $ Amount % of Total	FY89 - FY99
General Fund	548,001 34.9% 976,238 34.5%	78.1%
Designated Fund	45,055 2.9% 117,819 4.2%	161.5%
Expendable Restricted Fund	268,505 17.1% 504,675 17.8%	88.0%
Auxiliary Fund	710,014 45.2% 1,234,997 43.6%	73.9%
Total Expenditures	1,571,575 100.0% 2,833,729 100.0%	80.3%

Note: The total operating deficit indicated by the difference in operating funds revenues and expenditures for 1988-89 is due to a $46,138,000 deficit in the auxiliary activities fund.

1988-89 1988-89 1998-99 1998-99	% Change
$ Amount % of Total $ Amount % of Total	FY89 - FY99
Instruction	291,299 21.4% 454,997 17.3%	56.2%
Research	197,703 14.6% 392,043 14.9%	98.3%
Public service	17,035 1.3% 46,530 1.8%	173.1%
Academic support	81,572 6.0% 144,130 5.5%	76.7%
Student services	38,241 2.8% 58,552 2.2%	53.1%
Institutional support	49,578 3.6% 102,860 3.9%	107.5%
Operations and maintenance of plant	62,873 4.6% 130,337 4.9%	107.3%
Scholarships and fellowships	67,481 5.0% 159,034 6.0%	135.7%
Auxiliary operations activities	56,812 4.2% 134,454 5.1%	136.7%
Hospitals and Health Centers	495,999 36.5% 1,010,272 38.4%	103.7%
Total Expenditures	1,358,593 100.0% 2,633,209 100.0%	93.8%
Mandatory Transfers	27,842 48,784
Other Transfers	185,140 151,736
Total Expenditures and Transfers	1,571,575 2,833,729

Endowment

September 30, 1997 marked the official end of the five-year Campaign for Michigan, the largest fund-raising effort ever undertaken by a public university. The original goal of $1 billion ($850 million in cash gifts and $150 million in new bequest intentions) was exceeded by 41.5% with the final total coming in at $1,415,162,694.

New gifts and pledges totaled $1.1 billion, 29.5% over the original $850 million goal. New bequest intentions totaled $314.1 million, 209.4% of the original $150 million goal. The endowment goal of $340 million for new professorships, scholarships, fellowships and programs was exceeded by 11%.

In fiscal year 1997-98, the University of Michigan set another record in total amount of gifts received, raising $179,524,097. This past year was the first "post campaign" year, yet total contributions again set a new record for giving to the University. Support from individual donors now accounts for 60% of the donations.

Along with this growth in individual giving has been an increase in support for endowment. The University of Michigan’s endowment fund grew by $322 million during fiscal year 1998. As of June 30, 1999, the University’s endowment funds were valued at $2.5 billion. This growth is net of funds utilized to support operations. Most of the endowment provides direct support for the University’s 19 schools and colleges, and the Dearborn and Flint campuses.

The University’s investment portfolios earned 13.4 percent for the fiscal year ending June 30, 1999. This places the University’s investment performance in the top quartile of the 150 college and university portfolios tracked by Cambridge Associates, a Boston-based investment advisor that specializes in higher education and other nonprofit institutions across the country.

Sponsored research

In terms of sponsored research activity, for nearly all this decade the University of Michigan has ranked first in the nation in total annual research expenditures (exclusive of expenditures at university-associated federally-funded research and development centers). The University’s research expenditures are approaching the $500 million dollar mark. Fiscal year 1998-99 expenditures rose nearly 2% over the prior year to $499,721,931. Total research expenditures have increased 75% percent over the past decade, from $286.1 million in 1989-90 to $499.7 million in 1998-99.