University of Rochester
Board of Trustees Orientation
Financial 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?
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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
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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
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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
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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
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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
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Financial Planning Committee
Committee on Audit and Risk Assessment
Personnel Committee
Facilities Committee
Committee on Compliance and
Compensation
Strategic Planning Advisory Committee
Scale of the Enterprise and the
Financial Overview – FY2008
Educational Activities 1%
Royalty Income 3%
Gifts & Pledges 4%
Other 1%
Grants &
Contracts 15%
Net Tuition & Fees
Auxiliary
7%
Enterprises
3%
Long-Term
Investment
Income
3%
Hospital & Faculty
Practice Patient
Care Activities 63%
Operating Revenues
$2.4 Billion
Scale of the Enterprise and
Financial Overview – FY2008
Business &
Professional
9%
Maintenance &
Utilities 2% Facilities 4%
Depreciation
Expense 5%
Interest Expense
2%
Other 3%
Supplies 13%
Total
Compensation
62%
Operating Expenses
$2.3 Billion
Key UR Issues
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Decentralization
Exposure to Health Care
Institutional Resources
Aggregate Rate of Endowment Use
College Financial Position and Endowment Use
Eastman School of Music and Simon School
Financial Position and Revenue Trends
Limited Debt Capacity
Strategic and Campus Master Plan Prioritization
Implication of the Current Economic Crisis
Endowment Market Values
by Division ($ in millions)
Nursing
$21.7
Other (includes University General
$43.6 & Memorial Art Gallery)
The College
$405.4
Simon
$86.0
Medicine & Dentistry/
Health Sciences $683.8
Eastman
$263.6
Total value as of June 30, 2008 = $1,530.8
Warner
$26.7
FY2008 Total Budget –
Composition by Divisions
Warner
0.4%
Eastman
1.7%
Simon
1.6% Other
0.3%
Medical Center Faculty Practice/
Eastman Dental Center
16.1%
The College
15.1%
Nursing
1.0%
Strong Memorial
Hospital
43%
Medicine & Dentistry/
Health Affairs
20.7%
Medical Center 80.9%
FY2009 Divisional Budgets –
Core Sources of Funds
Gifts/Transfers
& All Other 8%
Transfers 22%
Indirect Cost
Recovery 15%
Gifts & Other
19%
Endowment 19%
Indirect Cost
Recovery 32%
Net Tuition & Fees
58%
Endowment 18%
Net Tuition & Fees
9%
The College
School of Medicine
& Dentistry
FY2009 Divisional Budgets –
Core Sources of Funds
Gifts & All
Others 5%
Gifts, Transfers &
All Other 10%
Indirect Cost Recovery 8%
Endowment 7%
Endowment 54%
Net Tuition & Fees
75%
Net Tuition & Fees
41%
Eastman School of Music
School of Nursing
FY2009 Divisional Budgets –
Core Sources of Funds
Gifts/Transfers
& All Other 7%
Endowment 15%
Endowment 20%
Net Tuition & Fees
73%
Net Tuition & Fees
85%
Simon School
Warner School
Financial Informational
Resources
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Audited Consolidated Financial Statements
Operating Budget document (see page 3 for
budget entity chart)
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Capital Budget document
University Financial Administration
Ronald J. Paprocki
Senior Vice President for Administration & Finance &
Chief Financial Officer
Salim M. Alani
Director, Office of University Audit
Holly G. Crawford
Associate Vice President for Budgets & Planning & Deputy to
the Sr. V.P. for Administration & Finance & CFO
Kathy A. King-Griswold
Treasury Manager
Douglas W. Wylie
University Controller
Medical Center Financial Administration
Michael C. Goonan
Medical Center Vice President & Chief Financial Officer
Leonard J. Shute
Senior Director of Finance & Chief Financial Officer,
Strong Memorial Hospital