Messenger - Vol. 1, No. 3, Page 4 Spring 1992 University of Delaware Annual Report Report of the University Treasurer Current Funds Revenues, Expenditures, Transfers and Other Changes University Current Funds Revenues increased 9.3 percent to $313,533,000 in 1990-91. Tuition and Fees accounted for 35.7 percent of all revenues, up from 34.1 percent the prior year. State Appropriations were 21.2 percent of all revenues, down from 23.2 percent the prior year. The major sources of Current Funds Revenues and the major functions for Current Funds Expenditures, Transfers and Other Changes are illustrated below. Tuition and Fees Tuition and Fees Revenues of $111.9 million in 1990-91 were up 14.4 percent from the prior year. This increase is caused by several factors, including an increase in total students served, increased tuition rates averaging 8.4 percent, and increases in specific user fees, such as application fees and orientation fees. In addition, because of a mandated mid-year reduction in State Appropriations discussed below, a mid-year tuition increase of $100 per student was necessary to make up some of the lost funding. State Appropriations During 1990-91, the state of Delaware was required to deal with a deteriorating financial situation, and mandated reversions of operating appropriations from state-assisted organizations, including the University. The 1990-91 Appropriation received by the University was $3.2 million less than had originally been approved by the state and included in the University budget. The result was no increase in the amount of state appropriations for operations to the University in 1990-91 over the prior year. This leveling of state funding, while the Consumer Price Index continues to increase, has resulted in an increase in the percentage of University costs borne by students and in a reduction in staffing and other University costs. The state has been able to provide continued support for the University with capital appropriations for two major building projects now under way--the Lammot du Pont Laboratory for chemistry and biochemistry and the Bob Carpenter Sports/Convocation Center. These projects are funded by a combination of state appropriations and private funds from contributions to the University. The state portion of the laboratory is to be $17 million, with $4 million appropriated in 1990-91, bringing the total to date to $7 million. The state portion of the Bob Carpenter Center is to be $12 million, with $3 million appropriated in 1990-91, bringing the total to $7 million. Contracts and Grants Contracts and Grants Revenues increased from $31.7 million in 1989-90 to $36.2 million in 1990-91. (All Dollars in Millions) Percent 1989-90 1990-91 Increase Federal Government $21.8 $24.9 14.2% State Government 5.8 5.9 1.7 Private 4.1 5.4 31.7 ------- ------- ------- Total $31.7 $36.2 14.2% Revenues from Contracts and Grants support research, public service and training, as well as financial aid for students. Of the Contracts and Grants Revenues, $23.3 million was received specifically for the support of basic and applied research efforts of the University faculty. The University's ability to garner support for research is a reflection of the growing recognition of the quality of research conducted at the institution. Such research helps the University attract excellent faculty and students and helps the growth of regional business. It also can lead to additional gifts for its academic programs. Gifts As financial pressures continue on the University's operations, gifts play an increasingly important role in maintaining and enhancing the academic quality of the University. Increases in private giving to the University of Delaware have been no exception, as gifts for operating purposes increased from 2.6 percent ($7.5 million) in 1989-90 to 3.2 percent ($10.1 million) of the 1990-91 Current Funds Revenues. Gifts for capital purposes also increased in a significant way with $3.1 million contributed for the endowment and $3.6 million for major capital projects. Total 1990-91 Gifts in excess of $16.9 million, represents a 36.4 percent increase in private support over the prior fiscal year. The University is pleased with the response to its needs from alumni, friends and the business community. Investments The market value of University Investments continues to be at an all-time high: (All Dollars in Millions) Endowments Other Combined June 30, 1991 University $356.2 $110.3 $466.5 Funds Held in Trust 36.7 - 36.7 -------- ------- -------- Total $392.9 $110.3 $503.2 June 30, 1990 University $326.3 $112.3 $438.6 Funds Held in Trust 35.4 - 35.4 -------- -------- -------- Total $361.7 $112.3 $474.0 The University's Endowments achieved an annual total return of 12.1 percent during 1990-91 and this was somewhat less than the 14.4 percent average annual total return earned during the decade of the 1980s. The total return for 1990-91 on equity holdings was 13.7 percent compared to the Standard and Poor's 500 index of 7.4 percent for the same period. Approximately 54 percent of the Endowments was invested in equities as of June 30, 1991. An infusion of $12.1 million of gifts and reinvested income combined with the investment performance to achieve significant growth in the market value of the University's Endowments. Income (yield) from short-term investment of operating funds (referred to as Other in this section) has been declining as a result of lower interest rates in a recessing economy. The chart below illustrates that combined investment income available to support operations has been relatively flat. This trend is expected to continue through the 1991-92 year, putting additional pressure on University operations. (All Dollars in Millions) Endowments Other Combined 1990-91 $ 22.4 $ 9.4 $ 31.8 1989-90 22.0 9.7 31.7 Fund Balances The Statement of Changes in Funds Balances as shown in the Financial Statements that follow, report the overall increase or decrease in University Fund Balances, and provide some details of the additions and deductions impacting these changes. Total Fund Balances increased by $19.7 million during 1990-91, primarily because of increases of Endowments (at book value $15.7 million) and Plant Funds ($8.7 million). Current Funds (i.e., those funds that support the operations of the University) decreased by $3.4 million as explained below. Endowments were discussed in the previous section. Plant Funds represents those funds set aside or restricted for new buildings, renovations of existing buildings and the replacement of equipment, as well as the value of the University's land, buildings and equipment. The increase in Plant Funds is primarily due to funding for the chemistry and Carpenter Center facilities. The decline in Current Funds Balances is the result of spending resources accumulated in prior years, and not replenishing these funds from operations during 1990-91. Conclusion The University of Delaware continues in stable financial condition, but pressures on operating expenditures of the University are increasing. Salary increases and escalating costs of health care, library materials and state-of-the-art equipment needed for instruction have required the University to make some difficult budget decisions, including reductions of almost 200 positions over the past two years. The University has set its priorities as appropriate compensation for faculty and staff, additional scholarship support for students and appropriate additions and renovations to the physical plant and equipment. The difficult budget decisions referenced above have enabled the University of Delaware to make gains relative to peer institutions in all of these priority areas.