MONTHLY FINANCIAL REPORT (unaudited)

Transcription

1 T HE U NIVERSITY OF T EXAS S YSTEM O FFICE OF THE C ONTROLLER MONTHLY FINANCIAL REPORT (unaudited) APRIL Seventh Street, ASH 5 th Floor Austin, Texas

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3 THE UNIVERSITY OF TEXAS SYSTEM MONTHLY FINANCIAL REPORT (Unaudited) FOR THE EIGHT MONTHS ENDING 30, 2017

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5 TABLE OF CONTENTS FOREWORD... 7 SYSTEMWIDE COMPARISONS OF ACTUAL... 9 YEAR-TO-DATE INCOME (LOSS) SUMMARY BY INSTITUTION EXPLANATIONS OF VARIANCES GLOSSARY OF TERMS U. T. SYSTEM ADMINISTRATION U. T. ARLINGTON U. T. AUSTIN U. T. DALLAS U. T. EL PASO U. T. PERMIAN BASIN U. T. RIO GRANDE VALLEY U. T. SAN ANTONIO U. T. TYLER U. T. SOUTHWESTERN MEDICAL CENTER U. T. MEDICAL BRANCH - GALVESTON U. T. HEALTH SCIENCE CENTER - HOUSTON U. T. HEALTH SCIENCE CENTER - SAN ANTONIO U. T. M. D. ANDERSON CANCER CENTER U. T. HEALTH SCIENCE CENTER - TYLER

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7 The University of Texas System Monthly Financial Report Foreword The Monthly Financial Report (MFR) compares the results of operations between the current year-todate cumulative amounts and the prior year-to-date cumulative amounts. Explanations are provided for institutions having the largest variances in Adjusted Income (Loss) year-to-date as compared to the prior year, both in terms of dollars and percentages. In addition, although no significant variance may exist, institutions with losses may be discussed. The data is reported in three sections: (1), (2), and (3) Other Nonoperating Adjustments. Presentation of state appropriation revenues are required under GASB 35 to be reflected as nonoperating revenues, so all institutions will report an Operating Loss prior to this adjustment. The MFR provides an Adjusted Income (Loss), which takes into account the nonoperating adjustments associated with core operating activities. An Adjusted Margin (as a percentage of operating and nonoperating revenue adjustments) is calculated for each period and is intended to reflect relative operating contributions to financial health. 7

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9 The University of Texas System Consolidated For the Period Ending 30, 2017 Net Student Tuition and Fees 1,154,686, ,096,083, ,603, % Sponsored Programs 2,100,338, ,042,819, ,518, % Net Sales and Services of Educational Activities 426,439, ,490, ,948, % Net Sales and Services of Hospitals 3,788,245, ,552,782, ,463, % Net Professional Fees 1,183,113, ,102,094, ,019, % Net Auxiliary Enterprises 463,643, ,443, ,199, % Other 366,076, ,981, ,095, % Total 9,482,544, ,924,695, ,848, % Salaries and Wages 5,634,457, ,344,950, ,506, % Payroll Related Costs 1,556,059, ,446,732, ,327, % Membership Dues 19,297, ,297, % Registration Fees/Meetings/Conferences 40,693, ,693, % Cost of Goods Sold 102,557, ,515, ,042, % Professional Fees and Services 333,955, ,116, (17,160,939.33) -4.9% Other Contracted Services 558,415, ,832, ,582, % Fees and Other Charges 41,297, ,297, % Travel 99,611, ,570, ,040, % Materials and Supplies 1,243,196, ,171,658, ,538, % Utilities 188,505, ,873, ,631, % Communications 71,686, ,231, (3,544,923.79) -4.7% Repairs and Maintenance 218,603, ,385, ,218, % Rentals and Leases 116,598, ,477, ,120, % Printing and Reproduction 24,778, ,902, (123,979.75) -0.5% Royalty Payments 9,721, ,721, % Bad Debt Expense 697, , , % Impairment of Capital Assets 11,797, ,797, % Insurance Costs/Premiums 53,601, ,601, % Claims and Losses 11,465, ,504, (6,038,875.99) -34.5% Increase in Net OPEB Obligation 471,353, ,561, ,791, % Pension Expense 166,884, ,929, ,954, % Scholarships and Fellowships 291,744, ,882, ,861, % Depreciation and Amortization 917,162, ,859, ,302, % Federal Sponsored Program Pass-Through to Other State Agencies 16,094, ,921, (1,827,477.55) -10.2% State Sponsored Program Pass-Through to Other State Agencies 3,610, ,878, (8,268,189.91) -69.6% Other 140,054, ,896, (158,841,704.60) -53.1% Total 12,343,902, ,715,265, ,637, % Operating Loss (2,861,358,775.85) (2,790,569,818.85) (70,788,957.00) -2.5% State Appropriations 1,541,152, ,508,588, ,564, % Nonexchange Sponsored Programs 211,040, ,160, (16,120,367.02) -7.1% Gift Contributions for Operations 291,099, ,153, (37,054,098.34) -11.3% Net Investment Income 696,068, ,046, ,021, % Interest Expense on Capital Asset Financings (229,396,492.16) (186,564,723.90) (42,831,768.26) -23.0% Net 2,509,963, ,457,383, ,580, % Adjusted Income (Loss) including Depreciation & Amortization (351,394,842.55) (333,185,992.34) (18,208,850.21) -5.5% Adjusted Margin % including Depreciation & Amortization -2.9% -2.9% Investment Gain (Losses) 2,128,210, (572,956,701.25) 2,701,167, % Adj. Inc. (Loss) with Investment Gains (Losses) 1,776,815, (906,142,693.59) 2,682,958, % Adj. Margin % with Investment Gains (Losses) 12.4% -8.2% Adjusted Income (Loss) excluding Depreciation & Amortization 565,767, ,673, ,093, % Adjusted Margin % excluding Depreciation & Amortization 4.6% 4.5% 9

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11 The University of Texas System Comparison of Adjusted Income (Loss) For the Eight Months Ending 30, 2017 Including Depreciation and Amortization Expense U. T. System Administration $ (549,544,631.12) (1) $ (583,796,673.70) 34,252, % U. T. Arlington 10,449, ,828, ,620, (2) 33.5% U. T. Austin 109,018, ,844, (48,826,243.59) (3) -30.9% U. T. Dallas (11,929,839.15) 2,299, (14,229,824.77) (4) % U. T. El Paso (12,537,057.98) (5) (11,704,521.05) (832,536.93) -7.1% U. T. Permian Basin 892, (1,204,507.35) 2,096, (6) 174.1% U. T. Rio Grande Valley 5,879, ,914, (3,035,396.55) (7) -34.0% U. T. San Antonio (10,879,726.82) 667, (11,547,371.71) (8) -1,729.6% U. T. Tyler (3,921,874.13) (7,994,105.22) 4,072, (9) 50.9% U. T. Southwestern Medical Center 83,112, ,694, (42,582,699.67) (10) -33.9% U. T. Medical Branch - Galveston (6,921,569.28) (4,320,053.47) (2,601,515.81) (11) -60.2% U. T. Health Science Center - Houston 21,506, ,565, (40,059,569.94) (12) -65.1% U. T. Health Science Center - San Antonio 7,121, ,571, (8,449,931.31) (13) -54.3% U. T. M. D. Anderson Cancer Center 247,610, ,959, ,650, (14) 133.7% U. T. Health Science Center - Tyler (11,416,233.07) (7,241,972.77) (4,174,260.30) (15) -57.6% Elimination of AUF Transfer (229,833,052.27) (203,271,560.67) (26,561,491.60) -13.1% Total Adjusted Income (Loss) (351,394,842.55) (333,185,992.34) (18,208,850.21) -5.5% Investment Gains (Losses) 2,128,210, (572,956,701.25) 2,701,167, % Total Adjusted Income (Loss) with Investment Gains (Losses) Including Depreciation and Amortization $ 1,776,815, $ (906,142,693.59) $ 2,682,958, % Excluding Depreciation and Amortization Expense U. T. System Administration $ (537,235,847.45) $ (571,880,108.25) 34,644, % U. T. Arlington 43,472, ,371, ,100, % U. T. Austin 293,684, ,844, (29,159,576.92) -9.0% U. T. Dallas 37,029, ,687, (7,658,639.42) -17.1% U. T. El Paso 7,975, ,151, (1,176,315.12) -12.9% U. T. Permian Basin 10,205, ,105, ,100, % U. T. Rio Grande Valley 31,838, ,070, (1,231,682.73) -3.7% U. T. San Antonio 21,172, ,509, (11,336,426.32) -34.9% U. T. Tyler 5,998, ,621, ,376, % U. T. Southwestern Medical Center 191,770, ,671, (38,901,797.49) -16.9% U. T. Medical Branch - Galveston 91,970, ,883, ,086, % U. T. Health Science Center - Houston 62,533, ,648, (40,115,467.87) -39.1% U. T. Health Science Center - San Antonio 41,788, ,904, (9,116,597.97) -17.9% U. T. M. D. Anderson Cancer Center 496,866, ,347, ,519, % U. T. Health Science Center - Tyler (3,468,185.26) 7, (3,475,397.58) -48,187.0% Elimination of AUF Transfer (229,833,052.27) (203,271,560.67) (26,561,491.60) -13.1% Total Adjusted Income (Loss) 565,767, ,673, ,093, % Total Adjusted Income (Loss) Excluding Depreciation and Amortization $ 565,767, $ 516,673, $ 49,093, % 11

12 THE UNIVERSITY OF TEXAS SYSTEM EXPLANATION OF VARIANCES ON THE MONTHLY FINANCIAL REPORT For the Eight Months Ending 30, 2017 Explanations are provided for institutions having the largest variances in adjusted income (loss) year-to-date as compared to the prior year, both in terms of dollars and percentages. Explanations are also provided for institutions with a current year-to-date adjusted loss and/or a projected year-to-date loss. (1) U. T. System Administration incurred a year-to-date loss of $549.5 million primarily as a result of an accrual of $471.4 million for other postemployment benefits (OPEB) expense and an accrual of $166.9 million for pension expense for the entire U. T. System for the first eight months of Excluding depreciation and amortization expense, U. T. System Administration s adjusted loss was $537.2 million or % of revenues. U. T. System Administration anticipates ending the year with an $895.9 million loss, % of projected revenues, which includes $18.5 million of depreciation and amortization expense, as well as a $707.0 million accrual for OPEB and a $250.3 million accrual for pension expense. the Hazelwood and Hazelwood Legacy programs; and an increase in interest expense on capital asset financings. Excluding depreciation and amortization expense, U. T. El Paso s adjusted income was $8.0 million or 2.7% of revenues. U. T. El Paso anticipates ending the year with a $14.5 million loss, -3.4% of projected revenues, which includes $32.2 million of depreciation and amortization expense. U. T. El Paso is continuing measures to reduce spending, including a hiring freeze on positions that are not mission critical, a freeze on all non-academic travel, mandatory departmental budget cuts, restrictions on the purchase of equipment and capital assets, utility savings efforts, and other cost savings measures. (2) U. T. Arlington The $2.6 million (33.5%) increase in adjusted income over the same period last year was primarily attributable to an increase in net investment income which was understated in the prior year. Excluding depreciation and amortization expense, U. T. Arlington s adjusted income was $43.5 million or 10.2% of revenues (3) U. T. Austin The $48.8 million (30.9%) decrease in adjusted income over the same period last year was primarily attributable to an increase in salaries and wages and payroll related costs. Also contributing to the variance were the following: an increase in depreciation and amortization expense resulting from new buildings and equipment related to the Dell Medical School; an increase in other contracted services due to costs related to the hiring of a new baseball coach and the cancellation of the agreement with Aspire Marketing; and an increase in materials and supplies primarily driven by furniture purchases for the Dell Medical School and a wireless access point upgrade initiative. Excluding depreciation and amortization expense, U. T. Austin s adjusted income was $293.7 million or 14.6% of revenue. (4) U. T. Dallas The $14.2 million (618.7%) decrease in adjusted income over the same period last year was primarily attributable to the following: a decrease in nonexchange sponsored programs as a result of a reduction in the Texas Research Incentive Program funds received in 2017; an increase in depreciation and amortization expense as a result of the addition of new buildings and infrastructure; and an increase in interest expense on capital asset financings due to debt issued for the new Engineering Building. As a result of these factors, U. T. Dallas incurred a year-to-date loss of $11.9 million. Excluding depreciation and amortization expense, U. T. Dallas adjusted income was $37.0 million or 9.1% of revenues. U. T. Dallas anticipates ending the year with a $17.9 million loss, -2.9% of projected revenues, which includes $73.4 million of depreciation and amortization expense. (5) U. T. El Paso incurred a year-to-date loss of $12.5 million primarily due to the following: an increase in salaries and wages and payroll related costs due to a 2% merit increase for faculty and staff implemented in 2017; an increase in tuition exemption scholarship expense, primarily related to 12 (6) U. T. Permian Basin - The $2.1 million (174.1%) increase in adjusted income over the same period last year was primarily attributable to an increase in nonexchange sponsored programs as a result of a portion of the prior year Pell Grant funding not being drawn until Although U. T. Permian Basin is currently reporting a positive margin of $0.9 million, U. T. Permian Basin anticipates ending the year with a $4.1 million loss, -4.5% of projected revenues, which includes $14.8 million of depreciation and amortization expense. The projected loss is primarily attributable to the following: an increase in salaries and wages to accommodate enrollment growth combined with a 2% salary increase; an increase in payroll related costs due to rising premium sharing costs; an increase in materials and supplies as a result of noncapital furnishings purchased for the new residence/dining hall and the Student Success Center; and an increase in other contracted services due to increased payments to Chartwells for dining services and increased support for the Wagner Noel Performing Arts Center. Excluding depreciation and amortization expense, U. T. Permian Basin s adjusted income was $10.2 million or 15.8% of revenues. (7) U. T. Rio Grande Valley The $3.0 million (34.0%) decrease in adjusted income over the same period last year was primarily attributable to an increase in salaries and wages and payroll related costs as a result of one-time merit payments in 2017 and an increase in the number of full-time equivalents. In addition, other contracted services increased primarily due to increased expenses for the new School of Medicine, the Pharr San Juan Alamo Independent School District Early Head Start Center and other sponsored programs. Materials and supplies also increased primarily as a result of increased expenses for the new School of Medicine, the Mathematics and Science Academy, Graduate College Office, Library and Learning Enrichment, vivarium activity, computing system maintenance, Biomedical Sciences, the College of Fine Arts and other sponsored programs. Excluding depreciation and amortization expense, U. T. Rio Grande Valley s adjusted income was $31.8 million or 9.9% of revenues. (8) U. T. San Antonio The $11.5 million (1,729.6%) decrease in adjusted income over the same period last year was primarily due to following: an increase in salaries and wages and payroll related costs; a decrease in net investment

13 income; a decrease in state appropriations due to an overstatement throughout the prior year; and an increase in interest expense on capital asset financings due to debt issued for athletic projects, fire and safety renovations, and network upgrades, as well as the new Science and Engineering Building. As a result of these factors, U. T. San Antonio incurred a year-to-date loss of $10.9 million. Excluding depreciation and amortization expense, U. T. San Antonio s adjusted income was $21.2 million or 6.0% of revenues. U. T. San Antonio anticipates ending the year with a $16.7 million loss, -3.2% of projected revenues, which includes $48.1 million of depreciation and amortization expense. (9) U. T. Tyler - The $4.1 million (50.9%) decrease in adjusted loss over the same period last year was primarily due to an increase in net student tuition and fees as a result of increased enrollment and designated tuition rates. Net sales and services of educational activities also increased as a result of pharmacy revenue now including the second year student cohort. Finally, state appropriations increased as a result of increased Tuition Revenue Bonds authorized by the Texas Legislature. Despite the decrease in adjusted loss, U. T. Tyler still incurred a year-to-date loss of $3.9 million primarily due to the following: an increase in salaries and wages and payroll related costs driven by merit increases and an increase in the number of full-time equivalents; an increase in interest expense on capital asset financings due to debt issued for the new STEM Business Building; and additional pharmacy start-up costs. Excluding depreciation and amortization expense, U. T. Tyler s adjusted income was $6.0 million or 6.3% of revenues. U. T. Tyler anticipates ending the year with a $7.9 million loss, -5.6% of projected revenues, which includes $14.9 million of depreciation and amortization expense. (10) U. T. Southwestern Medical Center The $42.6 million (33.9%) decrease in adjusted income over the same period last year was primarily attributable to a decrease in gift contributions for operations as a result of a number of large gifts received in 2016 with no such comparable gifts in Excluding depreciation and amortization expense, Southwestern s adjusted income was $191.8 million or 10.2% of revenues. (11) U. T. Medical Branch Galveston The $2.6 million (60.2%) increase in adjusted loss over the same period last year was primarily due to the following: an increase in salaries and wages and payroll related costs; an increase in depreciation and amortization expense mainly due to the completion of the Jennie Sealy Hospital and League City Campus Hospital, as well as software upgrades; an increase in cost of goods sold largely due to increased pharmacy costs; and an increase in interest expense on capital asset financings due to debt issued for the Jennie Sealy Hospital. Additionally, on January 4, 2017, UTMB experienced a fire in the John Sealy Hospital building which had a negative impact on net patient care revenue of approximately $9.3 million. PricewaterhouseCoopers has been engaged to assist in computing the business interruption loss. As a result of these factors, UTMB incurred a year-to-date loss of $6.9 million. Excluding depreciation and amortization expense, UTMB s adjusted income was $92.0 million or 6.7% of revenues. UTMB anticipates ending the year with a $7.2 million loss, which represents -0.3% of projected revenues and includes $163.8 million of depreciation and amortization expense. This projection does not include any potential insurance recoveries related to business interruption as a result of the fire in the John Sealy Hospital. (12) U. T. Health Science Center Houston The $40.1 million (65.1%) decrease in adjusted income as compared to the same period last year was primarily attributable to an increase in salaries and wages and payroll related costs due to the addition of numerous positions to accommodate the planned growth of the physician practice plan. Excluding depreciation and amortization expense, UTHSC-Houston s adjusted income was $62.5 million or 5.9% of revenues. (13) U. T. Health Science Center San Antonio The $8.4 million (54.3%) decrease in adjusted income over the same period last year was primarily due to an increase in salaries and wages and payroll related costs. In addition, interest expense on capital asset financings increased due to debt issued to acquire the Professional Administrative Resource Center and to construct a new ambulatory facility, as well as increased debt service for Tuition Revenue Bonds authorized by the Texas Legislature. Excluding depreciation and amortization expense, UTHSC-San Antonio s adjusted income was $41.8 million or 7.5% of revenues. (14) U. T. M. D. Anderson Cancer Center The $141.7 million (133.7%) increase in adjusted income over the same period last year was primarily attributable to the following: an increase in net sales and services of hospitals due to an increase in inpatient and outpatient activity; and an increase in net investment income. Excluding depreciation and amortization expense, M. D. Anderson s adjusted income was $496.9 million or 15.8% of revenues. (15) U. T. Health Science Center Tyler - The $4.2 million (57.6%) increase in adjusted loss over the same period last year was primarily due to an increase in salaries and wages and payroll related costs as a result of a larger employee base, accompanied by increased compensable absence expenses and premium sharing costs. Professional fees and services also increased due to higher usage levels of contracted physician services, new contractual expenses related to the Northeast Texas Consortium (NETnet) community college subcontract and increased expenses for maintenance of NETnet operations. Depreciation and amortization expense also increased contributing to the unfavorable variance. UTHSC-Tyle recognized $4.5 million less in Delivery System Reform Incentive Payments (DSRIP) revenue as compared to the prior year. In addition, UTHSC-Tyle recorded a one-time charge of $1.3 million in February 2017 to reserve for the possibility of a Medicare recoupment from a 2011 claims outlier review. As a result of these factors, UTHSC-Tyler incurred a year-to-date loss of $11.4 million. Excluding depreciation and amortization expense, UTHSC-Tyler s adjusted loss was $3.5 million or -2.7% of revenues. UTHSC-Tyler anticipates ending the year with a $1.7 million loss as a result of ongoing expense reduction initiatives, continued growth in clinical services with a corresponding increase in net patient revenues, and additional DSRIP and sponsored programs revenue recognized once metrics and deliverables are fully achieved. The projected loss of $1.7 million represents -0.8% of projected revenues and includes $11.9 million of depreciation and amortization expense. 13

14 GLOSSARY OF TERMS OPERATING REVENUES: NET STUDENT TUITION All student tuition and fee revenues earned at the UT institution for educational purposes, net of tuition discounting. SPONSORED PROGRAMS Funding received from local, state and federal governments or private agencies, organizations or individuals, excluding Federal Pell Grant Program which is reported as nonoperating. Includes amounts received for services performed on grants, contracts, and agreements from these entities for current operations. This also includes indirect cost recoveries and pass-through federal and state grants. NET SALES AND SERVICES OF EDUCATIONAL ACTIVITIES Revenues that are related to the conduct of instruction, research, and public service and revenues from activities that exist to provide an instructional and laboratory experience for students that create goods and services that may be sold. NET SALES AND SERVICES OF HOSPITALS Revenues (net of discounts, allowances, and bad debt expense) generated from UT health institution s daily patient care, special or other services, as well as revenues from health clinics that are part of a hospital. NET PROFESSIONAL FEES Revenues (net of discounts, allowances, and bad debt expense) derived from the fees charged by the professional staffs at UT health institutions as part of the Medical Practice Plans. These revenues are also identified as Practice Plan income. Examples of such fees include doctor s fees for clinic visits, medical and dental procedures, professional opinions, and anatomical procedures, such as analysis of specimens after a surgical procedure, etc. NET AUXILIARY ENTERPRISES Revenues derived from a service to students, faculty, or staff in which a fee is charged that is directly related to, although not necessarily equal to the cost of the service (e.g., bookstores, dormitories, dining halls, snack bars, inter-collegiate athletic programs, etc.). OTHER OPERATING REVENUES Other revenues generated from sales or services provided to meet current fiscal year operating expenses, which are not included in the preceding categories (e.g., certified nonprofit healthcare company revenues, donated drugs, interest on student loans, etc.) Other receipts for settlements, judgments and lawsuits are considered nonoperating revenues. OPERATING EXPENSES: SALARIES AND WAGES Expenses for all salaries and wages of individuals employed by the institution including full-time, parttime, longevity, hourly, seasonal, etc. Includes salary augmentation and incentive compensation. PAYROLL RELATED COSTS Expenses for all employee benefits paid by the institution or paid by the state on behalf of the institution. Includes supplemental retirement annuities. MEMBERSHIP DUES - Payments for professional memberships and community organization memberships for employees. REGISTRATION FEES/MEETINGS/CONFERENCES Payments made for employees to attend professional conferences and meetings. COST OF GOODS SOLD Purchases of goods for resale and raw materials purchased for use in the manufacture of products intended for sale to others. PROFESSIONAL FEES AND SERVICES Payments for services rendered on a fee, contract, or other basis by a person, firm, corporation, or company recognized as possessing a high degree of learning and responsibility. Includes such items as services of a consultant, legal counsel, financial or audit fees, medical contracted services, guest lecturers (not employees) and expert witnesses. OTHER CONTRACTED SERVICES Payments for services rendered on a contractual basis by a person, firm, corporation or company that possess a lesser degree of learning and responsibility than that required for Professional Fees and Services. Includes such items as temporary employment expenses, janitorial services, dry cleaning services, etc. FEES AND OTHER CHARGES Payments for various fees such as estate settlements, court costs, document filing fees, etc. TRAVEL Payments for travel costs incurred by employees and board members for meetings and training. MATERIALS AND SUPPLIES Payments for consumable items. Includes, but is not limited to: computer consumables, office supplies, paper products, soap, lights, plants, fuels and lubricants, chemicals and gasses, medical supplies and copier supplies. Also includes postal services, and subscriptions and other publications not for permanent retention. UTILITIES Payments for the purchase of electricity, natural gas, water, and thermal energy. COMMUNICATIONS - Electronically transmitted communications services (telephone, internet, computation center services, etc.). REPAIRS AND MAINTENANCE Payments for the maintenance and repair of equipment, furnishings, motor vehicles, buildings and other plant facilities, and waste disposal. Includes, but is not limited to repair and maintenance to copy machines, furnishings, equipment including medical and laboratory equipment, office equipment and aircraft. RENTALS AND LEASES Payments for rentals or leases of furnishings and equipment, vehicles, land and office buildings (all rental of space). PRINTING AND REPRODUCTION Printing and reproduction costs associated with the printing/copying of the institution s documents and publications. ROYALTY PAYMENTS Payments incurred for copyright and patent royalties. BAD DEBT EXPENSE Expenses incurred by the university related to nonrevenue receivables such as non-payment of student loans. 14

15 INSURANCE COSTS/PREMIUMS Insurance premiums and fees associated with the various self-insurance programs, including professional medical liability. CLAIMS AND LOSSES Payments for claims from self-insurance programs. Other claims for settlements, judgments and lawsuits are considered nonoperating expenses. INCREASE IN NET OPEB OBLIGATION The change in the actuarially estimated liability of the cost of providing healthcare benefits to UT System s employees after they separate from employment (retire). PENSION EXPENSE An estimate of year-end expense which will be allocated from the Texas Comptroller s Office based upon prior year amounts. SCHOLARSHIPS AND FELLOWSHIPS Payments made for scholarship grants to students authorized by law, net of tuition discounting. DEPRECIATION AND AMORTIZATION Depreciation on capital assets and amortization expense on intangible assets. FEDERAL SPONSORED PROGRAM PASS-THROUGHS TO OTHER STATE AGENCIES Pass-throughs to other Texas state agencies, including other universities, of federal grants and contracts. STATE SPONSORED PROGRAM PASS-THROUGHS TO OTHER STATE AGENCIES Pass-throughs to other Texas state agencies, including Texas universities. OTHER OPERATING EXPENSES Other operating expenses not identified in other line items above (e.g., certified non-profit healthcare company expenses, property taxes, credit card fees, hazardous waste disposal expenses, etc.). Other claims for settlements, judgments and lawsuits are considered nonoperating expenses. OPERATING LOSS Total operating revenues less total operating expenses before other nonoperating adjustments like state appropriations. OTHER NONOPERATING ADJUSTMENTS: STATE APPROPRIATIONS Appropriations from the State General Revenue fund, which supplement the UT institutional revenue in meeting operating expenses, such as faculty salaries, utilities, and institutional support. NONEXCHANGE SPONSORED PROGRAMS Funding received for the Federal Pell Grant Program, the portion of state appropriations funded by the American Recovery and Reinvestment Act, Texas Research Incentive Program (TRIP) and Enrollment Growth funding. GIFT CONTRIBUTIONS FOR OPERATIONS Consist of gifts from donors received for use in current operations, excluding gifts for capital acquisition and endowment gifts. Gifts for capital acquisition which can only be used to build or buy capital assets are excluded because they cannot be used to support current operations. Endowment gifts must be held in perpetuity and cannot be spent. The distributed income from endowment gifts must be spent according to the donor s stipulations. NET INVESTMENT INCOME (on institutions sheets) Interest and dividend income on treasury balances, bank accounts, Short Term Fund, Intermediate Term Fund and Long Term Fund. It also includes distributed earnings from the Permanent Health Fund and patent and royalty income. NET INVESTMENT INCOME (on the consolidated sheet) Interest and dividend earnings of the Permanent University Fund, Short Term Fund, Intermediate Term Fund, Long Term Fund and Permanent Health Fund. This line item also includes the Available University Fund surface income, oil and gas royalties, and mineral lease bonus sales. INTEREST EXPENSE ON CAPITAL ASSET FINANCINGS Interest expenses associated with bond and note borrowings utilized to finance capital improvement projects by an institution. This consists of the interest portion of mandatory debt service transfers under the Revenue Financing System, Tuition Revenue bond and Permanent University Fund (PUF) bond programs. PUF interest expense is reported on System Administration as the debt legally belongs to the Board of Regents. ADJUSTED INCOME (LOSS) including Depreciation and Amortization Total operating revenues less total operating expenses including depreciation and amortization expense plus net other nonoperating adjustments. ADJUSTED MARGIN % including Depreciation and Amortization of Adjusted Income (Loss) including depreciation and amortization expense divided by Total plus Net Nonoperating Adjustments less Interest Expense on Capital Asset Financings. AVAILABLE UNIVERSITY FUND TRANSFER Includes Available University Fund (AUF) transfer to System Administration for Educational and General operations and to UT Austin for Excellence Funding. These transfers are funded by investment earnings from the Permanent University Fund (PUF), which are required by law to be reported in the PUF at System Administration. On the MFR, investment income for System Administration has been reduced for the amount of the System Administration transfer so as not to overstate investment income for System Administration. The AUF transfers are eliminated at the consolidated level to avoid overstating System-wide revenues, as the amounts will be reflected as transfers at year-end. INVESTMENT GAINS (LOSSES) Realized and unrealized gains and losses on investments. ADJUSTED INCOME (LOSS) excluding Depreciation and Amortization Total operating revenues less total operating expenses excluding depreciation and amortization expense plus net other nonoperating adjustments. ADJUSTED MARGIN % excluding Depreciation and Amortization of Adjusted Income (Loss) excluding depreciation and amortization expense divided by Total plus Net Nonoperating Adjustments less Interest Expense on Capital Asset Financings. 15

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17 The University of Texas System Administration For the Period Ending 30, 2017 Sponsored Programs 10,800, ,194, (1,393,574.41) -11.4% Net Sales and Services of Educational Activities 22,257, ,755, (2,497,994.36) -10.1% Other 60,369, ,512, ,857, % Total 93,428, ,462, ,965, % Salaries and Wages 53,108, ,393, ,714, % Payroll Related Costs 12,023, ,899, ,124, % Membership Dues 455, , % Registration Fees/Meetings/Conferences 334, , % Professional Fees and Services 9,267, ,792, (525,670.12) -5.4% Other Contracted Services 27,651, ,079, ,571, % Fees and Other Charges 60, , % Travel 1,188, ,036, , % Materials and Supplies 15,290, ,984, ,305, % Utilities 344, , , % Communications 6,156, ,272, (115,445.33) -1.8% Repairs and Maintenance 10,002, ,903, (5,900,772.89) -37.1% Rentals and Leases 4,973, ,985, , % Printing and Reproduction 252, ,089, (837,465.91) -76.9% Impairment of Capital Assets 11,797, ,797, % Insurance Costs/Premiums 20,963, ,963, % Claims and Losses 11,465, ,504, (6,038,875.99) -34.5% Increase in Net OPEB Obligation 471,353, ,561, ,791, % Pension Expense 166,884, ,929, ,954, % Scholarships and Fellowships 513, , , % Depreciation and Amortization 12,308, ,916, , % State Sponsored Program Pass-Through to Other State Agencies 1,909, ,598, , % Other 2,810, ,985, (26,174,477.83) -90.3% Total 841,117, ,581, ,536, % Operating Loss (747,689,558.39) (716,118,778.13) (31,570,780.26) -4.4% State Appropriations 1,681, ,863, (181,283.42) -9.7% Nonexchange Sponsored Programs 13,631, ,712, (80,990.93) -0.6% Gift Contributions for Operations 876, ,032, (156,731.55) -15.2% Net Investment Income 166,655, ,820, ,834, % Interest Expense on Capital Asset Financings (58,964,607.47) (43,874,527.15) (15,090,080.32) -34.4% Net 123,879, ,554, ,325, % Adjusted Income (Loss) including Depreciation & Amortization (623,809,605.12) (652,564,110.94) 28,754, % Adjusted Margin % including Depreciation & Amortization % % Available University Fund Transfer 74,264, ,767, ,497, % Adjusted Income (Loss) with AUF Transfer (549,544,631.12) (583,796,673.70) 34,252, % Adjusted Margin % with AUF Transfer % % Investment Gain (Losses) 1,721,049, (169,232,738.61) 1,890,282, ,117.0% Adj. Inc. (Loss) with AUF Transfer & Invest. Gains (Losses) $1,171,505, (753,029,412.31) $1,924,534, % Adj. Margin % with AUF Transfer & Invest. Gains (Losses) 56.6% -1,267.2% Adjusted Income (Loss) with AUF Transfer excluding Depreciation & Amortization (537,235,847.45) (571,880,108.25) 34,644, % Adjusted Margin % with AUF Transfer excluding Depreciation & Amortization % % 17

18 The University of Texas at Arlington For the Period Ending 30, 2017 Net Student Tuition and Fees 187,120, ,456, ,664, % Sponsored Programs 46,819, ,551, ,268, % Net Sales and Services of Educational Activities 12,229, ,647, (417,193.14) -3.3% Net Auxiliary Enterprises 27,831, ,327, , % Other 8,257, ,804, ,453, % Total 282,259, ,786, ,472, % Salaries and Wages 186,875, ,498, ,376, % Payroll Related Costs 49,414, ,315, ,099, % Membership Dues 817, , % Registration Fees/Meetings/Conferences 993, , % Cost of Goods Sold 4, , (636.59) -12.2% Professional Fees and Services 8,559, ,453, ,106, % Other Contracted Services 47,240, ,274, ,965, % Fees and Other Charges 642, , % Travel 5,184, ,037, , % Materials and Supplies 15,766, ,014, (247,452.17) -1.5% Utilities 6,676, ,817, (141,011.99) -2.1% Communications 4,563, ,245, (682,184.84) -13.0% Repairs and Maintenance 7,245, ,058, ,186, % Rentals and Leases 2,114, ,497, (383,077.87) -15.3% Printing and Reproduction 1,982, ,810, , % Royalty Payments 98, , % Bad Debt Expense 133, , (42,723.77) -24.3% Insurance Costs/Premiums 529, , % Scholarships and Fellowships 23,750, ,862, ,887, % Depreciation and Amortization 33,023, ,542, ,480, % Federal Sponsored Program Pass-Through to Other State Agencies 3,986, ,510, , % State Sponsored Program Pass-Through to Other State Agencies 107, , (3,474.98) -3.1% Other 7,257, ,817, (1,559,883.92) -17.7% Total 406,967, ,050, ,917, % Operating Loss (124,708,072.21) (119,263,693.02) (5,444,379.19) -4.6% State Appropriations 92,499, ,655, ,844, % Nonexchange Sponsored Programs 36,692, ,806, (2,114,364.89) -5.4% Gift Contributions for Operations 3,380, ,080, , % Net Investment Income 10,799, ,455, ,344, % Interest Expense on Capital Asset Financings (8,215,063.92) (7,904,839.27) (310,224.65) -3.9% Net 135,157, ,092, ,064, % Adjusted Income (Loss) including Depreciation & Amortization 10,449, ,828, ,620, % Adjusted Margin % including Depreciation & Amortization 2.5% 2.0% Investment Gain (Losses) 5,772, (12,168,626.42) 17,941, % Adj. Inc. (Loss) with Investment Gains (Losses) 16,222, (4,340,016.46) 20,562, % Adj. Margin % with Investment Gains (Losses) 3.8% -1.2% Adjusted Income (Loss) excluding Depreciation & Amortization 43,472, ,371, ,100, % Adjusted Margin % excluding Depreciation & Amortization 10.2% 9.9% 18

19 The University of Texas at Austin For the Period Ending 30, 2017 Net Student Tuition and Fees 326,666, ,333, ,333, % Sponsored Programs 371,067, ,325, ,742, % Net Sales and Services of Educational Activities 288,698, ,744, ,954, % Net Auxiliary Enterprises 260,716, ,310, ,405, % Other 7,895, ,420, ,475, % Total 1,255,044, ,206,133, ,911, % Salaries and Wages 835,658, ,624, ,033, % Payroll Related Costs 243,073, ,361, ,711, % Membership Dues 2,192, ,192, % Registration Fees/Meetings/Conferences 19,848, ,848, % Cost of Goods Sold 16,974, ,766, (792,439.42) -4.5% Professional Fees and Services 22,266, ,177, ,089, % Other Contracted Services 116,858, ,000, ,858, % Fees and Other Charges 8,464, ,464, % Travel 30,058, ,571, ,486, % Materials and Supplies 94,437, ,910, ,527, % Utilities 60,363, ,875, ,487, % Communications 23,185, ,483, (2,298,043.01) -9.0% Repairs and Maintenance 44,426, ,663, (2,237,217.50) -4.8% Rentals and Leases 14,930, ,633, , % Printing and Reproduction 5,685, ,579, , % Royalty Payments 3,597, ,597, % Bad Debt Expense 316, , , % Insurance Costs/Premiums 939, , % Scholarships and Fellowships 93,333, ,000, ,333, % Depreciation and Amortization 184,666, ,000, ,666, % Federal Sponsored Program Pass-Through to Other State Agencies 2,019, ,330, (311,558.78) -13.4% State Sponsored Program Pass-Through to Other State Agencies 146, ,395, (9,249,269.49) -98.4% Other 40,625, ,958, (35,332,968.61) -46.5% Total 1,864,070, ,753,608, ,461, % Operating Loss (609,026,057.22) (547,475,766.94) (61,550,290.28) -11.2% State Appropriations 233,554, ,270, (11,716,185.97) -4.8% Nonexchange Sponsored Programs 28,668, ,333, (664,422.56) -2.3% Gift Contributions for Operations 109,185, ,323, ,862, % Net Investment Income 151,965, ,705, ,259, % Interest Expense on Capital Asset Financings (35,162,977.12) (30,584,008.96) (4,578,968.16) -15.0% Net 488,211, ,048, (13,837,444.91) -2.8% Adjusted Income (Loss) including Depreciation & Amortization (120,814,974.81) (45,427,239.62) (75,387,735.19) % Adjusted Margin % including Depreciation & Amortization -6.8% -2.6% Available University Fund Transfer 229,833, ,271, ,561, % Adjusted Income (Loss) with AUF Transfer 109,018, ,844, (48,826,243.59) -30.9% Adjusted Margin % with AUF Transfer 5.4% 8.1% Investment Gain (Losses) 134,781, (139,164,648.07) 273,945, % Adj. Inc. (Loss) with AUF Transfer & Invest. Gains (Losses) $243,799, $18,679, $225,119, ,205.2% Adj. Margin % with AUF Transfer & Invest. Gains (Losses) 11.4% 1.0% Adjusted Income (Loss) with AUF Transfer excluding Depreciation & Amortization 293,684, ,844, (29,159,576.92) -9.0% Adjusted Margin % with AUF Transfer excluding Depreciation & Amortization 14.6% 16.6% 19

20 The University of Texas at Dallas For the Period Ending 30, 2017 Net Student Tuition and Fees 203,844, ,724, ,119, % Sponsored Programs 40,850, ,710, ,139, % Net Sales and Services of Educational Activities 13,365, ,464, , % Net Auxiliary Enterprises 22,254, ,931, ,322, % Other 3,324, ,062, , % Total 283,639, ,893, ,745, % Salaries and Wages 199,623, ,861, ,761, % Payroll Related Costs 47,705, ,272, ,433, % Membership Dues 683, , % Registration Fees/Meetings/Conferences 1,964, ,964, % Professional Fees and Services 5,986, ,825, (838,271.50) -12.3% Other Contracted Services 11,287, ,448, , % Fees and Other Charges 759, , % Travel 5,177, ,493, , % Materials and Supplies 21,129, ,065, (935,469.01) -4.2% Utilities 7,051, ,419, (367,576.84) -5.0% Communications 1,185, , , % Repairs and Maintenance 5,608, ,912, ,695, % Rentals and Leases 4,913, ,716, , % Printing and Reproduction 1,300, ,403, (102,967.46) -7.3% Royalty Payments 776, , % Bad Debt Expense 42, , % Insurance Costs/Premiums 7,432, ,432, % Scholarships and Fellowships 28,503, ,038, ,465, % Depreciation and Amortization 48,959, ,388, ,571, % Federal Sponsored Program Pass-Through to Other State Agencies 67, , , % State Sponsored Program Pass-Through to Other State Agencies 84, , (181,200.34) -68.1% Other 4,111, ,701, (10,589,414.89) -72.0% Total 404,355, ,297, ,058, % Operating Loss (120,716,415.31) (117,403,404.49) (3,313,010.82) -2.8% State Appropriations 78,034, ,748, ,286, % Nonexchange Sponsored Programs 21,538, ,703, (14,165,438.63) -39.7% Gift Contributions for Operations 8,292, ,666, (374,014.88) -4.3% Net Investment Income 17,654, ,618, ,036, % Interest Expense on Capital Asset Financings (16,733,750.67) (14,034,044.54) (2,699,706.13) -19.2% Net 108,786, ,703, (10,916,813.95) -9.1% Adjusted Income (Loss) including Depreciation & Amortization (11,929,839.15) 2,299, (14,229,824.77) % Adjusted Margin % including Depreciation & Amortization -2.9% 0.6% Investment Gain (Losses) 10,392, (10,704,558.33) 21,096, % Adj. Inc. (Loss) with Investment Gains (Losses) (1,537,782.71) (8,404,572.71) 6,866, % Adj. Margin % with Investment Gains (Losses) -0.4% -2.2% Adjusted Income (Loss) excluding Depreciation & Amortization 37,029, ,687, (7,658,639.42) -17.1% Adjusted Margin % excluding Depreciation & Amortization 9.1% 11.3% 20

21 The University of Texas at El Paso For the Period Ending 30, 2017 Net Student Tuition and Fees 82,282, ,805, ,476, % Sponsored Programs 61,776, ,252, ,523, % Net Sales and Services of Educational Activities 3,880, ,353, (1,472,994.48) -27.5% Net Auxiliary Enterprises 23,035, ,145, ,889, % Other 96, (3,523.52) 100, ,849.8% Total 171,073, ,555, ,517, % Salaries and Wages 133,944, ,608, ,336, % Payroll Related Costs 35,733, ,658, ,074, % Membership Dues 611, , % Registration Fees/Meetings/Conferences 518, , % Professional Fees and Services 9,215, ,481, ,734, % Other Contracted Services 9,136, ,999, ,137, % Fees and Other Charges 2,504, ,504, % Travel 5,878, ,353, , % Materials and Supplies 12,742, ,864, (122,503.38) -1.0% Utilities 5,674, ,633, , % Communications 1,125, , , % Repairs and Maintenance 5,344, ,368, , % Rentals and Leases 1,687, ,102, (415,294.26) -19.8% Printing and Reproduction 877, , , % Insurance Costs/Premiums 687, , % Scholarships and Fellowships 42,575, ,076, (1,500,879.21) -3.4% Depreciation and Amortization 20,512, ,856, (343,778.19) -1.6% Federal Sponsored Program Pass-Through to Other State Agencies 615, ,490, (2,874,880.02) -82.4% Other 5,766, ,098, (2,332,476.17) -28.8% Total 295,151, ,980, ,171, % Operating Loss (124,078,805.27) (120,424,972.55) (3,653,832.72) -3.0% State Appropriations 77,998, ,551, ,447, % Nonexchange Sponsored Programs 27,204, ,638, , % Gift Contributions for Operations 5,274, ,956, ,317, % Net Investment Income 9,133, ,361, , % Interest Expense on Capital Asset Financings (8,069,791.36) (4,787,590.80) (3,282,200.56) -68.6% Net 111,541, ,720, ,821, % Adjusted Income (Loss) including Depreciation & Amortization (12,537,057.98) (11,704,521.05) (832,536.93) -7.1% Adjusted Margin % including Depreciation & Amortization -4.3% -4.2% Investment Gain (Losses) 9,231, (9,383,644.34) 18,615, % Adj. Inc. (Loss) with Investment Gains (Losses) (3,305,110.33) (21,088,165.39) 17,783, % Adj. Margin % with Investment Gains (Losses) -1.1% -7.9% Adjusted Income (Loss) excluding Depreciation & Amortization 7,975, ,151, (1,176,315.12) -12.9% Adjusted Margin % excluding Depreciation & Amortization 2.7% 3.3% 21

22 The University of Texas of the Permian Basin For the Period Ending 30, 2017 Net Student Tuition and Fees 11,042, ,312, (270,344.53) -2.4% Sponsored Programs 7,746, ,943, ,802, % Net Sales and Services of Educational Activities 1,089, ,399, (309,852.31) -22.1% Net Auxiliary Enterprises 6,788, ,222, ,565, % Other 346, , , % Total 27,012, ,113, ,898, % Salaries and Wages 24,077, ,527, ,549, % Payroll Related Costs 6,473, ,393, ,080, % Membership Dues 137, , % Registration Fees/Meetings/Conferences 106, , % Cost of Goods Sold - 6, (6,576.34) % Professional Fees and Services 2,398, ,976, , % Other Contracted Services 3,627, ,263, ,363, % Fees and Other Charges 15, , % Travel 1,340, , , % Materials and Supplies 3,689, ,404, , % Utilities 1,762, ,488, , % Communications 263, , (203,764.70) -43.6% Repairs and Maintenance 672, (87,426.83) 760, % Rentals and Leases 572, , , % Printing and Reproduction 74, , (55,648.03) -42.9% Royalty Payments % Bad Debt Expense 1, , % Insurance Costs/Premiums 164, , % Scholarships and Fellowships 3,237, ,522, (1,284,185.73) -28.4% Depreciation and Amortization 9,313, ,310, , Federal Sponsored Program Pass-Through to Other State Agencies (45,152.53) (44,024.12) (1,128.41) -2.6% Other 288, , (626,694.70) -68.5% Total 58,172, ,675, ,497, % Operating Loss (31,160,515.08) (30,561,700.91) (598,814.17) -2.0% State Appropriations 28,009, ,615, ,394, % Nonexchange Sponsored Programs 6,498, ,898, ,599, % Gift Contributions for Operations 1,654, ,743, (88,627.72) -5.1% Net Investment Income 1,287, , , % Interest Expense on Capital Asset Financings (5,397,598.80) (3,598,363.28) (1,799,235.52) -50.0% Net 32,052, ,357, ,695, % Adjusted Income (Loss) including Depreciation & Amortization 892, (1,204,507.35) 2,096, % Adjusted Margin % including Depreciation & Amortization 1.4% -2.1% Investment Gain (Losses) 1,506, (1,802,645.66) 3,309, % Adj. Inc. (Loss) with Investment Gains (Losses) 2,398, (3,007,153.01) 5,405, % Adj. Margin % with Investment Gains (Losses) 3.6% -5.5% Adjusted Income (Loss) excluding Depreciation & Amortization 10,205, ,105, ,100, % Adjusted Margin % excluding Depreciation & Amortization 15.8% 14.5% 22