OVERVIEW OF FINANCIAL ACTIVITIES UNIVERSITY AT BUFFALO THE STATE UNIVERSITY OF NEW YORK Financial Overview 0

Transcription

1 OVERVIEW OF FINANCIAL ACTIVITIES UNIVERSITY AT BUFFALO THE STATE UNIVERSITY OF NEW YORK 2013 Financial Overview 0

2 Introduction... 2 Overview... 3 Core Operating Activities Financial Highlights... 3 State Appropriation... 9 University-wide Programs Appropriations Tuition Revenue Comprehensive Fee Residence Halls and Apartments Revenue Activity Revenues Facility and Administrative (F&A) Cost Recovery Statement of Revenues and Expenses for Core Operating Activities Other Financial Highlights Endowment and Similar Investments Long-term Debt General University Service Fee Sponsored Research Expenditure Activity Economic Impact...25 Components of Report Defined University at Buffalo Annual Financial Statements Fiscal Years Ended June 30, 2013 and Appendix 2013 Financial Overview 1

3 The objective of the annual Overview of Financial Activities of the State University of New York at Buffalo (UB) is to provide UB s leadership with a comprehensive summary of financial information for the campus to assist them with their financial decisions related to UB s core operations. The operating statements and financial information in this report, for the year ended June 30, 2013, are prepared on a cash basis for core operations that includes funding from: State tax support, tuition, fees, and service revenue Residence halls and apartments operations Agency, endowment income, and unrestricted gifts administered in the University at Buffalo Foundation Facility and administrative cost recovery and other income administered in the Research Foundation for SUNY Agency revenue administered in Campus Dining & Shops A detailed description of the funding sources can be found on page 26 of the report. In addition to the core operating activities, the Appendix of this report presents UB s Annual Financial Statements for the fiscal years ended June 30, 2013 and 2012, which were prepared on an accrual basis. The financial statements include restricted revenues that cannot be used for day-to-day operating activities, as well as the financial activity of closely affiliated entities, both of which are not included in the Overview of Financial Activities. These entities or activities include sponsored research activity in the Research Foundation for SUNY and the University at Buffalo Foundation Services, Inc., the SUNY Construction Fund, and Campus Dining & Shops corporate activities Financial Overview 2

4 Overview The Overview of Financial Activities examines in-depth the University at Buffalo s (UB) core financial operating condition and activities for the fiscal year ended June 30, 2013 and prior years. The report is focused on the core operations of UB that includes sources from: State operating tax support Tuition and fees Service revenue Residence halls and apartments operations Agency, endowment income, and unrestricted gifts administered in the University at Buffalo Foundation (UBF) Research Foundation (RF) facility and administrative cost recovery and other revenue Campus Dining & Shops (CDS) agency revenue Amounts reported in the accompanying cash basis report are different from amounts reported in UB s financial statements, which were prepared on an accrual basis and include activities from closely affiliated entities that UB s management does not directly control. Other financial highlights outside of UB s core operating activities are presented beginning on page 20 and include analysis of UB s endowment fund investments, long-term debt, general university service fee, sponsored research activity, and UB s economic impact on the Buffalo-Niagara region. Core Operating Activities Financial Highlights Operating Revenues Operating revenues received in totaled $680 million as reported in Chart 1. Tuition revenue (net of $10 million of State supported scholarship allowances) of $219 million was the largest source of revenue at 32% of the total. It was $59 million higher than State support of $160 million. State support shrank to 23% of total revenues. Other $133 20% Chart 1: Operating Revenues ($ in millions) Investment income $21 3% Auxiliary enterprises $52 8% F&A cost recovery $35 5% State support $160 23% Revenue from student fees of $60 million moved higher capturing 9% of total revenues. Other revenue accounted for $133 million or 20% of the total and was comprised of revenue from sales and services, salary recovery from grants, and other miscellaneous revenues. Student fees $60 9% Total Revenues $680 million Tuition $219 32% 2013 Financial Overview 3

5 Chart 2 displays the operating revenues by source for fiscal years through Revenues for of $680 million were $50 million or 8% greater than $630 million for The significant changes were: State support of $160 million fell $23 million or 13% from $183 million in as the State continued to reduce tax dollar support to UB. Tuition revenue of $219 million rose $35 million or 19% from $184 million in mostly due to tuition rate increases by the SUNY Board of Trustees to offset shrinking State support. Student Fees of $60 million increased $9 million or 18% from $51 million in mainly as a result of the Academic Excellence and Success Fee introduced in spring Chart 2: through Operating Revenues by Source ($ in millions) State support Tuition Auxiliary enterprises Student fees F&A cost recovery Investment income Other $0 $50 $100 $150 $200 $ Other revenue of $133 million grew $32 million or 32% from $101 million in due to increases in transfers from affiliated entities, hospital and clinical and continuing education revenues. Operating Expenses by Function Operating expenses of $632 million for are displayed according to functional classification in Charts 3 and 4. Combined expenses for instruction, departmental research and academic support of $364 million represented 58% of total expenses. Operation and maintenance of plant $57 9% Chart 3: Operating Expenses by Functional Classification ($ in millions) Scholarships and fellowships $22 3% Other $74 12% Instruction $289 46% Institutional support of $81 million includes activities that are of a general character and for the general executive and administrative offices serving UB as a whole. (Includes Office of the Chief Information Officer, University Business Services and Student Advisement, Resources & Financial Services). Other expenses totaled $74 million and consisted of expenses for public service, hospitals and clinics, residence halls, intercollegiate athletics, and other operating expenses. Institutional support $81 13% Student services $34 5% Academic support $29 5% Departmental research $46 7% Total Expenses $632 million 2013 Financial Overview 4

6 Chart 4: through Operating Expenses by Functional Classification ($ in millions) Instruction Institutional support Operation and maintenance of plant Student services Departmental research Academic support Scholarships and fellowships Other $0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250 $275 $300 $ Total operating expenses of $632 million in was equivalent to the level spent in of $631 million. Major spending changes between functions are explained as follows: Instruction increased $20 million to $289 million largely due to higher expenditures in the School of Medicine and Biomedical Sciences, School of Dental Medicine, and School of Engineering and Applied Sciences of $7, $3 and $2 million, respectively. Institutional support declined $25 million to $81 million primarily as a result of reduced expenditures related to the closure of the UB Micro store in June 2012 of nearly $8 million and designation of UB Foundation funds for future use that totaled almost $13 million. Scholarships and fellowships rose $3 million or 16% with support from Income Fund Reimbursable resources to assist students with higher tuition. Operating Expenses by Type Charts 5 and 6 present UB s operating expenses by type of expenditure. Employee salaries totaling $419 million was the largest expense at 66% of total expenses. The salary expense breakdown by funding source, which includes the Dormitory Income Fund Reimbursable (DIFR), Income Fund Reimbursable (IFR) and State University Tuition Reimbursable Account (SUTRA) funds, was: State Operating $337 million 80% DIFR, IFR & SUTRA $36 million 9% UB Foundation $33 million 8% Research Foundation $13 million 3% Employee fringe benefits expense of $26 million excludes fringe benefits for salaries supported by State operating funds as those costs are paid directly by the State. Employee fringe benefits paid directly by the State amounted to $172 million in Financial Overview 5

7 Travel $14 2% Chart 5: Operating Expenses by Type ($ in millions) Contractual services $108 17% Equipment and maintenance $33 5% Salaries $419 67% Salaries combined with fringe benefits expense totaled $445 million, which was $8 million or 2% higher than $437 million in Although the number of employees grew by nearly 600 or 5%, growth in payroll expense was negligible. Negotiated salary increases for State employees were eliminated in and Also, the deficit reduction leave program implemented in , negotiated by the State for certain bargaining units, reduced costs. Supplies $32 5% Employee fringe benefits $26 4% Total Expenses $632 million Expenses for items other than salaries and fringe benefits totaled $187 million or 30% of total expenses in These expenses declined $7 million or 4% from $194 million in $3 million of utility expense savings combined with an $8 million utility debt payoff in contributed to a $16 million or 13% drop in contractual services offset by a rise in equipment and maintenance of $8 million. Chart 6: through Operating Expenses by Type ($ in millions) Salaries Contractual services Supplies Equipment and maintenance Employee fringe benefits Travel $0 $50 $100 $150 $200 $250 $300 $350 $400 $ Net Results from Core Operating Activities The net results from core operating activities significantly recovered in after years of declines since , as displayed in Chart resulted in a net operating increase of $48 million compared to a net increase of $22 million in Financial Overview 6

8 Revenues and expenses Net results Although State tax dollar support sharply declined since , revenues in jumped by $64 million or 10% from because of strong growth in tuition, student fees, sales and services, facility and administrative cost recovery and increased transfers from affiliated entities. Expenses increased from by $38 million or 6% fueled by a combined rise in salaries and employee fringe benefits totaling $35 million. Chart 7: through Net Results from Core Operating Activities ($ in millions) $680 $670 $660 $650 $640 $630 $620 $610 $600 $590 $ $60 $50 $40 $30 $20 $10 $0 -$10 Revenues Expenses Net results Available Balances Available balances for the funding sources supporting the core operations of UB are defined as the unspent cash or budget at the end of a fiscal year. Chart 8 and Table 1 provide the available balances at the close of each fiscal year from to by funding source. $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 -$50,000 Chart 8: Available Balances ($ in thousands) F&A Cost Recovery State Operating State Reimbursables UB Foundation Other 2013 Financial Overview 7

9 The total available balances grew $54.6 million or 26.2% from $208.7 million in to $263.3 million in primarily due to: An increase of $43.2 million or 153.3% in facility and administrative (F&A) cost recovery balances produced by the consistent growth in revenue and decline in expenditures from this funding source in recent years resulting from UB s focus on utilizing State balances over other funds. A $42.9 million or 102.3% rise in State reimbursables balances created mainly by significant reductions in expenditures from IFR and DIFR funds in and a 23.7% jump in combined IFR and SUTRA revenues in SUNY s cash reserve policy, implemented June 30, 2011, for IFR and SUTRA accounts recommends cash be maintained based on a range of 10% to 25% of operating expenditures. Growth in UB Foundation balances of $32.8 million or 41.1% from a transfer of available balances for State endowment accounts in , increase in rental income from Greiner Hall that opened in August 2011 and a substantial drop of $11.1 million in expenditures in from A reduction of $63.7 million or 122.9% from $51.8 million in in State operating available balances. UB utilized these reserves as substantial State imposed budget cuts began in and continued through State operating balances were over-expended in both and IFR cash balances were utilized to support the over-expenditures. Chart 8 and Table 1 display the deficit balances before the utilization of IFR balances. Table 1: Available Balances through ($ in thousands) Funding Source F&A Cost Recovery $28,164 $37,762 $51,522 $59,192 $71,324 % Change % 36.4% 14.9% 20.5% State Operating 51,826 51,814 32,972 (4,918) (11,881) % Change - 0.0% -36.4% % % State 41,942 31,555 39,528 61,970 84,831 Reimbursables (IFR, SUTRA & DIFR) % Change % 25.3% 56.8% 36.9% UB Foundation 79,868 89,226 84,148 93, ,680 % Change % -5.7% 11.1% 20.5% Other 6,884 3,650 4,473 5,351 6,322 % Change % 22.6% 19.6% 18.2% Total $208,684 $214,007 $212,643 $215,117 $263,276 $ Change - $5,323 $(1,364) $2,474 $48,159 % Change - 2.6% -0.6% 1.2% 22.4% 2013 Financial Overview 8

10 State Appropriation UB receives State appropriation to support its core operating budget from a combination of State tax dollar support and revenues from tuition and certain other sources (revenue targets). Chart 9 presents the State appropriation supported by combined tax dollars and campus revenues from through Detailed analysis of these two components of the State appropriation is provided later in this section. The State appropriation components dramatically shifted since as a result of limited State resources and tuition revenue growth. Notable changes in were: Appropriation of $355.2 million fell $13.1 million or 3.6% from $368.3 million in Appropriation reversed the downward trend growing $11.1 million or 3.2% from Tax dollar support dropped to 42% of the total appropriation, down 15% from 57% in Campus revenues grew $49.2 million, but fell short in covering a cut in tax dollars of $62.3 million since $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Chart 9: State Appropriation ($ in thousands) 43% 49% 52% 56% 58% 57% 51% 48% 44% 42% Tax dollars Campus revenues State Appropriation Total $ $368,300 $357,683 $346,967 $344,019 $355,164 % Change % -3.0% -0.9% 3.2% State Appropriation Supported by Tax Dollars The State appropriation supported strictly by State tax dollars is reported in Chart 10 and Table 2 for the fiscal years ending June 30, 2009 through The State tax dollar support is categorized as support for the base budget, salary increases and utilities. This analysis excludes appropriation provided by the State for employee fringe benefit costs, which are funded and paid directly by the State. Tax dollar support significantly declined from by $62.3 million or 29.5% to $149.2 million in Following is the five year change in the three components from : Base budget dropped $71.3 million or 78.0%. Salary increase funding for the State s negotiated salary increases provided to employees was up $8.7 million or 9.1%. Utilities funding increased $347 thousand or 1.4% Financial Overview 9

11 $220,000 $200,000 $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Chart 10: State Appropriation Supported by Tax Dollars ($ in thousands) Base budget Utilities funding Salary increase funding Total State tax appropriation Table 2: State Appropriation Supported by Tax Dollars ($ in thousands) Support Category Base budget $91,422 $57,014 $43,096 $21,300 $20,109 % Change % -24.4% -50.6% -5.6% Salary increases 95,153 99,283 99, , ,830 % Change - 4.3% 0.0% 4.1% 0.5% Utilities 24,869 25,000 25,007 25,216 25,216 % Change - 0.5% 0.0% 0.8% 0.0% Total State tax appropriation $211,444 $181,297 $167,379 $149,846 $149,155 % Change % -7.7% -10.5% -0.5% State Appropriation Supported by Campus Revenues (Revenue Targets) Chart 11 and Table 3 display the trend in campus revenue targets that support our State appropriation from through Certain revenues collected by UB are required to be transmitted to the State in return for State appropriation. These revenues include a portion of our tuition revenue and other campus revenues. In the following analysis, revenues labeled as Other revenues target include: Interest income on State balances Financial Overview 10

12 Overhead from Dormitory Income Fund Reimbursable (DIFR) accounts. Discontinued July 1, College fee. A portion of certain other fees: graduate application, late payment, late registration, library fines, returned check, and academic transcript fees. Discontinued July 1, Research Foundation (RF) revenue tithe (effective ). Discontinued July 1, Beginning July 1, 2012, the other revenues target no longer included DIFR overhead, revenues from other fees and the RF revenue tithe in order to accommodate an increase in the tuition revenue target. Except for the RF revenue tithe, which was eliminated, the DIFR overhead and fee revenue were moved to the Income Fund Reimbursable fund. State appropriation supported by campus revenues in rose $49.2 million or 31.3% since Consistent increases in the tuition revenue target were necessary to partially offset the substantial decline in tax dollar support. $210,000 $200,000 $190,000 $180,000 $170,000 $160,000 $150,000 $140,000 Chart 11: State Appropriation Supported by Revenue Targets ($ in thousands) Tuition revenue target Other revenues target Table 3: State Appropriation Supported by Revenue Targets ($ in thousands) Support Category Tuition revenue target $152,053 $169,251 $175,244 $189,838 $205,349 % Change % 3.5% 8.3% 8.2% Other revenues target 4,803 7,135 4,344 4, % Change % -39.1% -0.2% -84.8% Total campus revenues $156,856 $176,386 $179,588 $194,173 $206,009 target % Change % 1.8% 8.1% 6.1% 2013 Financial Overview 11

13 University-wide Programs Appropriations In addition to State appropriations received to support UB s core operating budget, UB receives appropriations earmarked for specific purposes. A portion of the university-wide appropriations benefitting UB is accounted for on the financial records of SUNY rather than UB s records and are not reported in the Statement of Revenues and Expenses for Core Operating Activities on page 19. Chart 12 provides the appropriations received for programs that flowed through UB s financial records and for those programs that are reported on SUNY s financial records for a five year period. Additionally, Table 4 offers details on the various programs supported from through Funding in declined by 10.5% or $2.8 million from since the Multidisciplinary Center for Earthquake Engineering Research (MCEER) and Research Institute on Addictions were no longer designated as university-wide programs. Chart 12: University-wide Programs Appropriations ($ in thousands) $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $ UB financial records SUNY financial records Table 4: Components of University-wide Programs Appropriations ($ in thousands) University-wide Programs UB Financial Records: Earthquake Center (MCEER) $1,867 $1,748 $1,643 $648 $0 Educational Opportunity Center 5,050 4,731 4,737 4,680 4,587 Educational Opportunity Program 2,418 2,099 2,033 2,054 2,175 Empire Innovation 2,782 2,854 2,545 2,433 2,202 Research Institute on Addictions 3,179 2,977 2,798 1,806 0 Miscellaneous 1,795 1,818 1,714 1,608 1,657 Subtotal UB 17,091 16,227 15,470 13,229 10,621 SUNY Financial Records: Graduate Tuition Support 9,809 9,809 9,809 9,809 9,809 Underrepresented Graduate Fellowships 1,498 1,481 1,452 1,452 1,452 Miscellaneous 1,060 2,429 2,156 1,975 1,817 Subtotal SUNY 12,367 13,719 13,417 13,236 13,078 Total University-wide $29,458 $29,946 $28,887 $26,465 $23,699 % Change - 1.7% -3.5% -8.4% -10.5% 2013 Financial Overview 12

14 Tuition Revenue Reported in Chart 13 and Table 5 is tuition revenue for through collected from New York State resident and nonresident students. Tuition revenue includes $9.8 million of State supported scholarship allowances. Significant changes from include: Tuition revenue up $61 million or 36% Resident undergraduate annual tuition rate up $910 or 20% Nonresident undergraduate annual tuition rate up $4,450 or 38% Graduate/Professional annual tuition rates up from 27% to 59% Nonresident students up 389 or 8% Nonresident revenue up $26 million or 55% was the second year of the SUNY Board of Trustees five-year rational tuition plan. SUNY increased fall 2012 tuition rates by 6% for resident undergraduate and graduate students, 9% for resident professional programs and 10% for most nonresident programs. UB collects tuition revenues from overseas academic programs (OAP), summer session, and contract courses that are excluded from this tuition analysis. As mandated by SUNY, tuition revenues for OAP, summer session and contract courses are reported separately from regular academic-year tuition reported in Chart 13 and Table 5. In , $16.8 million of tuition revenue was collected to support instructional activities from OAP, summer session and contract courses. Additionally, student headcount for these programs is not included in the headcount provided in Chart 14. Annual tuition rates paid by resident and nonresident students are presented in Charts 15 and 16. $250,000 $200,000 $150,000 $100,000 $50,000 $0 Chart 13: Tuition Revenue ($ in thousands) Resident Nonresident Table 5: Tuition Revenue ($ in thousands) Resident $120,035 $132,221 $135,013 $140,372 $154,983 % Change % 2.1% 4.0% 10.4% Nonresident 47,948 55,674 59,037 63,161 74,214 % Change % 6.0% 7.0% 17.5% Total $167,983 $187,895 $194,050 $203,533 $229,197 % Change % 3.3% 4.9% 12.6% 2013 Financial Overview 13

15 30,000 27,000 24,000 21,000 18,000 15,000 12,000 9,000 6,000 3,000 0 Chart 14: Headcount for Tuition Billable Students Total 27,465 27,835 27,723 27,064 27,336 4,896 5,138 5,281 5,142 5,285 22,569 22,697 22,442 21,922 22, Resident Nonresident $33,000 $30,000 $27,000 $24,000 $21,000 $18,000 $15,000 $12,000 $9,000 $6,000 $3,000 $0 Chart 15: Annual Tuition Rates for Residents of New York State Chart 16: Annual Tuition Rates for Nonresidents of New York State $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $ Financial Overview 14

16 Comprehensive Fee The comprehensive fee is a consolidation of campus-required fees paid by students attending UB unless they meet waiver requirements. The components of the comprehensive fee include the following: college, transportation, technology, campus life, health service, transcript and athletics (undergraduate day students only). Table 6 provides a list of the annual rates charged to a full-time undergraduate student by component and Chart 17 illustrates the growth in comprehensive fee revenue over a 5 year period. The college fee component is excluded from Chart 17 because the revenue collected is transferred to the State University of New York and is redistributed to UB as State appropriation dollars Annual Fee Rate $2,080 UP $305 or 17.2% from $1,775 in Fee Revenue $46.2 million UP $7.3 million or 18.6% from $38.9 million in The generous rise in comprehensive fee revenue is mostly due to the increase in the rate offset by a minimal decline in students of 0.5% from as reflected in Chart 14 on page 14. Table 6: Comprehensive Fee Annual Rates Fee Component Athletics $430 $447 $474 $484 $496 Campus Life College Health Service Technology Transcript Transportation Total $1,775 $1,854 $1,976 $2,022 $2,080 % Change - 4.5% 6.6% 2.3% 2.8% Chart 17: Comprehensive Fee Revenue ($ in thousands) $50,000 $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $ Athletic Campus Life Health Service Technology Transcript Transportation 2013 Financial Overview 15

17 Residence Halls and Apartments Revenue Combined revenue from residence halls and apartments is the largest component of auxiliary enterprises operating revenue presented in Charts 1 and 2, found in the Financial Highlights section beginning on page 3, and on the Statement of Revenues and Expenses for Core Operating Activities on page 19. Other activity reported in auxiliary enterprises revenue includes sales and services for food services, campus store operations, intercollegiate athletics and transportation. Revenue from residence halls is accounted for in Dormitory Income Fund Reimbursable (DIFR) State accounts while revenue from on-campus apartment rentals is administered through the University at Buffalo Foundation Faculty-Student Housing Corporation. UB offers a wide variety of on-campus housing options at various costs that are designed around the needs of the students. Since total revenue from residence halls and apartments grew $10.9 million or 22.9% to $58.7 million in , as reflected in Chart 18. Housing rate increases in , following no increases in the previous two years, combined with the opening of Greiner Hall in accounted for the growth. Room rates for residence halls increased 5.4% from to primarily support campus initiatives and residential building maintenance. $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Chart 18: Residence Halls and Apartments Revenue ($ in thousands) 32% 38% 38% 29% 29% 71% 71% 68% 62% 62% Residence halls Apartments Residence Halls and Apartments Total revenue $47,753 $46,923 $54,174 $56,821 $58,689 % Change % 15.5% 4.9% 3.3% 2013 Financial Overview 16

18 Activity Revenues Various activities conducted at UB produce revenues that are used to enhance UB s operations. The revenues are accounted for in Income Fund Reimbursable accounts and in agency accounts in the UB Foundation (UBF), Research Foundation (RF) and Campus Dining & Shops (CDS). Those activities are grouped into 5 categories: Investment income Miscellaneous student fees Salary recovery from grants Sales and services Other miscellaneous revenues Sales and services revenue generating activities include rentals (excluding housing), computer store sales, continuing education, dental clinics, and inventions and licenses. Chart 19 displays the activity revenues received by campus units beginning in through Activity revenues totaled $114.7 million in , which was $13.5 million or 13.4% greater than $101.2 million in Principal reasons for the net increase were: Miscellaneous student fees revenue rose $7.8 million or 130.9% due to higher fee rates and the introduction of the Academic Excellence and Success Fee in spring Sales and services revenue strengthened by $6.1 million or 9.4% due to: Growth in continuing education revenue of $8.1 million or 281.4%. Higher rates charged by departments for sales and services that contributed $6.2 million. Decline in computer store sales of $8 million or 63.0% mostly from decreased demand in hardware sold at the UBMicro store that closed in June Chart 19: Activity Revenues ($ in thousands) $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $ Investment income Miscellaneous student fees Salary recovery Sales and services Other miscellaneous revenues 2013 Financial Overview 17

19 Facility and Administrative (F&A) Cost Recovery Sponsored research programs generate two types of costs: direct costs and F&A costs (indirect costs). The F&A costs incurred by UB for accepting the sponsored research cannot be assigned easily and accurately to specific programs and therefore are calculated as a fixed percentage of all or a portion of a program s direct costs. The calculated amount is recovered by UB and is used to support decanal units, several administrative units, research incentive programs, and various other financial commitments, as well as cover an annual administrative assessment by the Research Foundation (RF). Chart 20 portrays the trend in F&A cost recovery earned net and gross of the RF annual assessment. Net F&A cost recovery collected in was $31.8 million, which was $2.3 million or 7.7% higher than the amount collected in of $29.5 million. Factors contributing to the minimal increase were: $776 thousand collected in on federal research awards funded by the American Recovery and Reinvestment Act (ARRA) of Growth in direct costs, excluding funds from ARRA, of $1.6 million or 1.5% from Consistent federal F&A cost recovery rate of 58.5% for the five year period. The F&A cost recovery reported in Chart 1 on page 3 represents the amount received rather than earned as reported in the previous paragraph. In , the RF paid UB $35.2 million of the net F&A cost recovery earned that consisted of $8.4 million due from and $26.8 million from The RF will pay the balance of $5.0 million to UB in $40,000 Chart 20: Facility and Administrative Cost Recovery ($ in thousands) $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $ Gross RF assessment Net 2013 Financial Overview 18

20 University at Buffalo Statement of Revenues and Expenses for Core Operating Activities For the Years Ended June 30, 2013 and 2012 ($ in thousands) Operating revenues: Tuition $229,197 $203,533 Less: scholarship allowances (9,809) (9,809) Net tuition 219, ,724 State support 159, ,075 Student fees 59,982 52,827 Auxiliary enterprises 51,624 47,876 Investment income 21,268 38,900 Facility and administrative cost recovery 35,222 29,253 Other operating revenue: Salary recovery from sponsored programs 13,656 14,135 Sales and services 77,304 65,498 Other 42,033 21,860 Total operating revenues 680, ,148 Operating expenses by functional classification: Instruction 288, ,068 Departmental research 46,487 43,570 Public service 2,648 4,326 Academic support 28,941 30,174 Student services 34,310 30,756 Institutional support 80,591 99,894 Operation and maintenance of plant 56,750 51,335 Scholarships and fellowships 22,232 19,547 Hospitals and clinics 5,414 6,332 Auxiliary enterprises: Intercollegiate athletics 23,511 21,207 Student housing 41,580 43,016 Other 1, Total operating expenses by function 632, ,674 Net results of core operating activities $48,159 $2,474 Operating expenses by type: Salaries $418,740 $409,220 Employee fringe benefits 25,663 24,729 Supplies 32,412 28,223 Travel 13,939 12,417 Contractual services 108, ,845 Equipment, repairs and maintenance 33,114 30,240 Total operating expenses by type $632,094 $624, Financial Overview 19

21 Endowment and Similar Investments Other Financial Highlights UB Foundation s (UBF) endowment consists of approximately 1,100 individual funds established for a variety of purposes, including both donor-restricted endowment funds and funds designated by UBF s Board of Trustees to function as endowments. UBF s Trustee Investment Committee supervises the management of UB s endowment assets with the primary investment objective to maximize total investment return while preserving the inflation-adjusted purchasing power of the portfolio and providing a predictable stream of funding to programs. A professional consultant and investment managers share in the administration of the portfolio, with performance monitored by the investment committee. UBF targets a diversified asset allocation to achieve its long-term objectives within prudent risk parameters. Table 7 reports the market value and activity for UB s endowment fund from through Additions to the endowment fund are predominantly contributions from donors while the amounts in the withdrawals column primarily represent dollars made available for spending to various UB units market value of $554 million is below its highest value of $582 million in Table 7: Endowment Activity through ($ in thousands) Beginning Investment Ending Market Year Market Value Additions Return Withdrawals Value $511,020 $7,726 $59,576 $23,930 $554, $494,791 $42,507 $5,280 $31,558 $511, $428,851 $9,187 $83,533 $26,780 $494, $410,464 $3,633 $41,277 $26,523 $428, $552,663 $3,717 ($117,572) $28,344 $410,464 UB s endowment fund asset allocation from through is displayed in Chart 21 on page 21. The asset allocation targets are proposed by the consultant and approved by the UBF investment committee. Significant changes to the targets from are provided in the adjacent diagram. Up: Domestic equity 156% Hedge funds 43% Down: Cash 67% International equity 46% Chart 22 presents the annual nominal (not adjusted for inflation) returns net of fees and spending payout percentages for the endowment fund from through The spending payout is defined as funds made available from the endowment for university programs and administrative expenses, exclusive of management, brokerage, and custodial fees, as a percentage of the beginning market value. In terms of real dollars, the spending payout is relatively consistent as designed by the spending formula Financial Overview 20

22 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Chart 21: Endowment Market Value and Asset Allocation ($ in thousands) Domestic equity International equity Fixed income Cash Hedge funds Private equity Real assets Domestic International Fixed Hedge Private Real Year equity equity income Cash funds equity assets % 21.0% 14.6% 3.2% 19.9% 12.1% 3.5% % 16.9% 20.5% 2.0% 19.1% 12.5% 4.2% % 23.3% 18.3% 0.6% 19.0% 10.6% 8.8% % 22.1% 19.8% 1.7% 21.0% 9.3% 5.9% % 32.4% 18.4% 9.3% 15.6% 6.7% 4.8% Chart 22: Endowment Annual Nominal Net Returns and Spending Payout % 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% -25.0% 20.1% 4.6% 10.7% 6.0% 12.0% 5.2% 5.9% -0.7% 4.7% -22.0% Nominal return Spending payout 2013 Financial Overview 21

23 Long-term Debt UB has entered into agreements to finance various capital facilities or large equipment purchases. Table 8 lists the long-term debt outstanding at June 30, 2013 along with the current principal due in that will be paid by operating dollars. Table 8: Long-term Debt Obligations at June 30, 2013 ($ in thousands) Long-term debt Maturity Date Interest Rate June 30, 2013 Balance Principal Due in New York Power Authority Chillers Phase I ES-ESN-0249 loan payable from State funds in monthly installments of $16 including interest. June 2016 New York Power Authority Phase II ES-ESN loan payable from State funds in monthly installments of $30 including interest. January 2022 Variable rate, 0.86% in $561 $191 Variable rate, 0.86% in , Village of Kenmore Housing Authority bonds (Flickinger Project) payable from UBF funds in monthly installments of $47 including interest. January % 5, Dormitory rehabilitation projects various dormitory projects through Dormitory Authority of the State of New York (DASNY) bond or revolving loans. Payable from State Dormitory Income Fund Reimbursable funds. June 2031 Varies 49,015 4,155 Town of Amherst Development Corporation bonds (South Lake Village) payable from UBF funds in annual principal installments that escalate through maturity plus interest. October 2035 Variable rate, 0.08% to 0.23% range in , Town of Amherst Development Corporation bonds (Flint Village and Creekside Village Refunding) payable from UBF funds in monthly principal installments that escalate through maturity plus interest. August 2042 Town of Amherst Development Corporation bonds (Greiner Hall and Hadley Village) payable from UBF funds in annual principal installments that escalate through maturity plus interest. October 2045 Variable rate, 1.53% to 1.56% in , Adjusted annually ranges from 2.25% to 5.00% 79,910 1,875 Total debt obligations $193,147 $8, Financial Overview 22

24 General University Service Fee A general university service fee (GUSF) of 13% is charged on external revenues that are deposited into State Income Fund Reimbursable (IFR), University at Buffalo Foundation (UBF), Research Foundation (RF) and Campus Dining & Shops (CDS) accounts. GUSF is not applied to gifts, sponsored programs and CDS corporate activity. Chart 23 presents GUSF collections by entity from through Total GUSF collected escalated by $11.5 million or 199.0% to $17.3 million in from $5.8 million in This significant rise is explained by: Increases in the GUSF rate of 3% on July 1, 2010 and November 1, Constant growth in annual student fee revenue in the State IFR accounts. Chart 23: General University Service Fee Collections ($ in thousands) $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $ State IFR UBF RF CDS Year State IFR UBF RF CDS Total $13,192 $3,930 $177 $13 $17, $9,505 $3,437 $158 $14 $13, $8,571 $1,994 $121 $11 $10, $4,440 $1,290 $49 $6 $5, $4,059 $1,685 $43 $4 $5, Financial Overview 23

25 Sponsored Research Expenditure Activity UB is a research-intensive public university that utilizes two fiscal agents to administer its sponsored research grants and contracts as illustrated below: SUNY Research Foundation UB Foundation Services, Inc. (with the prior approval of the Provost and Dean) Public Organizations Private Organizations Although direct sponsored research activity is not included in the core operating statements, it is included in UB s financial statements. Sponsored research expenditure activity as displayed in Chart 24 and Table 9 is summarized as follows: expenditures of $150.4 million were $6.0 million or 4.2% greater than the amount in of $144.4 million. Funding from the federal government s American Recovery and Reinvestment Act (ARRA) accounted for $2.5 million of this increase, without which the increase would have been 2.5%. Expenditures in dropped $6.7 million from $157.1 million in due to ARRA funding falling $7.1 million or 74.3%. Other sponsors include foreign sponsors, non-profit organizations and those that cannot be easily categorized into the other sponsor types. Each year the National Science Foundation (NSF) conducts a survey of research and development expenditures at colleges and universities across the country. Expenditures reported in this survey include not only the externally funded research reported in Chart 24 and Table 9, but also research supported by various institutional funds and research conducted by UB faculty at affiliated institutions (CUBRC, Inc., Hauptman-Woodward Medical Research Institute, Kaleida Health, Roswell Park Cancer Institute, and the Veterans Affairs of Western New York Healthcare System from through ). The total expenditures for reported to the NSF were $385.0 million. $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 Chart 24: Sponsored Research Expenditure Activity ($ in thousands) $ Federal State and local Industry Other 2013 Financial Overview 24

26 Table 9: Sponsored Research Expenditure Activity through ($ in thousands) Sponsor Federal (without ARRA) $91,468 $88,915 $85,597 $91,744 $90,950 % Change % -3.7% 7.2% -0.9% ARRA (Federal only) - 9,617 14,064 8,159 1,813 Subtotal Federal 91,468 98,532 99,661 99,903 92,763 % Change - 7.7% 1.2% 0.2% -7.2% State and local 15,790 14,162 14,166 13,203 15,446 % Change % 0.0% -6.8% 17.0% Industry 8,603 7,202 8,301 9,462 8,348 % Change % 15.3% 14.0% -11.8% Other 28,495 29,035 29,834 34,549 33,869 % Change - 1.9% 2.8% 15.8% -2.0% Total expenditures $144,356 $148,931 $151,962 $157,117 $150,426 % Change - 3.2% 2.0% 3.4% -4.3% Economic Impact The economy of the Buffalo-Niagara region benefits in many ways from UB s educational and research activities conducted at its three campuses. The region also profits from UB s capital projects as it purchases structures, constructs new buildings and renovates existing buildings that currently number 181 across its three campuses. UB s Office of Science, Technology Transfer and Economic Outreach (STOR) promotes economic revitalization to the region by transferring technology developed at UB to the business community and has assisted in launching new companies through its incubator program. The combined expense activity from UB entities, as listed in the column labeled Economic Impact of Table 10 on page 27, was used to calculate the direct economic impact. Almost 29,000 Students $1.4 Billion Direct Economic Impact 12,230 Employees Additional Financial Stimulus from Employees, Students and Visitors 2013 Financial Overview 25

27 Components of Report Defined The Overview of Financial Activities (Overview) provides key financial information for the campus, focusing on operating activities directly controlled by campus management. This is in contrast to the financial statements of the campus, which includes entities that are closely affiliated with the campus and campus management may not have direct control over the operations. Furthermore, UB s economic impact on the Buffalo-Niagara region, discussed on page 25, includes activities from independent organizations that the University has a close association with. In Table 10, the components of the Statement of Revenues and Expenses for Core Operating Activities on page 19 of the Overview are compared to the Statement of Revenues, Expenses and Changes in Net Assets on page 3 of UB s Annual Financial Statements for fiscal years ended June 30, 2013 and 2012 (Appendix) and UB s economic impact results. A list and description of components or entities included in the Overview, UB s financial statements, and economic impact section are provided in the following paragraphs and table. New York State budget components supporting UB s core operations that are contained in the Overview include the following: State Operating Budget which is a combination of support from State tax dollars and campus revenues from tuition and certain other sources. Also, included are other earmarked State funds. Income Fund Reimbursable (IFR) and State University Tuition Reimbursable Account (SUTRA) which are self-supporting funds that provide educational and related activities to students and clients from fee, service and tuition revenue. Dormitory Income Fund Reimbursable (DIFR) which is a self-supporting fund used to administer room rental fees and charges. Other components supporting UB s core operations that are included in the Overview are: University at Buffalo Foundation (UBF) agency, endowment income, and unrestricted gifts used to support and promote the educational and public service mission of UB. Companies included in the report are UBF, Inc., UBF Activities, Inc. and UBF Faculty-Student Housing Corporation. Research Foundation (RF) dollars managed by UB generated from facility and administrative (F&A) cost recovery from sponsored programs and agency service fees. Campus Dining & Shops (CDS) agency funds expended by campus departments for operating activities. The following restricted revenue that cannot be used for day-to-day operating activities and financial activity of closely affiliated entities are not included in the balances reported in the Overview, but are included in UB s financial statements and economic impact amounts: Capital Budget activities tracked in the State University of New York (SUNY) Construction Fund system that includes construction in progress, capitalized interest and depreciation of assets. Research activities funded from external contracts and grants administered through the RF for SUNY and UBF Services, Inc. UBF restricted activities (UBF Corporation, endowment investments, and various property corporations). Dining, retail, vending, campus identification cards, and catering services provided by CDS. Operations of independent organizations that are included in the amounts reported only in the economic impact section are: Medical and dental services extended to patients by UB faculty through the Clinical Practice Plans. University Dental Resident Services PC and University Medical Resident Services PC. Student associations and clubs such as the Graduate Student Association, Medical Student Polity, and Undergraduate Student Association Financial Overview 26

28 COMPONENTS Table 10: List of Components Included in Financial Reports OPERATING ACTIVITIES FINANCIAL STATEMENTS ECONOMIC IMPACT State: Capital Budget and related debt Dormitory Income Fund Reimbursable (DIFR) Imputed fringe benefits (Note 1) Income Fund Reimbursable (IFR) State Operating Budget State University Tuition Reimbursable Account (SUTRA) University-wide (flows through UB records) University-wide (flows through SUNY records) Other State funds (Note 2) University at Buffalo Foundation (UBF): 248 North Long Street, Inc. FNUB Inc. UBF Activities, Inc. UBF Corporation UBF Faculty-Student Housing Corporation UBF, Inc. UBF Incubator, Inc. UBF Services, Inc. University Dental Resident Services PC University Medical Resident Services PC Research Foundation (RF): Direct sponsored research activity Facility and Administrative cost recovery Other (Note 3) Campus Dining & Shops (CDS): Agency funds Operating activity for dining and retail Clinical Practice Plans Student Associations and Clubs Notes: 1. Fringe benefits for State Operating employees are funded and paid directly by the State. 2. Includes workstudy accounts, undistributed payroll accounts, Dr. Nuala McGann Drescher award and United University Professions Development award. 3. Includes service and facility accounts, agency fee revenue, campus portion of royalty activity, and the general university service fee on non-sponsored income Financial Overview 27

29

30 STATE UNIVERSITY OF NEW YORK AT BUFFALO ANNUAL FINANCIAL STATEMENTS FISCAL YEARS ENDED JUNE 30, 2013 and

31 Table of Contents Financial Statements... 2 Notes to Consolidated Financial Statements... 4 Supplemental Schedules

32 STATE UNIVERSITY OF NEW YORK AT BUFFALO ASSETS, LIABILITIES AND NET ASSETS BALANCE AT JUNE 30, 2013 and 2012 Assets Current assets: Cash and cash equivalents (Note 6) $183,473,918 $158,548,980 Accounts and notes receivable, net (Note 7) 49,680,305 46,601,557 Other receivables (Note 8) 36,313,782 32,353,600 Short-term investments 380,139, ,336,321 Inventory 3,223,177 3,164,266 Prepaid expenses 2,214,511 1,274,223 Total current assets 655,045, ,278,947 Noncurrent assets: Property, plant and equipment, net (Note 11) 1,181,113,883 1,046,304,848 Long-term investments 356,752, ,989,127 Other assets (Note 12) 9,387,573 10,324,988 Total noncurrent assets 1,547,253,674 1,401,618,963 Total assets $2,202,298,993 $2,009,897,910 Liabilities and Net Assets Current liabilities: Accounts payable $13,486,348 $21,827,916 Accrued expenses 9,079,035 10,577,486 Current portion of long-term debt 10,136,605 8,869,862 Deferred revenue 830, ,932 Other current liabilities 997, ,285 Total current liabilities 34,529,095 42,549,481 Noncurrent liabilities: Long-term debt (Note 13) 219,921, ,097,580 Other long-term liabilities 516,989, ,719,933 Total noncurrent liabilities 736,910, ,817,513 Total liabilities 771,439, ,366,994 Net assets: Unrestricted (1,801,731) (293,491,261) Restricted non expendable 195,495, ,503,198 Restricted expendable 1,237,165,174 1,377,518,979 Total net assets 1,430,859,020 1,245,530,916 Total liabilities and net assets $2,202,298,993 $2,009,897,910 See accompanying notes to financial statements 2

33 STATE UNIVERSITY OF NEW YORK AT BUFFALO STATEMENT OF REVENUES, EXPENSES and CHANGES in NET ASSETS FOR THE YEARS ENDED JUNE 30, 2013 and Operating revenues: Tuition and fees $269,505,627 $242,008,067 Less: scholarship allowance (49,899,582) (48,497,227) Net tuition and fees 219,606, ,510,840 Grants and contracts 206,580, ,877,757 Private support and other 85,950,643 55,126,552 Auxiliary enterprises 105,693,121 98,394,805 Hospitals and clinical revenue 18,124,723 15,902,075 Total operating revenues * 635,955, ,812,029 Operating expenses: Instruction 416,235, ,830,133 Research 125,842, ,051,595 Public service 9,295,190 27,792,838 Academic support 75,931,044 73,979,492 Student services 35,430,332 44,643,574 Institutional support 138,146, ,102,321 Operation and maintenance of plant 72,157,441 88,251,832 Depreciation 26,034,335 26,745,872 Scholarships and fellowships 13,585,740 15,903,465 Hospitals and clinics 7,448,955 9,892,488 Auxiliary enterprises 114,323, ,339,842 Total operating expenses 1,034,430,607 1,272,533,452 Nonoperating revenues (expenses): State appropriations * 493,813, ,453,049 Endowment and investment income * 77,418,251 (2,864,409) Net realized and unrealized gains(losses) * 8,495,453 (5,431,148) Gifts and other nonoperating revenue * 39,745,204 50,340,979 Loss on disposal of plant assets (693,328) (10,653,065) Interest expense on capital related debt (34,975,294) (38,865,818) Total nonoperating revenues 583,803, ,979,588 Increase (decrease) in net assets 185,328,104 (115,741,835) Net assets at the beginning of year 1,245,530,916 1,361,272,751 Net assets at the end of year $1,430,859,020 $1,245,530,916 * Campus revenues totaled $1,255 million and $1,202 million for FY2013 and FY2012, respectively. See accompanying notes to financial statements 3

34 1. Reporting Entities STATE UNIVERSITY OF NEW YORK AT BUFFALO NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The State University of New York at Buffalo (UB) is comprised of various entities/components that are closely affiliated with UB and therefore are included within the campus financial statements. Decisions on which entities/components to include were based on one or more of the following criteria: (a) is the University financially accountable for the organization, (b) does the organization receive or hold economic resources that are significant to and for the direct benefit of the University or its constituents, (c) is the University entitled to, or can otherwise access, a majority of the economic resources received or held by the organization, (d) is the organization fiscally dependent upon the University. Entities/components that meet these criteria and therefore are included in the financial statements are: State Operating dollars from the approved New York State budget. Income Fund Reimbursable (IFR)/State University Tuition Reimbursable Account (SUTRA) activity which is comprised of self-supporting programs providing services for students and clients and for administering other charged tuition and fees in excess of what is needed to support the state budget. These accounts include fees for contract courses and summer sessions. Construction fund dollars include State and The Research Foundation for SUNY assets that are tracked in the SUNY system along with the depreciation associated with those assets. This also includes State construction in progress and capitalized interest. University at Buffalo Foundation (UBF) whose purpose is to support and promote the educational, research and public service mission of the University. The Research Foundation for SUNY (RF) is a private, nonprofit educational corporation that administers externally funded contracts and grants for and on behalf of SUNY. Auxiliary enterprises: Campus Dining & Shops (CDS) whose purpose is to provide, for the benefit of the campus community, dining services, retail services, vending services, campus ID cards and catering services. Dormitory Income Fund Reimbursable (DIFR), a self-supporting fund used to administer dormitory (residence hall) rental fees and charges. These unaudited financial statements are prepared from information received from the entities listed above, which includes audited financial statements from UBF and CDS. The balance of the financial numbers included in this statement is unaudited. Supplemental schedules include financial information by funding entity. 2. Fiscal Years The campus financial statements incorporate a twelve-month period for all entities. These entities operate under different fiscal periods. The following schedule provides the fiscal year end of the entities included in these financial statements: Funding type State-held funds: State Operating IFR/SUTRA Dormitory IFR State University Construction Fund University at Buffalo Foundation The Research Foundation for SUNY Campus Dining & Shops 4 Fiscal year end June 30 th June 30 th June 30 th March 31 st June 30 th June 30 th May 31 st

35 3. Limitation of Consolidated Campus Financial Statements Component parts of the campus financial statements have been audited by independent public accounting firms; however, the consolidation of these statements has not. While an attempt has been made to eliminate inter-entity transactions to the extent practical, it is possible that there exists some duplication of financial information that does not materially distort the accuracy of the financial statements. 4. Use of Estimates In preparing the financial statements certain information was not available either from the State University Construction Fund or from SUNY System Administration. This required the use of estimates in order to present the financial statements in conformity with U.S. generally accepted accounting principles. Actual results could differ from those estimates and will be reflected in next year s financial statements. 5. Fringe Benefits Employee fringe benefits (i.e., health insurance, worker s compensation, retirement and post-retirement benefits) are paid by the State on behalf of UB for employees funded through State Operating accounts. Other State-held funding sources such as IFR and SUTRA along with non-state entities, as outlined in Note 1, pay their own fringe benefits costs. The fringe benefits amount for UB employees paid by State Operating funds is calculated by taking the fringe benefits rate which is determined by the State, and applying it to total eligible personal service and temporary service costs incurred. These imputed costs are included in the financial statements. 6. Cash and Cash Equivalents Cash and cash equivalents represent University at Buffalo funds held in the short-term investment pool (STIP) in the State Treasury or in local depositories by the various entities included in these statements. The following schedule summarizes cash and cash equivalents by funding source: State-held funds: State Operating ($294,634) $878,747 IFR/SUTRA 70,601,194 55,410,708 Dormitory IFR 5,527,086 7,991,296 The Research Foundation for SUNY 70,532,901 58,405,294 University at Buffalo Foundation 29,757,211 29,484,700 Campus Dining & Shops 7,350,160 6,378,235 Total $183,473,918 $158,548,980 Campus Dining & Shops (CDS) has approximately $680,436 and $230,129 in their agency accounts for the fiscal years ended June 30, 2013 and 2012, respectively. CDS is the custodian of these funds that have been raised by various campus units that are associated with, but not controlled by, CDS. Such funds are disbursed at the instructions of the particular campus unit that controls them. The Research Foundation for SUNY (RF) has two pools of cash, unrestricted (non-sponsored) and restricted (sponsored). Unrestricted cash represents the majority of the balance and consists of facilities and administrative (indirect) cost recovery dollars that were not spent at the end of the fiscal year. Restricted cash is the consolidated balance of payments to the University by sponsors in excess of current expenditures for sponsored research projects. 5

36 A portion of the cash falls under the Governmental Accounting Standards Board (GASB) Statement No. 40, Deposit and Investment Risk Disclosure. This includes deposits held by UB that are not covered by depository insurance and are (a) uncollateralized; (b) collateralized with securities held by a pledging financial institution; or (c) collateralized with securities held by a pledging financial institution s trust department or agency. The table below summarizes the cash that falls under the GASB No. 40 disclosure rules. These are only for funds held by the State or CDS. Other agencies included in these financial statements follow Financial Accounting Standards Board rules and are not included in this analysis. Category A Category B Category C Total Cash and Cash Equivalents: $180,139 $6,767,152 $0 $6,947, Accounts and Notes Receivable Accounts and notes receivable totaled $49,680,305 and $46,601,557 for the fiscal years ended June 30, 2013 and 2012, respectively. This was net of allowances for doubtful accounts of $11,695,810 and $10,923,949 for the fiscal years ended June 30, 2013 and 2012, respectively. Depending upon the funding source these receivables occurred for a number of different reasons. State and auxiliary enterprises receivables occur due to student billings for tuition, fees, and room and board payments. Research receivables arise from sponsored awards where the expenditures exceed the cash received whether the difference is billed to the sponsor or not billed yet. The only notes receivable are student loans awarded from the former State-held endowment fund. These notes have various interest rates and repayment terms. Certain entities carry an allowance for doubtful accounts on their balance sheet. This amount is calculated in different ways depending on the funding source. Each entity writes off balances during the year as they are deemed uncollectible which, in most cases, is based upon the aging of the receivables. 8. Other Receivables The majority of other receivables consist of contributions receivable within UBF. These contributions represent unconditional promises to give. An allowance of $200,000 for uncollectible contributions is estimated for these receivables which are summarized below: Contributions Receivable: Unconditional promises expected to be collected in: Less than one year $27,154,975 $13,433,985 One year to five years 8,033,039 17,363,287 Greater than five years 1,450, ,524 36,638,748 31,782,796 Less: Discount to present value (570,114) (636,399) Allowance for uncollectible contributions receivable (250,000) (200,000) $35,818,634 $30,946,397 As of June 30, 2013, UBF has also received bequest intentions and revocable trusts that management estimates will approximate $59 million. These intentions and conditional promises to give are not recognized as assets in the accompanying consolidated financial statements. Amounts received under these conditional promises to give will generally be restricted for specific purposes stipulated by the donors, primarily endowments for faculty support, scholarships, and general operating support of particular departments and divisions of the University. 6

37 UB has committed Research Foundation (RF) funds to be used for a term loan and extension of credit to UB Associates Inc. (UBA) with the following terms: Term loan The loan is unsecured and in the amount of $11 million. It was repaid via interest until May 2012 and then principal and interest from June 2012 through May The loan s outstanding balance was $8.8 million as of June 30, Extension of credit The extension of credit is unsecured and is in the amount of $2.9 million. Its outstanding balance as of June 30, 2013 was $2.32 million. 9. Endowment and Other Investments Investments of UB are recorded at fair value with the majority of them being long-term. Investment income is reported net of investment fees. Realized and unrealized gains and losses are reflected in the Statement of Revenues, Expenses and Changes in Net Assets. CDS invests primarily in fixed income securities, which are comprised of income funds. These income funds are mutual funds, whose purpose is to provide income from investments. The composition of these investments (excluding cash) is as follows: June 30, 2013 June 30, 2012 CDS UBF CDS UBF Fixed income securities $3,720,488 $118,421,423 $2,246,402 $123,552,568 Domestic equity 162,837, ,268,119 International equity 769, ,808,564 1,785, ,955,707 Alternative investments: Real assets 66,492,002 53,026,427 Venture capital/private equity partnerships 79,821,641 82,292,568 Hedge funds and funds of funds 141,662, ,285,848 Other 2,474,128 2,447,012 $4,489,534 $730,517,765 $4,032,199 $674,828,249 The Research Foundation maintains a diverse investment portfolio and with respect to debt instruments, has a policy of investing primarily in high quality securities. Investments are held with the investment custodian in the Research Foundation s name and could not be broken out by campus for these statements. Therefore, the Research Foundation s investment balances could not be shown in the asset section nor could the unrealized or realized gains be recorded in the Statement of Revenues and Expenses. 10. Inventory The composition of inventory depends upon the entity being examined. For the entities covered within these financial statements, inventory consists of food, beverage, store inventory, dental supplies and chemicals. Inventory is stated at lower of cost (first-in, first-out method) or market. 11. Property, Plant and Equipment Fixed assets are either stated at historical cost if purchased or at fair market value at date of receipt if acquired by gift. Fixed assets are shown net of accumulated depreciation of $893,284,502 and $863,289,268 as of June 30, 2013 and 2012, respectively. The majority of the University depreciates its assets using the straight-line method over the assets estimated useful life. In general, the buildings and components are depreciated between years, capital equipment, furniture, and fixtures lives range from 4 to 15 years and library acquisitions are depreciated over 10 years. 7

38 There continues to be a one year lag between the Property, Plant and Equipment amounts recorded here in these statements due to the availability of the SUNY figures for our University. SUNY s numbers are finalized in the spring of the following year, while the numbers used for these statements are compiled in the fall, after the fiscal year closes (fiscal year numbers are available in March 2014, so fiscal year numbers are used instead). 12. Other Assets Fine art collections are included within the other assets reported in the financial statements and are valued at $10,025,754 and $9,854,042 for the fiscal years ended June 30, 2013 and 2012, respectively. These assets make up the majority of the University s other assets. 13. Long-term liabilities The University at Buffalo and its affiliated entities has entered into several debt obligations to finance various capital facilities or large equipment purchases. Total long-term and short-term obligations are summarized below: Campus Dining & Shops (CDS) Unsecured note payable related to a related party in annual principal payments and semi-annual interest payments totaling $951,091 per year, based on a fixed interest rate of 4.81% through June 30, $9,529,910 - Note payable to a bank in monthly installments of principal and interest of $53,454, based on a fixed interest rate of 2.62% through April This note is secured by investments with a net book value of $2,906,797. University at Buffalo Foundation (UBF ) 2,383,005 $2,952,878 Village of Kenmore Housing Authority bonds payable in monthly installments of $47,516 through January 2028, including interest at 4.95%. (Flickinger Project) 5,886,825 6,154,224 Town of Amherst Industrial Development Agency bonds payable in annual principal installments that escalate through maturity in August 2031, plus interest ranging from 4.30% to 5.25% adjusted annually, net of discount of $0 in 2013 and $72,184 in (Flint Village Projects) Town of Amherst Industrial Development Agency bonds payable in annual principal installments that escalate through maturity in August 2032, plus interest ranging from 3.00% to 5.00% adjusted annually, net of discount of $0 in 2013 and $115,343 in (Creekside Village Projects) - 22,142,816-11,899,657 8

39 University at Buffalo Foundation (UBF ) continued Town of Amherst Development Corporation bonds payable in annual principal installments that escalate through maturity in October 2045, plus interest ranging from 2.25% to 5.00% adjusted annually, net of discount of $25,411 in 2013 and $13,438 in (Greiner Hall Project and Hadley Village Refunding) Town of Amherst Development Corporation bonds payable in annual principal installments that escalate through maturity in October 2035 plus variable rate of interest. Interest rates ranged from 0.08% to 0.23% and 0.04% to 0.28% for the years ended June 30, 2013 and 2012, respectively. (South Lake Village) Town of Amherst Development Corporation bonds payable in monthly principal installments that escalate through maturity in August 2042 plus variable rate of interest. Interest rates ranged from 1.53% to 1.56% for the year ended June 30, 2013 and 1.56% from the date of issue through June 30, (Flint Village and Creekside Village Refunding) All debt covenants were compiled for all agencies having debt. 9 79,909,589 81,781,563 23,035,000 23,510,000 31,805,000 32,465,000 Operating Line of Credit payable on demand and bearing interest at 1.5% below the bank s prime rate, (1.75% at June 30, 2013 and June 30, 2012). 25,000,000 25,000,000 State NYPA Phase I Chillers loan payable in monthly installments of $16,100 through maturity June Variable interest rate, 0.86% for and 0.88% for , ,499 NYPA Phase II HVAC and outdoor lighting loan payable in monthly installments of $28,245 through maturity January Variable interest rate, 0.86% for and 0.88% in ,933,898 3,144,879 Dorm Rehab projects various dormitory projects through Dormitory Authority of the State of New York (DASNY) bond or revolving loans with the Dormitory Authority. Maturity of these borrowings end in June 2031 with varying interest rates. 49,014,795 53,166,926 Total debt obligations $230,058,584 $262,967,442 Current portion of long-term debt (10,136,605) (8,869,862) Long-term debt $219,921,979 $254,097,580 Campus Dining and Shops has available a $1,000,000 unsecured bank line of credit, with interest at the prime rate minus 0.50%. There are no amounts outstanding at May 31, 2013 or The Industrial Development Agency bonds, which had a balance of $3,350,000 as of May 31, 2011, were paid in full during the fiscal year. In June 2012, UBFFSH issued $32,465,000 Town of Amherst Development Corporation Bonds (Flint Village and Creekside Village). These bonds were issued to provide funds for the refunding of the outstanding principal of the original bonds used to finance the respective projects including funds needed for the costs incidental to their issuance.

40 14. Other Post-Employment Benefits (OPEB) SUNY, in compliance with GASB 45, records their annual liability and expense for Other Post- Employment Benefits (OPEB) on their financial statements. These benefits, as defined by GASB 45, include postemployment healthcare, as well as other forms of postemployment benefits (for example, life insurance) when provided separately from a pension plan. Since GASB 45 calls for disclosure and recognition of these benefits and there is a large portion of SUNY s OPEB costs that are unfunded by the State, the University at Buffalo s portion of the liability for these benefits has been recorded within these financial statements. The annual amounts of the unfunded actuarial accrued liability (UAAL) are recorded in other long-term liabilities with the offset being booked to expenses. The expense amount was allocated to the functional expense classifications consistent with the fringe benefit rate applied to personal service costs. The OPEB liability amounted to $55,133,725 for and $57,196,478 for The amount attributable to the University is obtained from SUNY and is based on the University s share of personal service costs. The accumulated liability for the University at Buffalo as of June 30, 2013 was $389,979, Commitments UB and its affiliated entities committed to numerous operating leases covering real property and equipment. Rental expenditures reported for the years ended June 30, 2013 and 2012 under such operating leases were approximately $2,350,561 and $1,915,822 respectively. The following is a summary of rental commitments under non-cancelable real property and equipment leases with terms exceeding one year: Year ending June 30, Amount 2014 $1,610, ,147, ,149, , , ,128,502 Total $5,626,486 The above schedule does not include The Research Foundation for SUNY. Their rental payments amounted to $276,909 and $360,818 for the fiscal years ended June 30, 2013 and 2012, respectively. Any amounts paid between State and UBF have been eliminated. 10

41 16. Subsequent Events The University entered into a financial arrangement (dated November 5, 2013) with the State University Construction Fund (SUCF) to fund the construction of the new School of Medicine and Biomedical Sciences building in downtown Buffalo. The estimated total cost of the project is $375 million and funding will be derived from the following categories: Source State Campus Existing Campus Appropriations $50,000,000 SUNY Match 15,000,000 Urban Development Corp. Funds 20,000,000 Debt Service 215,000,000 UB School of Medicine Funds $25,000,000 UB Philanthropy 50,000,000 Totals $300,000,000 $75,000,000 11

42 State University of New York at Buffalo Assets, Liabilities and Net Assets by Entity as of June 30, 2013 (In thousands) Assets State UB Research Auxiliary O perations IFR/SUTRA Foundation Foundation (CDS/DIFR) Total Current assets: Cash and cash equivalents ($294) $70,601 $29,757 $70,533 $12,877 $183,474 Accounts and notes receivable, net 18,792 1,305 3,464 22,916 3,203 49,680 Other receivables , ,314 Short-term investments , , ,140 Inventory 1, ,223 Intercompany receivables 2,349 (30,369) (10,909) 15,829 23,100 0 Prepaid expenses 1, ,051 2,214 Total current assets 23,817 41, , ,278 44, ,045 Noncurrent assets: Property, plant and equipment, net 954,472 53, ,991 3,469 13,466 1,181,114 Long-term investments , , ,752 Other assets , ,388 Total noncurrent assets 954,549 53, ,786 3,469 14,734 1,547,254 Total assets $978,366 $95,712 $955,835 $112,747 $59,639 $2,202,299 Liabilities and Net Assets Current liabilities: Accounts payable $6,215 $0 $6,838 $0 $433 $13,486 Accrued expenses 0 0 5,128 2,665 1,286 9,079 Current portion of long-term debt 5, , ,078 10,137 Deferred revenue Other current liabilities Total current liabilities 11, ,851 2,665 4,120 34,529 Noncurrent liabilities: Long-term debt 46, , , ,922 Other long-term liabilities 467,039 19,299 30, ,989 Total noncurrent liabilities 513,870 19, , , ,911 Total liabilities 525,763 19, ,758 2,665 14, ,440 Net Assets: Unrestricted (55,134) 0 16, ,222 (1,802) Restricted - nonexpendable , ,496 Restricted - expendable 507,737 76, , ,082 7,462 1,237,165 Total net assets 452,603 76, , ,082 44,684 1,430,859 Total liabilities and net assets $978,366 $95,712 $955,835 $112,747 $59,639 $2,202,299 12

43 State University of New York at Buffalo Assets, Liabilities and Net Assets by Entity as of June 30, 2012 (In thousands) Assets State UB Research Auxiliary O perations IFR/SUTRA Foundation Foundation (CDS/DIFR) Total Current assets: Cash and cash equivalents $879 $55,411 $29,485 $58,405 $14,370 $158,550 Accounts and notes receivable, net 18,872 1,428 3,884 19,309 3,109 46,602 Other receivables , ,407 32,353 Short-term investments , , ,336 Inventory 1, ,164 Intercompany receivables 1,111 (22,834) (7,714) 9,817 19,620 0 Prepaid expenses 1, ,274 Total current assets 24,020 34, ,278 87,531 41, ,279 Noncurrent assets: Property, plant and equipment, net 840,587 45, ,673 4,152 2,724 1,046,305 Long-term investments , , ,989 Other assets , ,325 Total noncurrent assets 840,664 45, ,537 4,152 5,097 1,401,619 Total assets $864,684 $79,563 $927,815 $91,683 $46,153 $2,009,898 Liabilities and Net Assets Current liabilities: Accounts payable $7,468 $0 $12,629 $0 $1,731 $21,828 Accrued expenses 0 0 5,904 3,408 1,266 10,578 Current portion of long-term debt 5, , ,870 Deferred revenue Other current liabilities Total current liabilities 12, ,523 3,408 4,113 42,550 Noncurrent liabilities: Long-term debt 52, , , ,098 Other long-term liabilities 410,787 20,417 36, ,719 Total noncurrent liabilities 462,811 20, , , ,817 Total liabilities 475,317 20, ,729 3,408 6, ,367 Net Assets: Unrestricted (334,846) 0 10, ,970 (293,491) Restricted - nonexpendable , ,503 Restricted - expendable 724,213 59, ,198 88,275 8,687 1,377,519 Total net assets 389,367 59, ,086 88,275 39,657 1,245,531 Total liabilities and net assets $864,684 $79,563 $927,815 $91,683 $46,153 $2,009,898 13

44 State University of New York at Buffalo Revenues and Expenses by Entity Fiscal Year Ended June 30, 2013 (In thousands) State UB Research Auxiliary O perations IFR/SUTRA Foundation Foundation (CDS/DIFR) Total Revenues: Tuition and fees, net $167,957 $44,773 $6,876 $0 $0 $219,606 State appropriations 493, ,813 Grants and contracts 45,529 4, , ,580 Private support and other 11,849 39,299 48,709 9,034 5, ,482 Endowment and investment income , ,914 Auxiliary enterprises 0 13,325 28, , ,693 Hospitals and clinical revenue 0 3,616 14, ,125 Other 11, ,214 Total revenues 730, , , ,980 70,382 1,255,427 Expenses by function: Instruction 307,793 38,825 51,645 17, ,235 Research 21,950 10, , ,842 Public service 3, , ,295 Academic support 69,419 6, ,931 Student services 17,950 17, ,430 Institutional support 74,376 14,189 24,514 25, ,147 Operation and maintenance of plant 70, ,158 Depreciation 24, ,104 26,034 Scholarships and fellowships 23,810 (17,122) 5,814 1, ,586 Hospitals and clinics 4,491 2, ,449 Auxiliary enterprises 13,087 13,466 23, , ,326 Interest expense 34, ,975 Other expenses Total expenses 667,226 87, , ,172 65,355 1,070,099 Expenses by type: Salaries 337,555 10,788 32,221 64,324 19, ,290 Employee fringe benefits 227,122 11,465 11,952 21,959 8, ,930 Supplies (18,496) 36,515 6,487 13,410 13,866 51,782 Travel 2,085 4,877 6,163 3,747 (105) 16,767 Contractual services 37,319 15,249 11,387 29,705 5,711 99,371 Insurance and professional fees 0 0 1, ,086 Rent, utilities and lease 16, , ,258 22,522 Depreciation 24, , ,104 34,153 Equipment, repairs and maintenance 5,968 5, ,005 9,334 27,180 Management fees and subscriptions 0 0 2,668 4, ,235 Interest expense 34, , ,846 Other expenses 21 3,387 16,088 (123) 2,564 21,937 Total expenses 667,226 87, , ,172 65,355 1,070,099 Increase (decrease) net assets $63,236 $17,267 $77,990 $21,808 $5,027 $185,328 14

45 State University of New York at Buffalo Revenues and Expenses by Entity Fiscal Year Ended June 30, 2012 (In thousands) State UB Research Auxiliary O perations IFR/SUTRA Foundation Foundation (CDS/DIFR) Total Revenues: Tuition and fees, net $154,809 $33,266 $5,436 $0 $0 $193,511 State appropriations 600, ,453 Grants and contracts 43,848 4, , ,546 Private support and other 2,332 27,126 58,608 2,468 5,245 95,779 Endowment and investment income (8,516) 0 20 (8,296) Auxiliary enterprises 250 7,972 29, ,487 98,395 Hospitals and clinical revenue 0 3,869 12, ,902 Other 8, ,020 Total revenues 809,912 76,632 97, ,767 65,752 1,202,310 Expenses by function: Instruction 447,085 43,050 51,775 13, ,830 Research 32,886 5, , ,052 Public service 5,344 17, , ,793 Academic support 66,703 6, ,979 Student services 29,965 13, ,644 Institutional support 108,799 13,679 29,564 23, ,103 Operation and maintenance of plant 93,769 (6,294) ,252 Depreciation 25, ,746 Scholarships and fellowships 22,223 (12,508) 5,148 1, ,903 Hospitals and clinics 6,983 2, ,892 Auxiliary enterprises 35,568 3,266 21, , ,391 Interest expense 38, ,866 Other expenses 2,377 (3) (4,000) 8, ,601 Total expenses 915,831 87, , ,943 54,604 1,318,052 Expenses by type: Salaries 330,833 10,386 33,903 68,176 18, ,074 Employee fringe benefits 497,774 9,504 11,487 22,873 8, ,117 Supplies (34,101) 42,741 8,298 13,062 11,718 41,718 Travel 2,811 3,368 6,142 3,826 (61) 16,086 Contractual services 34,053 14,969 13,749 27,241 5,692 95,704 Insurance and professional fees 0 0 2, ,513 Rent, utilities and lease 14, , ,320 19,435 Depreciation 25, , ,640 Equipment, repairs and maintenance 5,723 3, ,775 6,365 32,625 Management fees and subscriptions , ,750 Interest expense 38, , ,833 Other expenses (48) 3,083 12,691 (1,307) ,557 Total expenses 915,831 87, , ,943 54,604 1,318,052 Increase (decrease) net assets ($105,919) ($10,978) ($6,817) ($3,176) $11,148 ($115,742) 15

46 Prepared by Financial Services, a division of University Business Services