STANFORD UNIVERSITY BUDGET PLAN 2017/18

Transcription

1 S TA N F O R D U N I V E R S I T Y STANFORD UNIVERSITY BUDGET PLAN 2017/18 B U D G E T P L A N / 1 8

2 Approved: This Budget Pla was approved by the Staford Uiversity Board of Trustees Jue 14 15, This publicatio ca be foud at:

3 STANFORD UNIVERSITY BUDGET PLAN 2017/18

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5 EXECUTIVE SUMMARY iii EXECUTIVE SUMMARY To The Board of Trustees: It is a pleasure to submit my first Budget Pla as Staford s provost. This budget maitais our uiversity s pre-emiet academic ad research programs. It calls for selective ivestmets i high priority areas. It also stregthes our fiacial base, thereby providig the foudatio for the strategic iitiatives expected to emerge from the Log Rage Plaig process. Our approach i developig the 2017/18 Budget Pla has bee a cautious oe. Slow growth i edowmet payout ad ucertaity aroud govermet sposored research have created a plaig cotext i which we have reduced the growth of ew program ivestmet compared to recet years. At the same time, we have icreased our fiacial reserve positio should exteral fudig coditios deteriorate. We are cofidet this budget both furthers Staford s programmatic objectives ad maitais a strog uderlyig fiacial coditio. This documet presets Staford s 2017/18 Budget Pla for Trustee approval. The Budget Pla has two parts. The first is the Cosolidated Budget for Operatios, which icludes all of Staford s aticipated operatig reveue ad expese for ext year. The secod is the Capital Budget, which is set i the cotext of a multi-year Capital Pla. The budgets for Staford Health Care ad Staford Childre s Health, both separate corporatios, are ot icluded i this Budget Pla, although they are icorporated ito the uiversity s aual audited fiacial report. Highlights of the Budget Pla: The Cosolidated Budget for Operatios projects a surplus of $165 millio o $6.3 billio of reveues, $5.9 billio i expeditures, ad $243 millio i trasfers. We aticipate reveue to icrease 5.0% over the projected 2016/17 year-ed results. This results from a 11.6% icrease i health care services reveue ad a 12.6% growth i ivestmet icome, offset by a 13.2% reductio i SLAC sposored research activity, which is drive by a smaller costructio program compared to 2016/17. Overall, we are budgetig a 4.1% icrease i expeses, resultig from a 7.8% growth i compesatio coupled with a small reductio i other operatig expeses. The Cosolidated Budget icludes $1.45 billio i geeral fuds, of which $200 millio flows to the Graduate School of Busiess, the School of Medicie, ad Cotiuig Studies i accordace with previously agreed upo formulas. We aticipate a geeral fuds surplus of $26 millio, a figure higher tha last year but comparable to most years followig the recessio. We have also budgeted a $20 millio cotigecy agaist ucertaities i federal research, edowmet payout shortfall, ad iitial costs of iitiatives emergig from the Log Rage Plaig process. This surplus, coupled with the cotigecy, provides a appropriate cushio agaist reveue fluctuatio ad will allow us to address oe-time eeds throughout the year. This Budget Pla presets the projected 2017/18 results i a format cosistet with Geerally Accepted Accoutig Priciples, as reported i the uiversity s aual fiacial report. The projected Statemet of Activities shows a $115 millio surplus. The Capital Budget calls for $1.2 billio i expeditures i 2017/18. These expeditures are i support of a Capital Pla whose projects, whe fully completed, will total approximately $4.3 billio. Pricipal expeditures i 2017/18 will be directed toward:

6 iv EXECUTIVE SUMMARY u $329 millio for Staford Redwood City Phase 1. This is part of a multi-year project to build a admiistrative campus i Redwood City at a total cost of $569 millio. It is expected to ope i 2018/19. u $171 millio toward the ew Escodido Village Graduate Resideces. u $119 millio towards the $257 millio ChEM-H ad Staford Neuroscieces Istitute Research Complex. u $104 millio towards the Ceter for Academic Medicie 1 buildig. u $104 millio towards the BioMedical Iovatios Buildig. STRATEGIC CONTEXT The cotext i which we have developed the 2017/18 Budget Pla has bee shaped by several factors: Slow Growth i Edowmet Payout For the past two years edowmet returs have uderperformed our log term expectatio. Cosequetly, eve after icorporatig our smoothig formula, growth i edowmet payout has bee below what is eeded to maitai the purchasig power of our edowmet fuds. Sposored Research Ucertaity There is cosiderable ucertaity aroud govermet sposored research. While Staford has fared well durig past periods of declie i research, we are cocered about the outlook ad are workig actively to advocate our positio. Housig Costs A robust local ecoomy has helped tremedously to support the philathropy from which Staford has beefitted over the years. However, that strog ecoomic growth cotiues to place severe pressure o the costs of housig ad trasportatio. These are ot ew issues for Staford, but they show o sigs of slowig. Strategic Plaig The Log Rage Plaig process lauched this sprig will coclude i 2017/18 with a set of strategic directios for Staford. This is a excitig time for the uiversity as we look to create a shared visio for the future. Growth of Staford Medicie Staford Medicie (the Medical School, Staford Health Care, ad Staford Childre s Health) will cotiue o its growth trajectory of recet years with off-campus cliical expasio ad with the ew adult hospital scheduled to ope i late Cliical reveue flowig to the Medical School is the fastest growig icome source i the budget, ad it is ow the secod largest source of reveue for Staford. Chages i govermetal health care policy ad the trasformatio of biomedicie to precisio health cotiue to shape this rapidly evolvig eterprise at Staford. These factors have helped defie our major priority areas for the 2017/18 budget: Stregtheig ad Shorig Up the Base Budget I aticipatio of future strategic plaig iitiatives, a cetral priority i the 2017/18 budget process was o closig gaps or partial fudig i the existig budget. We made selective base budget allocatios i areas where oe-time fudig had bee a cotiued meas of support. I additio, i several schools we provided fudig to address the shortfall betwee the 1.6% growth i edowmet payout ad the 3.5% average aticipated growth i expese of a typical edowmet fud. Competitive Compesatio Providig a strog ad highly competitive compesatio program for faculty ad staff is a major priority i the 2017/18 budget. We recogize the challeges may of our faculty ad staff face i this very high cost area. Over the years, Staford has made substatial

7 EXECUTIVE SUMMARY v efforts to ehace our housig programs, particularly for faculty. But the challege remais. I partial respose, we made supplemetal salary allocatios i this budget to address issues of market competitiveess, iteral salary equity, ad retetio. Buildig Fiacial Reserves It has bee our geeral practice sice the 2010 recessio to carry a $25 millio geeral fuds surplus to protect the budget agaist potetial reveue shortfalls. I 2016/17, due to lower ivestmet icome, we reduced that budgeted surplus to $15 millio. For 2017/18 we have restored the budgeted surplus back to $26 millio ad created the $20 millio base budget cotigecy oted earlier. Slowig the Pace of New Program Ivestmet I light of the ucertaities aroud research ad the expectatio of strategic iitiatives emergig from the Log Rage Plaig process, we have reduced fudig for ew iitiatives, compared to the budget proposals of recet years. Housig This budget cotiues our multi-year strategy to expad housig opportuities for studets, faculty, ad staff, as the cost of housig cotiues to be Staford s greatest challege. We are addressig it with several aggressive iitiatives: u We have begu a 2400-bed graduate studet housig complex i Escodido Village. u The Uiversity Terrace Faculty Homes are opeig, with the full 180-uit complex to be available by the ed of caledar u Staford is buyig homes ad apartmets i the local area uder the $500 millio Housig Acquisitio Iitiative approved by the Trustees. u We are pursuig a proposal with the city of Melo Park to build additioal faculty ad staff housig at 500 El Camio Real. u Next year Staford will provide approximately $23 millio i subsidies for off-campus apartmets for graduate studets. While these iitiatives will ot address all of the housig eeds of Staford studets, faculty, ad staff, they are havig a positive impact ad will cotiue to improve the situatio over time. FINANCIAL RESERVES Staford has three pricipal categories of fiacial reserves: Expedable reserves We project Staford s expedable reserves will stad at $4.5 billio at the ed of 2017/18. Of that amout, $3.5 billio is a combiatio of restricted ad urestricted expedable fuds, ad uspet restricted edowmet payout. The remaiig amout is split amog plat, studet loa, ad agecy fuds. These reserves cosist of thousads of fuds held across the uiversity, largely cotrolled by idividual faculty, departmets, programs, ad schools. Tier I Buffer We project the Tier I Buffer will stad at $1.46 billio by the ed of 2017/18. The Tier I Buffer comprises the uiversity s urestricted fuds fuctioig as edowmet, the payout from which supports the geeral fuds compoet of the Cosolidated Budget. The majority of the buffer s fuds are geerated by the ivestmet returs o a subset of our expedable reserves. The Tier I Buffer acts as a backstop to maitai the face value of those expedable fuds, which are ivested i the merged pool. Tier II Buffer The Tier II Buffer is estimated to be $1.06 billio by the ed of 2017/18, which is close to its omial value before the recessio. Like the Tier I Buffer, this fud is geerated from excess ivestmet returs from expedable reserves, ad is ivested as fuds fuctioig as edowmet. The payout from the Tier II buffer, however, is used at the discretio of the presidet.

8 vi EXECUTIVE SUMMARY CONSOLIDATED BUDGET FOR OPERATIONS The table o the ext page shows the mai reveue ad expese lie items for 2017/18 ad compares those umbers to our curret projectio of fial results for 2016/17. Some highlights of both icome ad expese follow. REVENUE Studet Icome This figure is the sum of tuitio ad room ad board icome, ad is expected to grow by 3.8%. Tuitio icome is projected to grow 3.7% over the projected 2016/17 actuals as the result of a 3.5% icrease i the udergraduate ad graduate tuitio rates ad a slight growth i the umber of graduate studets. Room ad board icome is projected to icrease 4.3%, due to the 3.5% room ad board rate icrease, growth i meal plas, ad the re-opeig of the Schwab Residetial Ceter. Uiversity Sposored Research Sposored research reveues (excludig SLAC) are expected to grow by 3.6%, while idirect cost recovery will icrease by 4.2%. Direct research i the School of Medicie will cotiue its strog growth, icreasig at 5.8%, while o-medical grat fudig will be flat. SLAC s reveues are expected to declie by 13.2%, due to a lower costructio budget tha i 2016/17. Whe SLAC is icluded, total sposored research reveue is expected to decrease by 2.7% over 2016/17 projected year-ed results. There is cosiderable ucertaity aroud these umbers, give the precarious state of the federal budget. We will be moitorig the situatio closely as the year ufolds. Health Care Services Reveue from health care services is projected to icrease by 11.6% i 2017/18. This reveue cosists pricipally of paymets from the hospitals to the School of Medicie for faculty physicia services. Health care services reveue has bee the fastest growig elemet of the Cosolidated Budget over the last decade, with a compoud aual growth rate of 11%. The 2017/18 growth is drive by cotiued expasio of Staford Medicie s cliical activities throughout the regio. Expedable Gifts Staford has ejoyed very strog fudraisig results i recet years. Cosistet with the estimate from the Office of Developmet, we expect expedable gift reveue to be flat i 2017/18. Ivestmet Icome This category cosists of edowmet payout ($1,243.4 millio) ad other ivestmet icome ($275.8 millio), pricipally from the Expedable Fuds Pool (EFP). Edowmet payout is projected to icrease by 5.7%. The payout growth to a typical edowmet fud is oly 1.6% for 2017/18, but overall payout growth is higher due to additios to edowmet pricipal ad growth i real estate icome i 2017/18. The Expedable Fuds Pool payout is growig sigificatly i 2017/18. By Trustee policy, EFP payout is based o the total retur of the pool i the prior year, up to 5.5%. I 2015/16 that retur was just 2.5%, promptig a reductio i payout i 2016/17. We are expectig the full 5.5% retur i 2016/17, which will produce the sigificat icrease i the EFP payout for 2017/18. EXPENSE Compesatio We aticipate total compesatio to icrease 7.8% over 2016/17 year-ed results. The icrease is the result of a strog salary program, a 3.6% overall icrease i headcout, ad the targeted salary ehacemets metioed earlier. Fiacial Aid The costs for eed-based fiacial aid, athletic aid, ad graduate studet aid will icrease by 4.3%. This icrease allows Staford to maitai its geerous eed-based aid program for udergraduates, particularly for those families with icomes below $125,000. It also reflects a 4.5% icrease i aid for graduate studets, reflectig more geerous graduate support i selected disciplies ad a slight icrease i the umber of graduate studets.

9 EXECUTIVE SUMMARY vii CONSOLIDATED BUDGET FOR OPERATIONS, 2017/18 [IN MILLIONS OF DOLLARS] 2016/ / /18 CHANGE FROM 2015/16 BUDGET PROJECTED CONSOLIDATED PROJECTED ACTUALS JUNE 2016 ACTUALS BUDGET ACTUALS Reveues Studet Icome % 1,005 1,050 1,046 Uiversity Sposored Research 1, % SLAC Sposored Research % 1,034 1,177 1,123 Health Care Services 1, % Gifts ad Net Assets Released from Restrictios % 1,406 1,284 1,349 Ivestmet Icome 1, % Special Program Fees ad Other Icome % 5,680 5,881 5,965 Total Reveues 6, % Expeses 3,123 3,323 3,359 Compesatio 3, % Fiacial Aid % Debt Service % 1,541 1,781 1,781 Other Operatig Expese 1, % 5,118 5,594 5,625 Total Expeses 5, % Operatig Results 408 (346) (166) (187) Trasfers (243) Operatig Results after Trasfers 165 2,990 3,238 3,206 Begiig Fud Balaces 3,358 3,206 3,359 3,358 Edig Fud Balaces 3,524 Other Operatig Expeses This substatial expese item is the amalgam of graduate stipeds, operatios ad maiteace, utilities, capital equipmet, materials ad supplies, travel, library materials, subcotracts, ad professioal services. These expeses are projected to declie by 2.6% i 2017/18, drive largely by SLAC s reduced costructio activity. Exclusive of SLAC, these expeses will grow by 3.3%. SCHOOL INITIATIVES Staford s pricipal academic uits, the seve schools, will advace their agedas i 2017/18. A few highlights of their plas are: Graduate School of Busiess (GSB) Uder its ew dea, Jo Levi, the Busiess School has lauched a year-log strategic plaig process focusig o the future of maagemet educatio ad the future of research. The GSB cotiues to expad its ivolvemet globally; the Staford Istitute for Iovatio i Developig Ecoomies (Seed) will ope a ceter i souther Idia its third such iteratioal operatio. Earth, Eergy & Evirometal Scieces (SE3) The school is pursuig a set of goals that emerged from a strategic plaig effort last summer. The goals focus o egagig all Staford studets i gaiig kowledge of our plaet; expadig collaboratios iside ad outside the uiversity; acceleratig the impact of the school s research; ad advacig plaig for a ew facility.

10 viii EXECUTIVE SUMMARY Graduate School of Educatio (GSE) The GSE has lauched its ceteial year advacig several strategic priorities. Oe such area focuses o learers i peril, those studets who are disadvataged by either social or biological causes, or both. The school has recetly completed the early phases of a ew buildig plaig process ad will expad the effort i 2017/18. Also, the GSE will further develop its partership with local school districts i the comig year. Egieerig The school welcomed a ew dea this sprig, Jeifer Widom, who has served i several key leadership positios i the school. Egieerig cotiues to pursue several strategic iitiatives that emerged from the SOE Futures plaig process completed two years ago. There is a strog focus o computatioal research, particularly i computer sciece. Humaities ad Scieces (H&S) Recet growth i faculty ad facilities have placed H&S i a positio of great stregth, but have tighteed its fiacial situatio. Future faculty growth will be targeted to ehace diversity ad to fulfill iitiatives i Neurosciece ad ChEM-H. H&S cotiues its efforts to icrease studet iterest i the humaities ad social scieces through ew feeder programs for high school studets ad placemet programs for graduates. Law Staford Law School is i the midst of a geeratioal shift i its faculty, with 17 ew members joiig the faculty over the past several years. There is a icreased focus o iterdiscipliary research ad teachig. Several ew faculty have joit appoitmets with other schools at Staford. Medicie Staford Medicie cotiues to develop its strategy for leadig the trasformatio of biomedicie to Precisio Health. This approach leverages the art ad sciece of medicie to predict ad prevet disease before it occurs ad cure it if it does. The Medical School s research programs remai strog through recruitmet of high potetial ad prolific ivestigators as well as ivestmet i pilot grats to spur ew research directios. GENERAL FUNDS BUDGET A focal poit of the budgetig process is the developmet of the geeral fuds compoet of the Cosolidated Budget. The $1.25 billio i geeral fuds i the o-formula uits ca be used for ay uiversity purpose ad sustai may of the core academic ad support fuctios of the uiversity. As show i the chart o the ext page, base geeral fuds additios will total $74.7 millio i 2017/18. About 40% will cover icreases i cotiuig costs for salaries, beefits, o-salary costs, ad the operatig costs of facilities. We set aside $20 millio as a geeral cotigecy. As 2017/18 ufolds, this moey may be used to respod to potetial chages i federal research fudig; to provide capacity to address iitiatives emergig from the Log Rage Plaig process; ad to address potetial shortfalls i edowmet payout. The remaiig $22.6 millio will be split amog edowmet mitigatio, ehacig existig programs, covertig certai oe-time expeses to the cotiuig base budget, ad a small amout for fudig ew programs. These purposes are further delieated below. Edowmet Mitigatio ($4.0 millio) As oted earlier, we allocated fuds to cover the shortfall betwee the icrease i edowmet payout of 1.6% ad the growth i expese supported by a typical edowmet fud of approximately 3.5%. These allocatios, directed pricipally to those o-formula schools relyig heavily o edowmet payout, reduce the eed for those schools to draw o reserves or to make budget reductios to address the shortfalls.

11 EXECUTIVE SUMMARY ix 2017/18 BASE GENERAL FUNDS ADDITIONS: $74.7 MILLION [IN MILLIONS OF DOLLARS] Market-based Adjustmets 32.1 Edowmet Mitigatio 4.0 No-Salary & Facilities Cotigecy 20.0 Base Coversio 6.8 Program Ehacemet New Programs Salaries & 5.8 Beefits 19.9 Icremetal Allocatios 18.6 Admiistrative Support 5.9 Other Academic/Faculty Support Other icremetal allocatios as described below iclude Systems ad Security, Studet Support, ad New Facilities Debt ad Operatios. Faculty, Academic, ad Research Support ($6.8 millio) We cotiued our ivestmet i the Faculty Icetive Fud ad the Faculty Developmet Iitiative to ecourage ogoig recruitmet of uderrepreseted miorities ad wome to the faculty. We allocated base geeral fuds to replace oe-time fudig i Evirometal Health & Safety ad i the admiistrative offices of the Vice Provost for Teachig ad Learig. Ehacemets were also made to the faculty child care programs. Admiistratio ($5.9 millio) This category adds fudig i a umber of admiistrative areas, icludig: part-time readers i the udergraduate admissios office; a studet services professioal i Egieerig; expaded capacity i Developmet; ad icreased staffig i Uiversity Commuicatios. Systems ad Security ($2.5 millio) We are addig fudig for the ADAPT system i Developmet, the Graduate Fiacial Plaig System expasio, ad for Staford Web Services. This category also reflects the additio of a swor deputy positio i Public Safety ad the expasio of security patrols i parts of the campus. Studet Support ($1.7 millio) Some of the key items fuded i this category iclude: staffig ad operatioal costs i the Office of Commuity Egagemet ad Diversity withi Studet Affairs; fiacial aid for master s studets i the Graduate School of Educatio; ad supplemetal fudig for research assistat tuitio allowace. New Facilities Debt ad Operatios ($1.7 millio) This category reflects the costs of brigig ew facilities olie i the comig year. The most sigificat additio is the Bass Biology buildig, which is expected to ope i late 2018.

12 x EXECUTIVE SUMMARY CAPITAL BUDGET AND PLAN The Capital Budget ad three-year Capital Pla are based o a projectio of the major capital projects that the uiversity iteds to pursue to further its academic missio. The three-year Capital Pla spas 2017/18 through 2019/20; the Capital Budget represets aticipated capital expeditures i the first year of the pla. The three-year pla icludes projects that were iitiated prior to 2017/18, as well as the full cost of projects startig withi the rollig three-year period through 2019/20. The Capital Budget ad Capital Pla are subject to chage based o fudig availability, budget affordability, ad evolvig uiversity priorities. The three-year Capital Pla icludes $4.3 billio i costructio ad ifrastructure projects ad programs. The projects oted above, whe fully completed over the multi-year period, comprise the bulk of the Pla. It also icludes a umber of smaller projects ad several ifrastructure programs aticipated over the legth of the Pla. ACKNOWLEDGEMENTS I this, my first Budget Pla, it is a great pleasure to ackowledge the help ad support of may people. The Budget Pla is the product of a great deal of work o the part of maagers ad budget officers at every level of the uiversity. I thak the budget officers ad leadership i the schools ad admiistrative uits for their efforts i support of the budget process. There are two hardworkig advisory groups that assist me i formulatig the geeral fuds budget ad capital pla. The Uiversity Budget Group cosists of Margaret Bradeau, Harry Elam, Adrea Goldsmith, Judy Goldstei, Patti Gumport, Rosemary Kight, Rady Livigsto, Kam Moler, Steve Olso, Serea Rao, Daa Shelley, George Triatis, ad Tim Warer. This group met from late September through March, ofte twice a week, to review submissios ad requests from the various budget uits ad to advise me o the fial allocatios of geeral fuds. Support for the Budget Group, ad for the creatio of this documet, is provided by the budget office staff, cosistig of Kayte Bishop, Jacy Crapps, Neil Hamilto, Betsy Lewis, Mike Lig, Serea Rao, Davis Reek, Mark Rickey, ad Daa Shelley, uder the able leadership of Tim Warer. The Capital Plaig Group cosists of Jack Cleary, Mega Davis, Stephaie Kalfaya, David Leox, Bob Reidy, Craig Taaka, Bob Tatum ad Tim Warer. Craig guides the capital plaig process with remarkable efficiecy, with excellet support from Howard Leug. Fially, a special persoal thaks to both Tim Warer ad Joh Etchemedy. Tim has bee a patiet teacher as I lear the complexities of the Staford budget. Joh cotiued as a Special Advisor ad participated i the budget process after he stepped dow from the provost positio ad helped at every step with the craftig of this budget.

13 EXECUTIVE SUMMARY xi REQUESTED APPROVAL AND ORGANIZATION OF THIS DOCUMENT The Budget Pla provides a uiversity-level perspective o Staford s programmatic ad fiacial plas for 2017/18. We seek approval of the plaig directios, the pricipal assumptios, ad the high-level supportig budgets cotaied herei. As the year ufolds, we will provide periodic variace reports o the progress of actual expeses agaist the budget. I additio, we will brig forward idividual capital projects for approval uder ormal Board of Trustees guidelies. This documet begis with a overview of budgetig at Staford, followed by four chapters ad two appedices. Chapter 1 describes the fiacial elemets of the pla, icludig details of the Cosolidated Budget for Operatios ad the projected Statemet of Activities for 2017/18. Chapter 2 addresses program directios i the academic areas of the uiversity. Chapter 3 provides a similar view of the admiistrative ad auxiliary uits. Chapter 4 cotais details o the Capital Budget for 2017/18 ad the Capital Pla for 2017/ /20. The appedices iclude budgets for the major academic uits ad supplemetary fiacial iformatio. Persis S. Drell Provost Jue 2017

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15 TABLE OF CONTENTS xiii TABLE OF CONTENTS EXECUTIVE SUMMARY...iii INTRODUCTION: BUDGETING AT STANFORD...1 CHAPTER 1: CONSOLIDATED BUDGET FOR OPERATIONS...3 Cosolidated Budget for Operatios...3 Geeral Fuds Evirometal Health ad Safety (EH&S) Projected Statemet of Activities CHAPTER 2: ACADEMIC UNITS Overview of Academic Uits Graduate School of Busiess School of Earth, Eergy & Evirometal Scieces Graduate School of Educatio School of Egieerig School of Humaities & Scieces School of Law School of Medicie Vice Provost ad Dea of Research Vice Provost for Udergraduate Educatio Vice Provost for Graduate Educatio Vice Provost for Teachig ad Learig Hoover Istitutio Staford Uiversity Libraries SLAC Natioal Accelerator Laboratory CHAPTER 3: ADMINISTRATIVE & AUXILIARY UNITS Admiistrative Uits Major Auxiliary Uits CHAPTER 4: CAPITAL PLAN AND CAPITAL BUDGET Capital Plaig Overview Staford s Commitmet to Housig...70 The Capital Pla, 2017/ / The Capital Budget, 2017/ Capital Budget Impact o 2017/18 Operatios Capital Pla Project Detail APPENDIX A: CONSOLIDATED BUDGETS FOR SELECTED UNITS APPENDIX B: SUPPLEMENTARY INFORMATION...103

16 xiv TABLE OF CONTENTS

17 INTRODUCTION: BUDGETING AT STANFORD 1 INTRODUCTION: BUDGETING AT STANFORD Budgetig at Staford is a cotiuous process that takes place throughout the year ad occurs at early every level withi the uiversity. The cycle starts with plaig that cosiders programmatic eeds ad iitiatives, cotiues with the establishmet of cost drivers such as the approved salary program ad frige beefits rates, ad is tempered by available fudig sources. Staford s budget is a amalgamatio of thousads of smaller budgets, icludig everythig from a idividual faculty member s budget for a sposored grat from the Natioal Istitutes of Health, to the budget for the Departmet of Psychology, to the budget for the School of Egieerig, to the total of the Cosolidated Budget for Operatios. These budgets are created ad maaged by the areas that are govered by them, with oversight by the provost, the chief budget officer of the uiversity. There are geeral priciples ad guidelies to which the budgets must adhere, but schools ad other uits are allowed tremedous freedom i the developmet ad executio of their budgets. FUND ACCOUNTING Staford s budgets are developed ad maaged accordig to the priciples of fud accoutig. Reveue is segregated ito a variety of fud types, ad the use of the reveue is govered by the restrictios of the fud. For example, each expedable gift is put ito a idividual fud, ad the recipiet must use the fuds i accordace with the wishes of the door. Gifts of edowmet are also put ito separate fuds, but the corpus itself is ot usually spet. A aual payout o the edowmet fud is spet, ad as with gift fuds, oly i accordace with the restrictios imposed by the door. The segregatio of each gift allows the uiversity to esure that the fuds are spet appropriately ad to report to doors o the activities that their fuds support. Moies received from govermet agecies, foudatios, or other outside sposors are also deposited i separate, idividual fuds to esure strict adherece to the terms of the grats ad/or cotracts that gover the use of the fuds. No-gift ad o-sposored research reveue also reside i fuds, but this type of reveue may be commigled i a sigle fud. Departmets may choose to combie urestricted moies ito separate fuds for a particular program, for a capital project, or to create a reserve. Staford s cosolidated reveues by fud type are show at the right. BUDGET MANAGEMENT At the ed of fiscal year 2015/16, Staford had roughly 23,000 active expedable fuds ad more tha 8,000 edowmet fuds. So how does Staford budget ad maage all these fuds? It goes without sayig that the uiversity uses a sophisticated fiacial accoutig system to set up the idividual fuds, to record each fiacial trasactio, ad to track fud balaces. But early all of the decisio-makig for the use of Staford s fuds 2017/18 CONSOLIDATED REVENUES BY FUND TYPE Grats & Cotracts 22% Auxiliaries & Service Ceters 6% Restricted 22% Geeral Fuds 23% Desigated 27%

18 2 INTRODUCTION: BUDGETING AT STANFORD is made at the local level, cosistet with the decetralized ad etrepreeurial spirit of the uiversity. Ulike a corporatio, Staford is closer to a collectio of disparate, autoomous busiesses with widely varyig cost structures ad resources. As such, each pricipal ivestigator is accoutable for the resposible use of his/her grat fudig, each gift recipiet must esure that the gift fuds are used i accordace with the door s wishes, ad each school must fulfill the expectatios for teachig ad scholarship withi its available resources. Schedule 21 i Appedix B shows expedable fud balaces by academic uit ad by level of cotrol. BUDGET CONTROL The primary cotrol o local uit budgets at Staford is available fudig. Except for geeral oversight ad policies goverig the appropriate ad prudet use of uiversity fuds, the cetral admiistratio does ot place additioal limits o spedig. For example, if a faculty member eeds to hire a postdoctoral fellow to help carry out a particular research project, ad if grat fudig is secured to cover this expese, the uiversity does ot secod-guess this decisio. Coversely, two importat budget matters are cotrolled cetrally: faculty billets ad space. Because the majority of Staford s fudig is uder the direct cotrol of a faculty member, a departmet, or a school, these etities are able to support programs as log as they maitai a positive fud balace. This, however, does ot mea that the programs must operate with a surplus durig ay particular fiscal year. I fact, a deficit is usually reflective of a plaed use of prior year fud balaces. A simple example of this is whe a departmet receives a gift of $5.0 millio to be spet over five years. If the fuds are spet evely over the time period, the program will show a surplus of $4.0 millio i the first year ad will geerate a edig fud balace of $4.0 millio. I each of the ext four years, this program will receive o reveue, will exped $1.0 millio dollars, ad will thus geerate a aual deficit of $1.0 millio while drawig dow the fud balace of the gift. The Cosolidated Budget for Operatios, the aggregate of all of Staford s smaller budgets, is therefore ot cetrally maaged i the corporate sese. Noetheless, a great deal of plaig goes ito the developmet of the idividual uit budgets that aggregate ito the Cosolidated Budget of the uiversity. DEVELOPMENT OF THE CONSOLIDATED BUDGET AND THE ROLE OF GENERAL FUNDS Aother key elemet i the developmet of the uits budgets ad the Cosolidated Budget are uiversity geeral fuds, which are fuds that ca be used for ay uiversity purpose. Geeral fuds play a particularly importat role i the overall budget, because they cover may expeses for which it is difficult to raise restricted fuds, such as admiistratio ad campus maiteace. The mai sources of geeral fuds are tuitio icome, idirect cost recovery, urestricted edowmet icome, ad icome from the expedable fuds pool. Each school ad admiistrative uit receives geeral fuds i support of both academic ad admiistrative fuctios. The process for allocatig geeral fuds is cotrolled by the provost ad aided by the Budget Group, which icludes represetatio from both faculty ad admiistratio. The critical elemets of the process are a forecast of available geeral fuds, a thorough review of each uit s programmatic plas ad available local fudig, ad a assessmet of cetral uiversity obligatios such as buildig maiteace ad debt service. Balacig the eeds ad the resources is the ultimate goal of the Budget Group. The geeral fuds allocatio process is described i more depth i Chapter 1.

19 CONSOLIDATED BUDGET FOR OPERATIONS 3 CHAPTER 1 CONSOLIDATED BUDGET FOR OPERATIONS I this chapter we review the details of the 2017/18 Cosolidated Budget for Operatios, describe the geeral fuds allocatio process ad results, ad preset a forecasted Statemet of Activities. CONSOLIDATED BUDGET FOR OPERATIONS The Cosolidated Budget for Operatios provides a maagemet-orieted overview of all o-capital reveues ad expeditures for Staford Uiversity i the fiscal year. It is based o forecasts from the schools ad admiistrative areas. These forecasts are the merged with the geeral fuds budget forecast ad adjusted by the Uiversity Budget Office for cosistecy. The Cosolidated Budget icludes oly those reveues ad expeses available for curret operatios. It does ot iclude plat fuds, studet loa fuds, or edowmet pricipal fuds, although it does reflect edowmet payout. It also does ot iclude the budgets of Staford Health Care or Staford Childre s Health. The 2017/18 Cosolidated Budget for Operatios shows total reveue of $6,261.4 millio ad expeses of $5,853.3 millio, resultig i a et operatig surplus of $408.1 millio. After projected trasfers of $242.8 millio, predomiately to plat fuds, the Cosolidated Budget shows a surplus of $165.4 millio. Total reveues i 2017/18 are projected to icrease $296.8 millio or 5.0% over reveues expected i 2016/17. As has bee the case for several years, the total growth belies the variability amog the compoet reveue sources. Health care services reveue is expected to cotiue at double-digit growth, as Staford Medicie expads both o campus ad i ew faculty practice locatios throughout the Bay Area. Total ivestmet icome is also expected to icrease sharply, 2017/18 CONSOLIDATED REVENUES: $6,261.4M /18 CONSOLIDATED EXPENSES: $5,853.3M Other Ivestmet Icome 5% Other Icome 8% Studet Icome 15% Edowmet Icome 20% Uiversity Sposored Research 17% Other Operatig Expeses 30% Compesatio 62% Gifts & Net Assets Released from Restrictios 6% Health Care Services 20% SLAC 9% Debt Service 3% Fiacial Aid 5% 1 Net Reveues after Trasfers: $6,018.7 Millio

20 4 CONSOLIDATED BUDGET FOR OPERATIONS CONSOLIDATED BUDGET FOR OPERATIONS, 2017/18 [IN MILLIONS OF DOLLARS] 2016/ /17 AUXILIARY & 2015/16 BUDGET PROJECTED GENERAL GRANTS AND SERVICE CENTER ACTUALS JUNE 2016 ACTUALS FUNDS DESIGNATED RESTRICTED CONTRACTS ACTIVITIES TOTAL Reveues ad Other Additios Udergraduate Programs Graduate Programs Room ad Board Studet Icome Direct Costs Uiversity Idirect Costs , , ,045.6 Uiversity Sposored Research , SLAC Sposored Research , , ,122.8 Health Care Services , , Gifts ad Net Assets Released from Restrictios , , ,176.9 Edowmet Icome , Other Ivestmet Icome , , ,349.1 Ivestmet Icome , Special Program Fees ad Other Icome , , ,964.6 Total Reveues 1, , , , ,261.4 Expeses 3, , ,359.2 Compesatio , , Fiacial Aid Iteral Debt Service , , ,780.7 Other Operatig Expeses , , , ,625.0 Total Expeses 1, , , , , Operatig Results (281.9) Trasfers (125.6) (36.9) (119.2) Trasfers from (to) Edowmet Pricipal (83.5) (26.7) (110.2) (254.6) (159.1) (98.5) Trasfers from (to) Plat (61.9) (90.2) (2.3) (7.6) (162.0) Other Iteral Trasfers (10.8) 30.7 (228.9) (41.7) (346.2) (165.7) (187.1) Total Trasfers (72.7) (143.0) (257.8) (49.4) (242.8) Operatig Results ad Trasfers (0.0) (1.8) , , ,205.9 Begiig Fud Balaces , , , , , ,358.4 Edig Fud Balaces , , ,523.8

21 CONSOLIDATED BUDGET FOR OPERATIONS 5 as ormal ivestmet returs i the curret year drive the retur to full payout o the expedable fuds pool i 2017/18. Payout o the expedable fuds pool was roughly half of the full amout i 2016/17. Sposored research support is projected to declie by 2.7%, with SLAC totals decreasig 13.2% due to a sigificat declie i costructio activity. Uiversity sposored research, exclusive of SLAC, is budgeted to icrease by 3.8%. Studet icome is projected to grow slightly faster tha the approved tuitio rate icrease. Excludig SLAC, total reveues i 2017/18 are projected to grow by 7.2%. Total expeses i 2017/18 are forecast to grow by 4.1% over the projected year-ed results for 2016/17, ad by 6.3% excludig SLAC. SLAC expeses are expected to declie by 13.2% overall, drive by a $91.9 millio, or 30%, decrease i costructio activity compared to 2016/17. A very competitive salary program, targeted market-based salary icreases for some faculty ad staff, ad cotiued headcout growth combie to push total compesatio expeses up by 8.2%, excludig SLAC. Growth i geeral operatig expeses is expected to be comparable to that see i past years. The table o the facig page shows the projected cosolidated reveues ad expeses for 2017/18. For compariso purposes, it also shows the actual reveues ad expeses for 2015/16 ad both the budget ad the year-ed projectio for the curret fiscal year, 2016/17. Defiitios of key terms are provided below. THE CONSOLIDATED BUDGET BY PRINCIPAL REVENUE AND EXPENSE CATEGORIES Reveues Studet Icome Studet icome is expected to icrease by 3.8% i 2017/18 to $937.4 millio. Icreases i studet charges are approved by the Board of Trustees ad are guided by a umber of cosideratios: programmatic eeds, the effectiveess of the fiacial aid program, the impact of the ecoomy o the families of studets, ad Staford s pricig positio relative to peers. Tuitio ad Fees Staford expects to geerate $742.9 millio i tuitio ad fee reveue i 2017/18, a 3.6% icrease over 2016/17. Tuitio ad fees from udergraduate programs are projected to be 3.5% higher tha the curret year, cosistet with the approved tuitio rate. Graduate studet tuitio reveue will icrease by 3.8%, a slightly higher pace tha udergraduate tuitio, due to cotiued modest growth i total graduate studet erollmet. While tuitio ad fees will KEY TERMS Geeral Fuds: Urestricted fuds that ca be used for ay uiversity purpose. The largest sources are tuitio, urestricted edowmet icome, ad idirect cost recovery. Desigated Fuds: Fuds that come to the uiversity as urestricted but are directed to particular schools ad departmets, or for specific purposes by maagemet agreemet. Restricted Fuds: Iclude expedable ad edowmet icome fuds that ca oly be spet i accordace with door restrictios. Grats ad Cotracts: The direct compoet of sposored research, both federal ad o-federal. Idividual pricipal ivestigators cotrol these fuds. Auxiliaries: Self-cotaied etities such as Residetial & Diig Eterprises ad Athletics that geerate icome ad charge directly for their services. These etities usually pay the uiversity for cetral services provided. Service Ceters: Etities that provide services primarily for iteral cliets for which they charge rates to recover expeses. Net Assets Released from Restrictios: Uder GAAP, gifts ad pledges that cotai specific door restrictios prevetig their spedig i the curret fiscal year are classified as temporarily restricted, ad are ot icluded i the Cosolidated Budget for Operatios. Whe the restrictios are released, these fuds become available for use ad are icluded as part of the Cosolidated Budget o the lie Net Assets Released from Restrictios. These fuds iclude cash paymets o prior year pledges ad fuds trasferred from pedig fuds to gift fuds. Fiacial Aid: Icludes expeses for udergraduate ad graduate studet aid. Studet salaries, stipeds, ad tuitio allowaces are ot cosidered to be fiacial aid ad are icluded i other lies i the Cosolidated Budget. Formula Areas: Budget uits whose allocatios of geeral fuds are predetermied by a formula agreed to by the provost ad the uit. Pricipal formula uits iclude the Graduate School of Busiess, the School of Medicie, ad Cotiuig Studies/Summer Sessio.

22 6 CONSOLIDATED BUDGET FOR OPERATIONS cotribute oly 11.9% of Staford s total reveue i 2017/18, it will comprise 50.1% of geeral fuds. As such, it is a vital source of urestricted reveue. I additio to supportig faculty ad staff salaries, studet services, fiacial aid, ad other direct academic program eeds, tuitio plays a crucial role i fudig ifrastructure, support services, ad other operatioal activities. The geeral tuitio rate icrease for 2017/18, approved by the Board of Trustees i February, is 3.5%, which results i a rate of $48,987 for udergraduates ad o-professioal graduate studets. The rate icrease was set after careful cosideratio of the curret ecoomic circumstaces weighed agaist the budgetary eeds. Staford cotiues to be, alog with its peers MIT, Harvard, Yale, ad Priceto, oe of the lowest priced uiversities amog the highly selective private uiversities that comprise the Cosortium o Fiacig Higher Educatio (COFHE). The media tuitio of the COFHE uiversity cohort icreased 3.9% for 2016/17, leavig Staford s tuitio rak uchaged at 15th out of 17. The approved 3.5% tuitio icrease applies to the udergraduate tuitio rate, the geeral graduate tuitio rate, ad the graduate tuitio rates for first year MBA studets, the School of Egieerig, the School of Law, ad the School of Medicie. Room ad Board Total room ad board icome is projected to be $194.5 millio i 2017/18, icreasig by 4.3% over the curret year. The re-opeig of the Schwab Residetial Ceter, which is curretly uder reovatio, will push room ad board reveue i 2017/18 to rise somewhat faster tha the rate icrease, as more graduate studets are housed. I February, the Trustees approved a combied udergraduate room ad board rate icrease of 3.5% for 2017/18, brigig the udergraduate rate to $15,112. The udergraduate room rate will icrease by 4.4%, ad the 19-meal board pla will icrease by oly 2.2%. The graduate housig room rate will icrease by 4.75%. Staford s combied room ad board rate icreases cotiue to be less tha the COFHE uiversity media, ad, as a result, Staford s room ad board rakig i 2016/17 dropped from 11th to 12th out of 17. The 2017/18 recommeded rate icreases will allow Residetial ad Diig Eterprises (R&DE) to maitai Staford s high-quality residetial ad diig programs by supportig debt service o ew ad reovated facilities, iflatioary impacts o operatig costs (icludig the higher cost of attractig ad retaiig labor, elevated utility rates, ad the icreased security measures i techology), ad plaed escalatio i asset reewal. Sposored Research ad Idirect Cost Recovery Uiversity Uiversity sposored research reveue, excludig SLAC, is forecast to be $1,084.8 millio i 2017/18, a 3.8% icrease from 2016/17. The amout icludes direct research reveue from exteral grats ad cotracts ($806.8 millio) as well as reimbursemet for idirect costs icurred by the uiversity i support of sposored activities ($278.0 millio). SPONSORED RESEARCH REVENUE (Excludig SLAC) [IN MILLIONS OF DOLLARS] PERCENT 2016/ /18 CHANGE Federal Directs % No-Federal Directs % Total Directs % Total Idirects % Total Research 1, , % Curretly 69% of uiversity research fudig is provided by the federal govermet, ad that proportio has bee shrikig from 75% five years prior. Overall, federal direct research reveue is expected to reach $548.2 millio i 2017/18, a 1.9% icrease over 2016/17. Behid this modest icrease are very cotrastig growth trajectories betwee the School of Medicie (SoM) ad other academic uits. Over the last five years, the SoM has had close to 5% aual growth i federal research fudig, bolstered by ew research activity brought by icremetal faculty ad stable growth of support from the Natioal Istitutes of Health (NIH). Although the recet federal budget proposals may leave the uiversity research activity ope to risk, the SoM is cofidet that it will cotiue to hold a strog positio compared to peer istitutios uder the curret research climate ad projects a 5.0% icrease i the 2017/18 federal research budget. O the cotrary, federal research fudig for other academic uits has bee laguishig i the past five years, with a steady declie of about 2% a year. I 2016/17, o-medical schools have see less fudig support across all federal sposors except the NIH. The Natioal Sciece Foudatio, i particular, was dow by 7% as of the first six moths of the year. Those uits are cocered over ucertaities with the federal research outlook, ad may project a small declie or a relatively flat volume compared to the prior year. The oly exceptio is

23 CONSOLIDATED BUDGET FOR OPERATIONS 7 the School of Egieerig, aticipatig icreased spedig i the Bioegieerig Departmet due to ew faculty hires. Overall, federal research support for schools other tha SoM is forecast to decrease by 2.5%. O a brighter side, the uiversity has beefited from solid ad cosistet growth i o-federal direct research, averagig about 8.5% a year over the last five years, ad the tred is comparable betwee the SoM ad other academic uits. I 2017/18, o-federal direct research will reach $258.6 millio, a 7.5% icrease over the prior year. No-federal research activity will likely cotiue to be eergized by the icreased ivestmet from U.S. corporatios, foudatios, ad other o-profit orgaizatios. They together fud about 72% of the total o-federal research at Staford, ad their volumes escalated by 10% i the first six moths of 2016/17. Amog schools, the SoM forecasts a 8.9% icrease, i lie with the over 9% aual growth for the school i the past five years. Despite a estimated 30% pluge i the fudig from the Califoria Istitute for Regeerative Medicie (CIRM) i 2016/17, the SoM aticipates the fudig from the state s stem cell research agecy to remai flat i 2017/18. I the Dea of Research, fudig for the Global Climate ad Eergy Project, which sigaled declies i both 2015/16 ad 2016/17, will exted ito 2017/18 ad is aticipated to remai flat. Withi o-medical academic uits, growth i the rage of 4% to 6% is aticipated. The oly variatio lies i the Graduate School of Educatio, which estimates a 4% declie i aticipatio of multiple faculty retiremets i 2017/18, followig several years of robust growth i the school s ofederal research areas. Idirect cost recovery will total $278.0 millio i 2017/18, icreasig by 4.2%. The facilities & admiistratio rates (or idirect cost rate) will be the same as the rates i the prior year, with the o-campus orgaized research rate at 57.0%. The growth i idirect cost recovery will slightly outpace direct research volume for two reasos. First, fewer capital equipmet purchases are aticipated i 2017/18, a type of research activity exempt from idirect cost recovery. As a result, a higher portio of direct research fudig i 2017/18 will be assessed the idirect cost rate. Secod, the SoM projects idirect costs recovered from the aimal care facility to be 8% higher i 2017/18. SLAC Staford operates SLAC Natioal Accelerator Laboratory (SLAC), a federally fuded research ad developmet ceter, for the Departmet of Eergy (DOE). The DOE fuds over 95% of SLAC s budget. SLAC s sposored research budget of $559.4 millio i 2017/18 has two compoets: SLAC facility operatios, icludig research & developmet activities, ad DOE-fuded costructio projects. The facility operatios budget is aticipated to icrease modestly, reachig over $320 millio. The 2017/18 costructio budget is projected to declie approximately $90 millio from a high of $330 millio i 2016/17, due primarily to various sub-cotract activities widig dow. SLAC s $1 billio upgrade to the Liac Coheret Light Source (LCLS) is still o track with a aticipated $190 millio i fudig agai ext year. SLAC research ad costructio programs are discussed i more detail i Chapter 2. Health Care Services Strog growth is projected to cotiue ito 2017/18 for health care services icome with a budget of $1,253.2 millio, or a 11.6% icrease over the curret year. Health care services reveue is expected to cotiue to grow rapidly over the ext few years, as the School of Medicie recruits cliically active faculty ad cliicia educators i cojuctio with the expasio of Staford Health Care ad Staford Childre s Health. The School of Medicie ad the hospitals have a itegrated cliical strategy that icludes the growth essetial to maitaiig preemiece i a highly competitive health care market ad to providig the highly specialized care required for traiig purposes by a leadig academic medical ceter. The School of Medicie geerates more tha 90% of the uiversity s total health care services reveue, the majority of which is paid by Staford Health Care ad Staford Childre s Health through the professioal services ad fuds flow agreemets. These agreemets pass a portio of the hospitals cliical service reveues to the academic departmets based o cliicia productivity, with additioal paymets made for departmet overhead costs, medical directio leadership, programmatic developmet, ad for measures of quality, safety, ad value. Hospital paymets cover compesatio expeses for faculty, cliicia educators, ad staff who are directly ivolved i the cliical missio. I additio the fuds flow agreemets cover o-compesatio expeses of the cliical missio ad provide support of the academic ad research missio. Cliical reveues i 2017/18 are projected to icrease 12.9% to $1,011.8 millio. A additioal $133.6 millio of hospital paymets to the School of Medicie cover the uiversity s formula assessmet o the school s

24 8 CONSOLIDATED BUDGET FOR OPERATIONS cliical reveue, ret, use of the library, 3-D imagig, ad other o-cliical programs ad services. The remaiig $107.8 millio i health care services reveue represets paymets from the hospitals to other parts of the uiversity: $28.7 millio to Busiess Affairs, primarily for commuicatios services; $25.4 millio to Lad, Buildigs ad Real Estate for operatios ad maiteace ad utilities, the Marguerite shuttle service, ad parkig permits; $12.0 millio to the Office of Developmet for hospital fudraisig support; $11.4 millio to the Office of the Geeral Cousel for legal services; ad $23.5 millio to the cetral admiistratio for parkig structure debt service, Staford Ifrastructure Program fees, ad geeral overhead. Gifts ad Net Assets Released from Restrictios Reveue from expedable gifts ad et assets released from restrictios is budgeted to be $391.2 millio i 2017/18, comparable to the amouts i 2015/16 ad 2016/17. Because there is substatial volatility i the timig of gifts, i particular the use of pedig gifts, a zero growth assumptio is prudet for plaig purposes. Expedable gifts are those immediately available for purposes specified by the door ad do ot iclude gifts to edowmet pricipal, gifts for capital projects, gifts pedig desigatio, or o-govermet grats. Net assets released from restrictios iclude cash paymets o gift pledges made i prior years, as well as pedig gifts whose desigatio has bee determied. Ivestmet Icome I 2017/18, ivestmet icome is expected to icrease by $170.1 millio to $1,519.2 millio, a 12.6% icrease over 2016/17. This total icludes edowmet payout to operatios as well as other ivestmet icome described below. Edowmet Icome Edowmet payout to operatios i 2017/18 is expected to be $1,243.4 millio, a icrease of 5.7% over 2016/17. Edowmet icome icludes payout from idividual fuds ivested i the merged pool (MP), as well as specifically ivested edowmets (e.g., oil ad mieral rights), ad et retal icome from the Staford Research Park ad other edowed lads. The payout to a idividual edowmet fud ivested i the merged pool i 2017/18 will icrease by oly 1.6%, followig a year of o growth. Total merged pool payout, however, is expected to icrease by 5.2% due to ew gifts ad pledges to edowmet pricipal durig the remaider of the curret year ad throughout 2017/18, as well as trasfers by schools ad departmets of $119.2 millio from expedable balaces to edowmets at the ed of the curret fiscal year. We are also expectig to reivest $275 millio to the Tier I Buffer at the ed of the curret fiscal year, resultig from expedable fuds pool returs i excess of the 2016/17 expedable fuds pool payout. Together these additios cotribute roughly $35 millio to edowmet payout i 2017/18. The 2017/18 proposed spedig rate (payout per share) for the MP is derived from the applicatio of the uiversity s smoothig rule. The smoothig rule is used to dampe the impact o the budget of aual fluctuatios i the market value of the edowmet, thereby providig stability to budget plaig. Staford s smoothig rule uses the approved target payout rate of 5.5% to calculate a target payout per share i the curret year, 2016/17. Takig a weighted average of the target payout per share ad the curret year s actual payout per share results i a smoothed payout per share. The payout per share for 2017/18 is derived by icreasig the smoothed payout per share by the log-term growth factor of 3.5%. Fially, the 2017/18 proposed payout per share is expected to provide a overall edowmet payout rate that is withi the rage of 4.0% to 6.0%. The spedig rate was approved by the Trustees at the February 2017 meetig. Of the total edowmet icome, $261.3 millio or 21% is urestricted ad a source of geeral fuds. The urestricted edowmet icome icludes payout from urestricted MP fuds, icome geerated from Staford edowed lads, ad a small amout of other specifically ivested edowmet icome. The urestricted portio of edowmet icome is expected to icrease at a much faster pace (12.5%) i 2017/18 tha the restricted portio (4.0%), drive by the reivestmet of $275 millio of excess expedable fuds pool payout i the Tier I Buffer, as well as cotiued strog growth i real estate icome. Urestricted icome from Staford lads is projected to be $102.9 millio i 2017/18, providig early 40% of urestricted edowmet icome. Other Ivestmet Icome Other ivestmet icome is expected to icrease sharply from $172.2 millio i 2016/17 to $275.8 millio i 2017/18, a 60.1% jump. Other ivestmet icome comprises two categories of reveue: payout to operatios from the expedable fuds pool (EFP) ad earigs from the edowmet icome fuds pool (EIFP), ad

25 CONSOLIDATED BUDGET FOR OPERATIONS 9 ivestmet icome from several smaller sources as described below. The first of these sources, payout from the EFP, ca experiece extreme volatility but has a bufferig policy i place, as described below. The EFP is a collectio of thousads of idividual fuds ad is projected to have a 2017/18 year-ed balace of $4.2 billio. Approximately 80% of the fuds i the EFP receive o payout directly. Rather, a variable payout of 0% to 5.5% o the balaces of these so-called zero retur accouts, based o the actual EFP ivestmet returs durig the prior fiscal year, is paid to geeral fuds, both cetrally ad i the formula schools. The EFP is ivested mostly i the merged pool (MP), ad thus the EFP retur follows closely the retur o the MP. I the curret year, the zero-retur fuds, which comprise 82.8% of the EFP, will receive a payout rate of 2.5%, which was the total ivestmet retur o the EFP i the previous year, 2015/16. EFP returs are expected to be well above 5.5% i the curret year, so the EFP payout o the zero-retur fuds are budgeted at the full 5.5% allowed by policy. Both the expected icrease i the EFP balace ad the icrease i the ivestmet retur cotribute to the sigificat icrease i payout i 2017/18. The remaiig fuds ivested i the EFP receive a payout equal to a moey-market retur, which is expected to remai miimal at 0.5% i 2017/18, yieldig $3.6 millio. The EIFP is expected to ear $1.8 millio ad to have a fud balace of $355.0 millio at the ed of 2017/18. The $3.5 billio of edig fud balaces i the Cosolidated Budget for Operatios show o page 4 icludes all of the EIFP but oly $3.2 billio of the total $4.2 billio ivested i the EFP. This cosists of geeral operatig fuds, desigated fuds, expedable gifts, ad o-federal sposored research fuds. The portio of the EFP ot icluded i the Cosolidated Budget comprises roughly $770 millio i plat ad debt pool fuds ad $230 millio i studet loa, pedig, ad agecy fuds. The o-efp portio of other ivestmet icome comprises $46.6 millio i ivestmet icome distributed to support the operatios of the Staford Maagemet Compay ad the real estate divisio of Lad, Buildigs ad Real Estate; $19.3 millio i iterest icome o the Staford Housig Assistace Ceter (SHAC) portfolio; ad miscellaeous other ivestmet icome icludig rets from the Sad Hill Offices, security ledig, ad other iterest icome. The o-efp portio of other ivestmet icome is projected to be $98 millio i 2017/18. Special Program Fees ad Other Icome Special program fees ad other icome reveue is budgeted at $516.2 millio i 2017/18, a icrease of 1.5% over the expected level i 2016/17. This category is a collectio of reveue streams that icludes executive educatio istructio fees; techology licesig icome; academic corporate affiliates icome; ticket, admissio, ad broadcast fees for athletic ad other evets; coferece ad symposium reveues; retal icome from the Mid-Poit Techology Park ad the Welch Road ad Staford West Apartmets; ad participatio fees collected by the travel/study programs. The slower growth i 2017/18 is due partially to the tail-off of a major patet that accouted for over 70% of uiversity licesig icome ad partially to dimiishig retal icome from the Mid-Poit Techology Park as the uiversity embarks o the costructio of a admiistrative campus i Redwood City. This icome category also icludes a wide rage of other miscellaeous icome streams throughout the uiversity, ragig from retail reveues i Residetial & Diig Eterprises to fees for the use of various athletic facilities such as the golf drivig rage ad summer sports camps. Expeses Total Compesatio Total Compesatio i the Cosolidated Budget for Operatios icludes faculty, staff, bargaiig uit, ad studet assistatship salaries; frige beefits; tuitio beefits for research ad teachig assistats; ad other o-salary compesatio such as bouses ad icetive pay. Total compesatio i 2017/18 is budgeted to be $3,621.5 millio, a 7.8% icrease over the 2016/17 year-ed projectio of $3,359.2 millio. The approved merit programs for faculty ad staff, targeted market-based icreases, ad aticipated headcout growth drive this icrease. Salaries Total salary expese for faculty ad staff, icludig SLAC, is expected to grow by 7.7% i 2017/18 to $2,380.6 millio. Overall, projected salary expese i 2017/18 is the result of the approved salary program, icremetal fudig to icrease the competitiveess of faculty salaries for selected disciplies ad departmets, ad total combied headcout growth of 3.6% for faculty ad staff. The headcout growth assumptio is based o observatios of the 2016/17 actual headcout tred ad aalysis of historical average growth. Withi this aggregate, the uiversity aticipates faculty growth to be 1.8% i 2017/18. I recet years, the umber of

26 10 CONSOLIDATED BUDGET FOR OPERATIONS academic staff has grow sigificatly across the uiversity i support of expadig academic programs i the schools ad idepedet labs ad growth i cliical activities. I particular, the School of Medicie expects to hire 70 additioal cliicia educators i 2017/18, a sigificat driver i the overall icrease i academic staff, which is expected to icrease by 6.0%. The headcout for o-academic staff is projected to rise 3.5%, cosistet with recet years growth. Similar to past years, the approved salary program takes ito cosideratio the fiacial coditio of the uiversity as well as the curret labor market status. The aual salary program was guided by the uiversity s compesatio philosophy, which is to set faculty salaries at a level that will maitai Staford s competitive positio both atioally ad iteratioally for the very best faculty; ad to set staff salaries competitive withi the local employmet market i order to attract ad retai top talet. Departmet level faculty salary data aalysis shows that Staford cotiues to ejoy a competitive faculty salary positio i most areas, but targeted allocatios above the stadard faculty merit pool were made i selected cases. A review of salary survey data i several local markets idicates that staff salaries are i lie with market media salaries as of September The salary program for 2017/18 was established accordigly. Every year a miimum salary is set for research ad teachig assistats, although departmets ad programs may choose to pay more tha the miimum. The goal is for graduate studets icome to provide sufficiet fiacial support to meet the estimated o-tuitio livig expeses for a sigle graduate studet livig i uiversity housig. I 2017/18 the miimum salary will be icreased by 4.25%. Frige Beefits Frige beefits expese is projected to icrease 7.1% i 2017/18 to $733.6 millio, growig at a slightly slower pace tha salaries due to a drop i the mai frige beefits rate. The uiversity tracks the beefits costs separately for four distict employee groups ad charges a differet rate for each group based o the types of beefits that each is eligible to receive. The federally egotiated rates are calculated as a ratio of total beefits costs to total payroll for each group: Regular beefits-eligible employees Postdoctoral research affiliates Casual/temporary employees Graduate research ad teachig assistats I additio, the uiversity applies a fifth rate to eligible salaries to recover the costs of the Tuitio Grat Program (TGP), which provides udergraduate college tuitio beefits for the depedets of eligible faculty ad staff. The govermet does ot allow these charges, so the TGP rate is applied oly to faculty ad staff salaries that are ot charged to govermet sposored projects or academic service ceters. The TGP rate will drop for a secod year i a row from 1.75% to 1.60% i 2017/18, ad this cost comprises roughly $29.5 millio of the uiversity s total frige beefits expese. Niety-five percet of all frige beefits expese is icurred for regular beefits-eligible employees, ad the proposed rate for this group i 2017/18 is expected to decrease 0.3 rate poits over the egotiated rate for 2016/17. The frige beefits rates for postdoctoral research affiliates ad for casual/ temporary employees are expected to icrease i 2017/18, while the rate for graduate research ad teachig assistats is projected to decrease somewhat. FRINGE BENEFITS RATES NEGOTIATED PROPOSED 2016/ /18 Regular Beefits-Eligible Employees 30.7% 30.4% Postdoctoral Research Affiliates 22.6% 23.5% Casual/Temporary Employees 8.4% 8.5% Graduate RAs ad TAs 5.4% 5.0% Average Bleded Rate 28.3% 28.1% The major cost compoets cotributig to the regular beefits-eligible rate ad major chages are oted below: The major factor drivig the regular beefits-eligible rate dow is the projected cost for retiremet medical isurace. The cost of this program is projected to decrease from the budgeted 2016/17 amout of $19.0 millio to oly $10.1 millio i 2017/18, causig the rate to drop by 0.5 rate poits. The retiremet health pla beefit was chaged i The old program provided to retirees the same health beefits as active employees. Uder the ew program, the uiversity s cotributio to a retiree s health pla is a fixed dollar amout, based o years of service at the time of retiremet, ad the cotributio icreases at the pace of the uiversity s compesatio program rather tha medical iflatio. May employees were gradfathered ito the old pla, but each year a

27 CONSOLIDATED BUDGET FOR OPERATIONS 11 higher proportio of ew retirees fall uder the ew program. The sigificat decrease i the program costs i 2017/18 results from fewer retirees choosig to eroll i a health pla immediately upo retiremet, as well as a greater umber electig to waive coverage. Employee health plas comprise 32.2% of the frige pool for regular beefits-eligible employees ad are expected to add 0.2 rate poits i 2017/18. The cost to the uiversity for these plas is projected to be $210.6 millio, a icrease of 11.6% over the budgeted cost for the plas i 2016/17. The icrease is drive by a combiatio of erollmet growth ad medical cost iflatio. The average cost of the health plas per employee is projected to icrease by 7.0%. Startig i 2017/18, trasportatio beefits will be icluded i the frige pool. The program costs iclude Caltrai Go Pass, VTA Eco Pass, ad other trasportatio beefits to regular beefits-eligible employees ad salaried postdoctoral scholars. Iclusio of the $3.4 millio trasportatio program i the frige pool adds 0.15 rate poits to the RBE rate. A cash cotributio to the closed Staford Retiremet Auity Pla will icrease the rate by 0.2 rate poits, but will reduce the Pesio Beefit Guaraty Corporatio variable premium. The uder-recovery of frige costs i previous years will be slightly lower i 2017/18, resultig i a further 0.1 rate poit decrease. The 2017/18 postdoctoral research affiliates frige rate will icrease 0.9 rate poits from the 2016/17 egotiated rate, maily due to the iclusio of the trasportatio program i the beefits pool, medical iflatio, ad the impact of the carry forward from prior years. The frige rate for casual/temporary employees is projected to icrease by oly 0.1 rate poit. The rate for graduate research ad teachig assistats (RAs ad TAs) is expected to decrease by 0.4 rate poits due to the Cardial Care health isurace premium remaiig flat ad to the impact of the carry forward from prior years. Fiacial Aid Staford expects to sped a total of $298.2 millio o studet fiacial aid for udergraduate ad graduate studets i 2017/18, $42.9 millio of which will come from geeral fuds. Desigated ad restricted fuds ($238.0 millio) ad grats ad cotracts ($17.4 millio) will support the remaider. Total budgeted fiacial aid is 4.3% greater the projected total for 2016/17, as discussed below. Udergraduate Aid I 2017/18 Staford studets will receive $154.4 millio i udergraduate eed-based scholarships, of which $148.9 millio will be from Staford resources. I additio to Staford resources, $5.5 millio will come from federal grats, mostly Pell ad Supplemetal Educatioal Opportuity Grat (SEOG) grats, a amout comparable to 2016/17 but slightly less tha historical levels. Cal Grats, which are ot reflected i the Cosolidated Budget for Operatios as they are awarded directly to the studets, will provide $3.0 millio, a slight decrease from the curret year. Due to a major policy chage for fiacial aid at the federal level, udergraduate eed-based fiacial aid expese will icrease 4.4% over the projectio for 2016/17, a rate that is almost oe poit higher tha the growth i the studet budget. Applicatios for fiacial aid for 2017/18 will focus o data from the 2015 tax year, the so-called prior-prior year, to calculate a expected family cotributio. This chage greatly simplifies the applicatio process, as studets o loger have to estimate ad the later correct icome from the most recet tax year. It also allows the applicatio process to begi earlier i better aligmet with Staford s early admissio program. It is expected that overall paret cotributios will be lower, which is reflected i the growth i the fiacial aid budget. Staford has log bee committed to eed-blid admissios supported by a fiacial aid program that meets the demostrated fiacial eed of all admitted udergraduate studets. Sice 2008/09 oe of the hallmarks of the eed-based program has bee simple bechmarks that make it easy for prospective studets, particularly from low-icome backgrouds, to uderstad likely fiacial support from Staford. These bechmarks were updated for 2015/16 as follows: For families with total aual icome below $65,000 (formerly $60,000) ad typical assets for this icome rage, Staford will ot expect a paret cotributio toward educatioal costs. Tuitio, room ad board, ad other expeses will be covered with scholarship or grat fuds. For families with total aual icome below $125,000 (formerly $100,000) ad typical assets for this icome rage, the expected paret cotributio will be low eough

28 12 CONSOLIDATED BUDGET FOR OPERATIONS to esure that all tuitio charges will be covered with scholarship or grat fuds. Staford s fiacial aid program cotiues to be oe of the most geerous i the coutry, esurig that a family s ecoomic circumstaces will ot prevet admitted studets from erollig. The overall umber of aid recipiets i 2017/18 will be reduced slightly due to mior differeces betwee the size ad compositio of the curret seior class ad the expected icomig studet body i 2017/18. It is iterestig to ote the relative share of uiversity fudig sources supportig this critical program. Five years ago, presidet s fuds support was 20%, ad edowmet icome support at $75.0 millio provided 59%. Sice the, geerous door support has allowed edowmet icome support to steadily icrease to 71% of Staford resources supportig eed-based aid. Icremetal gifts to edowmet for eedbased aid result i aual edowmet payout that outpaces stadard icremetal costs of the program. Abset major chages i the program, the icreases i edowmet payout allow for slower icreases i support from geeral fuds. The table below shows the detail of udergraduate eed-based scholarship aid. Schedules 8 ad 9 i Appedix B provide supplemetal iformatio o udergraduate fiacial aid. Athletic scholarships, which are ot eed-based, will be awarded to udergraduate studets i the amout of $26.0 millio i 2017/18, a 3.5% icrease over the projectio for the curret year. Graduate Aid Staford provides several kids of fiacial support to graduate studets, the total of which is expected to reach $431.9 millio i 2017/18. As the table o the facig page idicates, this icludes the tuitio compoet of fellowships i the amout of $117.4 millio, which is reflected i the Fiacial Aid lie of the Cosolidated Budget. Fiacial aid for graduate studets is expected to icrease by 4.5%, cosistet with the plaed icreases i tuitio, more geerous graduate support i selected disciplies, ad projected icrease i the umber of graduate studets. The table also shows the budgets, ot represeted i the Fiacial Aid lie of the budget, for stipeds, tuitio allowace, ad RA ad TA salaries of $314.9 millio. Cosistet with the presetatio of Staford s fiacial statemets, tuitio allowace (tuitio beefits for RAs ad TAs) ad RA ad TA salary expeses are i the Compesatio lie, ad the stiped amout is i the Other Operatig Expeses lie of the Cosolidated Budget for Operatios o page 4. The miimum rate for TA ad RA salaries ad stipeds will icrease by 4.25% i 2017/18; tuitio allowace expese is expected to icrease by 6.5%, higher tha the tuitio rate icrease due to more RAs ad TAs, particularly i the School of Egieerig ad the School of Medicie. Graduate studet support is fuded by all of Staford s various fud types, with the exceptio of service ceter fuds. I aggregate, urestricted fuds (geeral fuds ad desigated fuds) cotribute roughly 35%, restricted fuds (gifts ad edowmet) support about 41%, ad grats ad cotracts UNDERGRADUATE NEED-BASED SCHOLARSHIP AID [IN MILLIONS OF DOLLARS] 2012/ / / / / /18 SOURCE OF AID ACTUAL ACTUAL ACTUAL ACTUAL PROJECTED PLAN Departmet Fuds ad Expedable Gifts Edowmet Icome Presidet s Fuds - The Tier II Buffer 9.3 Presidet s Fuds - The Staford Fud Geeral Fuds Subtotal Staford Fuded Scholarship Aid Federal Grats Total Udergraduate Scholarship Aid Geeral Fuds as a Share of Staford Fudig 18% 19% 17% 13% 15% 15% Presidet s Fuds as a Share of Staford Fudig 20% 14% 14% 14% 12% 12% Edowmet fuds as a Share of Staford Fudig 59% 64% 66% 70% 70% 71% Number of Studets 3,417 3,278 3,254 3,196 3,195 3,185

29 CONSOLIDATED BUDGET FOR OPERATIONS /18 FINANCIAL AID AND OTHER GRADUATE STUDENT SUPPORT FROM STANFORD RESOURCES [IN MILLIONS OF DOLLARS] PROJECTED DESIGNATED 2016/17 GENERAL AND GRANTS & YEAR-END FUNDS RESTRICTED CONTRACTS TOTAL Studet Fiacial Aid Udergraduate UG Athletic Graduate Total Other Graduate Support 84.3 Stipeds & Health Isurace Surcharge Tuitio Allowace RA/TA S&B Total Postdoc Support Total Studet Support This umber is $500,000 higher tha the Staford Fuded Scholarship Aid figure above because it icludes federal grats for o-eed-based aid recipiets. supply the remaiig 24%. However, the patters of fudig vary substatially withi the schools. Not surprisigly, grats ad cotracts provide a sigificatly higher proportio of graduate studet fudig i the research-itesive schools like Medicie ad Egieerig. The professioal schools rely almost exclusively o restricted fuds. While ot matriculated as graduate studets, Staford also provides support to postdoctoral research affiliates. More tha sixty percet of these idividuals work i the School of Medicie, ad 68.2% of support for all postdocs is provided by sposored research fudig. Postdocs are charged a tuitio fee of $125 per quarter, which is mostly covered by school fuds as well as by geeral fuds. Postdocs receive a salary or a stiped ad health beefits i exchage for their work. The total expese for postdocs is expected to be $146.1 millio i 2017/18, a icrease of 5.5% over 2016/17. Schedule 5 i Appedix B details graduate studet ad postdoc support by source of fuds. Iteral Debt Service Staford issues debt securities i the capital market to fiace capital projects ad to provide bridge fiacig for the receipt of gifts for capital projects. Iteral loas are advaced to projects ad amortized over the useful life of assets i equal istallmets. These iteral loas are assessed the Budgeted Iterest Rate (BIR), which is the weighted average rate of the debt issued to fiace capital projects ad icludes bod issuace ad admiistrative costs. The BIR is set at 4.25% for 2017/18, o chage from the rate of the past four years. Iteral debt service i the Cosolidated Budget is projected to be $199.3 millio i 2017/18, oly $200,000 more tha i 2016/17. It icludes debt service icurred o the iteral loas used to fiace capital projects ad bridge-fiace the receipt of gifts, but excludes $9.6 millio of debt service for the Rosewood Sad Hill Hotel ad the Sad Hill Road Office Complex. The reaso for a essetially flat iteral debt service expese is two-fold. I 2016/17, $3.6 millio of remaiig debt was writte off for existig two-story buildigs i Escodido Village (EV) after they were demolished for the costructio of the ew EV Graduate Resideces. This oe-time write-off, which iflated the debt service amout i 2016/17, will o loger exist i the 2017/18 budget. Noetheless, icremetal debt service from additioal housig projects will offset this decrease i 2017/18. The most sigificat icremet is the $2.6 millio for the Coloade, a apartmet complex acquired by the uiversity i 2016/17 as part of the Housig Acquisitio Iitiative. $1.7 millio of debt service is also aticipated for the Uiversity Terrace Faculty Homes project before the housig uits are fully occupied i 2018/19.

30 14 CONSOLIDATED BUDGET FOR OPERATIONS Other Operatig Expeses Other operatig expeses iclude all o-salary expeditures i the Cosolidated Budget except fiacial aid ad iteral debt service, which are detailed separately above. This category, which accouts for early 30% of uiversity cosolidated expeses, will total $1,734.2 millio i 2017/18, decreasig by 2.6% from the projected 2016/17 level. The decrease is etirely attributable to SLAC s costructio program, whose costs are expesed rather tha capitalized as the facilities are owed ad depreciated by the federal govermet. After accelerated costructio i 2016/17, the spedig for oe of SLAC s major capital projects the upgrade of the Liac Coheret Light Source (LCLS-II) is scheduled to slow dow, lowerig SLAC s o-salary expediture to $297.7 millio, a reductio of early 24%. Exclusive of SLAC costructio costs, the growth rate of other operatig expeses will be 3.3%. A few expediture compoets have see icreases ragig from 5% to 10% i recet years, due partially to the iflatio i the local ecoomy ad partially to icreasig busiess eeds across the uiversity. However, i light of the tepid growth of edowmet payout i 2016/17 ad 2017/18, may uits have implemeted cost cotrol strategies to moderate the growth of o-salary expeditures. Several uits have eve strategically applied budget cuts to a portio of their o-salary budgets. This tred will cotiue ito 2017/18. As a result, other operatig expeses are expected to icrease at a much slower pace tha i prior years. totalig $281.0 millio i 2017/18. Fifty percet of these expeses are for the purchase of materials ad supplies i laboratories ad research settigs. After the sale of the Blood Ceter to Staford Health Care, the expediture level of lab materials leveled off i 2015/16. Noetheless, ormal growth of 3.5% is aticipated for both 2016/17 ad 2017/18. Expeses for professioal services are the third largest compoet. Largely comprisig legal, accoutig, ad cosultig services, this expese category is projected to be $230.7 millio i 2017/18, a 6.5% icrease. Although fluctuatig year over year, it has show robust growth ragig from 6% to 9% a year, propelled by idividual uits operatioal eeds i a very decetralized busiess eviromet. Also icluded i other operatig expeses are stipeds for graduate studets ad postdoctoral scholars ad other otuitio aid, risig to $148.8 millio i 2017/18. Close to sixty percet of expeses i this category are for graduate studet stipeds. They will icrease 5.0%, i aticipatio of average stiped paymet growth ad graduate studet erollmet growth. Expeses related to geeral ad admiistrative services will icrease modestly to $144.5 millio. They represet a diverse rage of exteral paymets for o-professioal services, icludig isurace, permits, royalties, marketig, ad advertisig services. This expese category experieced oly 2.5% of growth as of the first six moths of 2016/17, ad that tred is expected to cotiue as may uits have deliberately costraied their geeral o-salary budgets i the face of slower edowmet payout growth i the ear future. OTHER OPERATING EXPENSES [IN MILLIONS OF DOLLARS] Besides the SLAC o-salary expese, capital equipmet ad library materials is the oly category expected to declie, PERCENT reducig by 8.4% to $95.1 millio. I 2016/17, the uiversity MAJOR COMPONENTS 2016/ /18 CHANGE purchased a set of advaced microscopic istrumets for SLAC No-Salary % the fields of biology ad biomedical scieces, which cost approximately Materials ad Supplies % $14 millio. Professioal Services % Stipeds ad Other Aid % The remaiig types of expeses comprise exteral paymets Geeral Services % for repairs ad maiteace of buildigs, equipmet, Repairs ad Maiteace % ad vehicles ($113.0 millio); paymets for retal ad leases Capital Equipmet ad ($77.1 millio), which have grow 15% o a compouded aual basis due to the expasio of off-campus facilities ad Library Materials % Telecommuicatios ad Utilities % housig uits; exteral paymets for telecommuicatios Other % ad utilities commodities i uiversity buildigs ($54.9 millio); Total 1, , % ad services purchased from Staford Health Care ad Staford Childre s Health ($48.5 millio). Expeses related Followig the SLAC o-salary expediture, the largest compoet of other operatig expeses is materials ad supplies, to repairs ad maiteace ad utilities will be addressed i more detail i the followig sectios. The remaider,

31 CONSOLIDATED BUDGET FOR OPERATIONS 15 $242.9 millio, icludes a variety of expeditures, ragig from travel expeses, to the cost of food associated with residetial ad diig services, to other property related expeses. Utilities I the past few years, Staford s eergy utilities, icludig electricity, steam/hot water, ad chilled water, have bee udergoig major chages. The uiversity completed the Staford Eergy System Iovatios (SESI) project i The Staford Solar Geeratio Statio, a 68-megawatt peak solar plat, also came olie at the ed of This solar plat, alog with 5 megawatts of rooftop solar systems beig implemeted o campus, provides 53% of Staford s total electricity use. The remaiig 47% of the power comes from the geeral Califoria grid, which is curretly at least 27% reewable ad will grow to 50% reewable by 2030 per state law. After two cosecutive years of decreases, the utilities budget will stay essetially flat at $103.4 millio i 2017/18. Prior year utility budgets icluded $30 millio to write-off the utility assets associated with the old eergy system, icludig $2 millio i 2016/17, which is the fial write-off. As the write-off costs scaled dow, the utilities budgets have show steady declies over the past two years. Offsettig this dowward tred are icreases i electricity prices ad water cosumptio i 2017/18. I 2017/18, the purchase price of electricity is expected to icrease 2% due, i large part, to the full-year implemetatio of more expesive reewable eergy. Water cosumptio is also aticipated to rise as the drought eases ad ew facilities come olie. The delivery of utilities to the campus ivolves three sigificat compoets: 1) exterally purchased utilities (36%), 2) debt amortizatio o capital expeditures (40%), ad 3) operatios ad maiteace i support of utility delivery (24%). Lad, Buildigs ad Real Estate (LBRE) provides the majority of campus utilities ($90.4 millio i 2017/18) through charge-out rates that are a fuctio of the total costs of the three compoets oted above ad uits cosumptio of the respective utilities. Uits purchase a additioal $12.9 millio of utilities from exteral providers, icludig the City of Palo Alto, Pacific Gas & Electric, Costellatio Eergy, ad the hospitals. Some examples are $6.2 millio paid by the School of Medicie for utilities at the Staford Research Park ad Medical Ceter buildigs; $3.7 millio paid by Residetial & Diig Eterprises primarily to cover the utility eeds at Muger, Escodido Village, ad off-campus housig uits; ad $1.0 millio by the Office of the Presidet ad Provost for utilities i the commo areas ad vacat housig uits of Staford West, Welch Road, ad Coloade properties. Operatios & Maiteace Operatios & Maiteace (O&M) icludes grouds maiteace, custodial, trash, recyclig, elevator repair, gutter maiteace, re-lampig, ad other services alog with prevetive ad reactive maiteace o buildigs, ifrastructure, equipmet, ad vehicles. The total O&M budget for the uiversity is projected to be $189.1 millio i 2017/18, risig 4.0% from 2016/17. The largest compoet i the O&M budget is the exteral paymet for repairs ad maiteace, which is a subset of other operatig expeses discussed above. It will icrease 5.0% to $113.0 millio i 2017/18, due to a combiatio of iflatioary cost rise ad icremetal O&M eeds for ew academic, admiistrative, ad athletic facilities. They iclude the ewly reovated Kigscote office space, the Bass Biology Buildig, the Athletic Academic Advisig ad Rowig Buildig, ad additioal outdoor lightig, pathways ad water ways maiteace. The total O&M budget also ecompasses sigificat expeses that are foud i other lies of the Cosolidated Budget: 1) $39.1 millio of iteral O&M services performed by the service ceters i LBRE, icludig most of the grouds services for the campus, approximately 50% of the buildig maiteace, ad 100% of the ifrastructure maiteace (e.g., storm drais ad roads). These service ceter expeses are reflected i the other iteral trasfers lie of the Cosolidated Budget. 2) $20.2 millio of labor costs for O&M staff hired by idividual uits. A sigificat portio, $14.8 millio, resides i two auxiliary uits, Residetial & Diig Eterprises (R&DE) ad DAPER. They employ bargaiig uit staff to perform custodial ad maiteace services i housig ad athletic facilities. The labor costs are captured i compesatio expeses of the Cosolidated Budget. 3) $10.5 millio of other o-salary expeses directly associated with the provisio of O&M services. They pricipally iclude costs for temporary services, cotract admiistratio, ad equipmet retals for performig O&M. They are dispersed across a variety of other operatig expese items i the Cosolidated Budget.

32 16 CONSOLIDATED BUDGET FOR OPERATIONS 4) $6.3 millio of services charged by Staford Health Care, mostly icurred by the School of Medicie (SoM). I additio to LBRE, several other uits oversee O&M for large areas of the campus. R&DE provides the operatios ad maiteace for approximately 33% of the campus; SoM for about 11%; ad DAPER for approximately 6%. The Graduate School of Busiess (GSB) is fiscally resposible for operatios ad maiteace of the Kight Maagemet Ceter ad the ew Highlad Hall. Trasfers The trasfers sectio of the Cosolidated Budget for Operatios accouts for the trasfers of fuds betwee uits, betwee fud types, ad out of the Cosolidated Budget altogether, ad yields the chage i fud balaces expected i each fud type ad i the Cosolidated Budget as a whole. I 2017/18, trasfers result i a et reductio from operatig results of $242.8 millio. The schools, admiistrative departmets, ad cetral admiistratio authorize movemets of fuds out of operatios to create other types of assets. These assets iclude studet loa fuds, fuds fuctioig as edowmet (FFE), capital plat projects or reserves, ad fuds held i trust for idepedet agecies such as the Howard Hughes Medical Istitute, the Caregie Istitutio, ad the Associated Studets of Staford Uiversity. These trasfers to ad from assets vary widely from year to year, ad a sigle trasactio ca greatly affect these umbers ad the resultig bottom lie of the Cosolidated Budget. Usig iformatio provided by budget uits, ad combiig that iformatio with cetral admiistratio commitmets, the Cosolidated Budget for Operatios adds or subtracts these trasfers from the operatig results (reveues less expeses). Trasfers to Edowmet Pricipal This lie represets trasfers of expedable fuds to edowmet pricipal, which create FFE, or withdrawals of FFE to support operatios. I 2017/18 Staford is projectig that a et $110.2 millio will be trasferred to FFE from curret operatig fuds. This figure is iformed by the uits idividual budget plas but has bee icreased by the Uiversity Budget Office to reach a level comparable to the actual results i each of the past five years. Most ofte schools ad departmets idetify excess fuds to ivest i FFE durig the year-ed process whe their operatig results are kow ad may ot iclude these actios i their budget plas. Trasfers to Plat The trasfers i this category are primarily for capital projects. Total trasfers to plat of $162.0 millio are plaed for 2017/18. Roughly $124 millio of this total are trasfers made from cetral uiversity fuds ad iclude just over $100 millio from the Capital Facilities Fud (CFF) ad the Facilities Reserve to support plat projects (see more o the CFF i Chapter 4), $10 millio for faculty home purchases, ad $15 millio for Staford Ifrastructure Program projects fuded from the hospitals. The School of Medicie plas to trasfer $28 millio to plat to support the Ceter for Academic Medicie 1, the Staford Oak Garde Childre s Ceter, ad phases 2 ad 3 of the reovatio of the Li Ka Shig Ceter. Lad, Buildigs ad Real Estate will trasfer $7 millio from the Plaed Maiteace Program for capital reewal projects. The remaider is made up of smaller amouts trasferred to capital projects out of other uits. Other Iteral Trasfers Additioal fiacial activity affects the et results of the Cosolidated Budget, icludig iteral reveue ad iteral expese, which are geerated from those charges that are made betwee departmets withi the uiversity for services provided through charge-out mechaisms. Commuicatio services provided by Busiess Affairs IT to uiversity departmets are oe type of iteral reveue ad expese. Aother is the charge that the Departmet of Project Maagemet (the group that maages costructio projects o campus) allocates to capital projects that use their services. These charges cotribute to the reveue ad expese of idividual departmets ad fud types but, ultimately, are etted agaist each other i the presetatio of the Cosolidated Budget to avoid double coutig. There is, however, a et $29.4 millio of iteral reveue flowig ito the Cosolidated Budget, primarily from capital plat fuds, which are outside the Cosolidated Budget, ito service ceters ad other fuds withi the Cosolidated Budget. Additioally, this amout icludes trasfers of curret fuds to studet loa fuds, such as the loa forgiveess programs i Graduate School of Educatio ad Law. It also icludes ay trasfers from livig trusts ad pedig fuds.

33 CONSOLIDATED BUDGET FOR OPERATIONS 17 GENERAL FUNDS The geeral fuds budget is a essetial elemet of the Cosolidated Budget, because geeral fuds ca be used for ay uiversity purpose, ad they support the ecessary admiistratio ad ifrastructure for all core activities at the uiversity. The mai sources of these fuds are studet tuitio, idirect cost recovery from sposored activity, urestricted edowmet icome, ad icome from the expedable fuds pool (EFP). Each school receives a allocatio of geeral fuds, which supports both academic ad admiistrative fuctios. Admiistrative uits are supported almost etirely by geeral fuds. Geeral fuds reveue i 2017/18 is projected to be $1,450.7 millio, a icrease of 10.2%, or $133.8 millio over the expected level for 2016/17. Nearly 50% of this icrease is due to a $64.0 millio payout o zero-retur fuds i the EFP. I 2016/17, icome from EFP to geeral fuds was about half of the historical average, because the EFP ivestmet retur i the prior year was oly 2.5%, sigificatly below the uiversity 5.5% stipulated payout. I 2017/18, geeral fuds will receive the full payout i aticipatio of a ivestmet retur above 5.5% i 2016/17. EFP payout is discussed i detail i the earlier sectio o ivestmet icome. Supplemetig the higher EFP payout to geeral fuds are a $26.1 millio icrease i studet icome, largely reflectig icreased tuitio rates, ad a $29.1 millio icrease i edowmet icome, propelled by payout growth i urestricted edowmets ad strog retal icome from Staford edowed lads. Other small icreases, totalig $14.6 millio, come from growth i idirect cost recovery, health care icome, ad other exteral icome. 2017/18 NON-FORMULA GENERAL FUNDS Per egotiated formula arragemets, $200.5 millio of geeral fuds will flow to the School of Medicie, the Graduate School of Busiess, ad other formula uits. I additio, $146.3 millio is set aside for the Capital Facilities Fuds, the Academic Facilities Reserve, the Housig Reserve, ad other smaller items. The remaiig $1,103.9 millio of geeral fuds are allocated by the provost to o-formula uits. Durig the aual geeral fuds budgetig process, each budget uit meets with the Budget Group, the provost s advisory body composed of seior faculty ad admiistrators to, 1) review the programmatic goals ad priorities of the orgaizatio; 2) report o fiacial status ad progress of curret programs; 3) discuss faculty ad studet growth ad fudig plas; ad, 4) submit requests for icremetal geeral fuds. At the ed of the process, the provost makes allocatio decisios based o the uits presetatios, cosultatio with the Budget Group, ad a fial forecast of available geeral fuds. The Budget Group took a cautious approach i allocatig geeral fuds this year, guided by three mai areas of focus. First, the group stressed the eed to stregthe faculty ad staff compesatio programs, i a effort to address regioal affordability issues. Secod, the group was midful of slower growth i edowmet payout i the recet fiscal years ad its impact o schools whose budgets are heavily depedet o edowmet icome. Third, the provost iteded to maitai a reasoable geeral fuds surplus to have the capacity to 1) respod to importat iitiatives arisig from the uiversity log-rage plaig, a process spaig from sprig 2017 to witer 2018; ad 2) prepare for potetial shortfalls i research fudig give ucertaities with federal research support. I light of those areas of cocers, $19.9 millio was allocated to fud compesatio programs ad associated frige beefits, icludig a very competitive salary program for both faculty ad staff i 2017/18. $4 millio of edowmet mitigatio fuds were provided to selected schools to bridge the gap betwee edowmet payout growth ad expese growth. Lastly, $20 millio of cotigecy fuds were set aside agaist research ucertaities ad outcomes from the log-rage plaig process. I additio, $18.6 millio of icremetal geeral fuds were allocated to uits i support of specific programs. Withi that, $6.8 millio is distributed to existig programs presetly o oe-time geeral fuds or reserve fuds, ad $6.0 millio is for the ehacemet of curret programs. The remaiig $6.8 millio will fuel the start-up of ew programs ad fud ew positios. The icremetal allocatios are reflected i the pie chart o the followig page. They are distributed amog academic/faculty, admiistrative, ad other programs i relatively eve proportios: $6.9 millio will support faculty ad core academic programs; $5.9 millio will bolster various

34 18 CONSOLIDATED BUDGET FOR OPERATIONS 2017/18 BASE GENERAL FUNDS ADDITIONS: $74.7 MILLION [IN MILLIONS OF DOLLARS] Market-based Adjustmets 32.1 Edowmet Mitigatio 4.0 No-Salary & Facilities Cotigecy 20.0 Base Coversio 6.8 Program Ehacemet New Programs Salaries & 5.8 Beefits 19.9 Icremetal Allocatios 18.6 Admiistrative Support 5.9 Other 5.9 Academic/Faculty Support 6.8 admiistrative fuctioal areas; ad $5.9 millio will be spet o a variety of other programs, icludig ew facilities, studet service programs, ad those that improve busiess systems ad campus security. The goal to icrease campus affordability agai plays a istrumetal role i makig icremetal allocatios. Of these allocatios, $2.0 millio is aimed at resolvig faculty salary equity ad retetio issues, ad $777,000 of base support is allotted to the faculty childcare assistace program, icludig icreasig the gross icome thresholds for program eligibility ad aual childcare award amouts. Amog other faculty ad academic programs, the Faculty Icetive Fuds (FIF) ad Faculty Developmet Iitiative (FDI) received $1.8 millio towards ew billets; ad the Evirometal Health & Safety departmet received over $700,000 to permaetly fud lab safety positios ad commuicatio programmig as a strategic move to raise the research safety profile of the uiversity (see detailed discussio o the facig page). I the admiistrative areas, icremetal geeral fuds are geared towards relievig workloads i academic support areas, drive by expaded busiess eeds ad icreasig operatioal complexity. For istace, $700,000 is appropriated to the Admissio ad Fiacial Aid Office to hadle the growig umber of applicatio reviews ad to maage the expaded alumi iterview program. A equal amout of fuds is provided to the Office of Developmet to maitai ad add developmet ad stewardship officers, give the risig umber of gift prospects ad school-specific fudraisig eeds. Icremetal allocatios made to studet areas also highlight the uiversity s cotiuig efforts to erich the studet experiece ad fiacial support. Sigificat icremets iclude $900,000 to fud additioal tuitio allowace for research assistats ad close to $550,000 to covert the Commuity Egagemet ad Diversity uit icludig the Diversity ad First-Ge Office withi Studet Affairs from oe-time to base support. Furthermore, approximately $1.7 millio will support icremetal O&M ad utilities eeds for ew buildigs ad facilities, icludig, but ot limited to, the Bass Biology Buildig ad the ewly-reovated Kigscote Garde. Additioal resources, totalig $2.5 millio, will help boost campus security ad busiess applicatios. The latter icludes the rollout of the ADAPT (Alumi ad Developmet Applicatio Trasformatio) system, the maiteace of a expaded uiversity etwork, the maagemet of the ewly-implemeted course evaluatio platform, ad the expasio of the Graduate Fiacial Plaig applicatio.

35 CONSOLIDATED BUDGET FOR OPERATIONS 19 ENVIRONMENTAL HEALTH AND SAFETY I a follow-up to the 2014 faculty-led task force o Advacig Safety Culture i the uiversity laboratory, ad with the ecouragemet of the Uiversity Budget Group, Evirometal Health ad Safety (EH&S) developed a multi-year strategic pla to address the fidigs ad recommedatios from the Task Force report. The overarchig focus of EH&S s curret efforts is o advacig ad implemetig a effective ad resposive culture of safety across the Uiversity. The five key priorities are: Research ad Academic Support EH&S ca help prevet mistakes ad better aticipate risk i our campus commuity by coordiatig ad itegratig more fully with research, teachig, ad learig activities that are itegral to Staford s missio. Furthermore, by itegratig safety (i.e., buildig it ito the way researchers ad faculty thik ad work), EH&S ca reduce admiistrative burde ad positively impact the ext geeratio of thought leaders. Istitutioal Emergecy Maagemet ad Cotiuity Plaig No uit or area of the uiversity is isolated from the impact of a emergecy, ad the eed to prepare ad pla is uiversal. The focus is to build o existig efforts to esure life safety by helpig campus parters icrease resiliecy ad limit disruptio to critical fuctios through pre-plaig, traiig, ad exercises. Ijury Prevetio ad Loss Protectio Prevetig ad reducig workplace ijuries is essetial to advacig employee welless ad campus-wide operatioal efficiecy. Itegratio of safety programs with the delivery of medical services through the o-campus Occupatioal Health Ceter (OHC) is istrumetal to the log-term strategy. Busiess Processes ad Data Maagemet As a result of compliace eeds, EH&S has made substatial ivestmets i techology ad data maagemet. By focusig o the user experiece, EH&S ca sigificatly impact the utility of safety-related systems ad services. Outreach ad Commuicatios Effective commuicatio ad outreach programs are essetial to the success of safety ad health iitiatives. A comprehesive broad-based commuicatio strategy will facilitate behavioral ad attitudial chages withi our campus commuity. To achieve these strategic goals, EH&S has idetified a combiatio of resources ad guidig priciples. EH&S will receive $700,000 of base geeral fuds i 2017/18 ad will ivest it ito iitial efforts focusig o: 1) esurig appropriate techical resources are available to support myriad ad ever chagig research programs, icludig ewly emergig techologies, as well as providig the expertise ecessary to address occupatioal safety challeges across the broader campus; 2) improvig systems ad processes to make it easier for all faculty, staff, ad studets to act ad perform their work safely; ad 3) ehacig traiig, outreach, ad commuities of practice that eable safety kowledge to be more efficietly dissemiated. Through o-goig egagemet, EH&S will advace a culture that itegrates safety ad health seamlessly with the work of laboratories ad classrooms, brigig safety ito the curriculum ad the o-boardig processes of all ew employees ad researchers to be passed alog to future geeratios whe studets, faculty, ad staff go out ito the world.

36 20 CONSOLIDATED BUDGET FOR OPERATIONS PROJECTED STATEMENT OF ACTIVITIES Staford Uiversity, as a ot-for-profit istitutio ad a recipiet of restricted doatios, uses a fud accoutig approach to maage itself iterally. Staford also presets a Statemet of Activities, prepared i accordace with accoutig priciples geerally recogized i the Uited States (GAAP). The Statemet of Activities summarizes all chages i et assets durig the year (both operatig ad o-operatig). The table o the ext page compares the Cosolidated Budget for Operatios with the projected operatig results sectio of the Statemet of Activities. Cash resources are classified ito fud groups, which are subject to differet legal ad maagemet costraits. There are four differet categories of fuds: 1) Curret Fuds, which iclude reveue to be used for operatig activities e.g., tuitio reveue, sposored research support, edowmet payout, ad other ivestmet icome; 2) Edowmet Pricipal Fuds, which iclude all of Staford s edowmet fuds, both those restricted by the door, ad those desigated as edowmet fuds by uiversity maagemet; 3) Plat Fuds, which iclude all fuds to be used for capital projects, such as costructio of ew facilities or debt service; ad 4) Studet Loa Fuds, which iclude those fuds to be let to studets. The Cosolidated Budget for Operatios icludes oly curret fuds, ad reflects the sources ad uses of those fuds o a modified cash basis that more closely matches the way the uiversity is maaged iterally. Withi these curret fuds, specific fuds are further classified by their purpose ad level of restrictio. The Cosolidated Budget for Operatios also reflects the trasfer of curret fuds for ivestmet i other fud groups: fuds fuctioig as edowmet, studet loa fuds, ad plat fuds. For example, a school may choose to trasfer operatig reveue to fud a future capital project. Similarly, a departmet may decide to move uspet curret fuds to the edowmet, either to build capital for a particular purpose, or to maximize the retur o those fuds as a log-term ivestmet. I both these istaces, these fuds are o loger available to support operatios, so they decrease the Cosolidated Budget for Operatios operatig results. These trasfers, however, have o impact o the Statemet of Activities operatig results, as the et assets of the uiversity have ot chaged (oe form of asset has bee coverted ito aother type of asset). Covertig the Cosolidated Budget ito the Statemet of Activities To covert the Cosolidated Budget to the Statemet of Activities uder GAAP, certai reveue ad expese reclassificatios, trasfers, ad adjustmets are ecessary. The followig adjustmets are made to the Cosolidated Budget to alig it with the GAAP basis Statemet of Activities: a) Elimiate Fud Trasfers. The Cosolidated Budget icludes trasfers of $276.3 millio of curret fuds to other fud groups, icludig plat, studet loas, ad fuds fuctioig as edowmet. The trasfers out are added back for the Statemet of Activities. b) Remove Capital Equipmet purchases. The Cosolidated Budget icludes the projected curret year s purchases of capital equipmet as expese. For GAAP purposes, the cost of capital equipmet is recorded as a asset o the Statemet of Fiacial Positio. As a result, $95.1 millio is elimiated from Cosolidated Budget expeses. c) Record Depreciatio expese for the curret year s asset use. The Statemet of Activities icludes the curret year s depreciatio expese related to capital assets. Depreciatio expese icludes the depreciatio of capital equipmet ad other capital assets, such as buildigs ad lad improvemets. This adjustmet adds $365.4 millio of expese to the Statemet of Activities. d) Adjust Frige Beefit expeses. The Cosolidated Budget reports the frige beefits cost based o the frige beefits rates charged o salaries; the rates may iclude over- or uder-recovery of actual costs from prior years. The Statemet of Activities reflects oly curret year expeses for frige beefits, so the over- or uder-recovery amout has to be removed from Salaries ad Beefits. The Statemet of Activities also icludes accruals for certai beefits, such as pesio ad post-retiremet beefits that are required by

37 CONSOLIDATED BUDGET FOR OPERATIONS 21 COMPARISON OF CONSOLIDATED BUDGET AND STATEMENT OF ACTIVITIES, 2017/18 Urestricted Net Assets [IN MILLIONS OF DOLLARS] STATEMENT OF ACTIVITIES FISCAL YEAR 2017/ / /17 PROJECTED PROJECTED 2015/16 JUNE 2016 PROJECTED CONSOLIDATED STATEMENT OF ACTUALS BUDGET YEAR-END BUDGET ADJUSTMENTS ACTIVITIES Reveues ad Other Additios Studet Icome: Udergraduate Programs Graduate Programs Room ad Board (269.6) (286.1) (286.0) Studet Fiacial Aid e (298.2) (298.2) Total Studet Icome (298.2) Sposored Research Support: Direct Costs Uiversity Idirect Costs , , ,045.6 Total Uiversity Research Support 1, , SLAC , ,035.5 Health Care Services f,k 1,253.2 (93.9) 1, Gifts & Net Assets Released from Restrictios Ivestmet Icome: 1, , ,177.1 Edowmet Icome j 1, , Other Ivestmet Icome g (47.7) , , ,304.0 Total Ivestmet Icome 1,519.2 (47.5) 1, Special Program Fees ad Other Icome j , , ,551.6 Total Reveues 6,261.4 (434.3) 5,827.2 Expeses 3, , ,361.7 Salaries ad Beefits d,g,j 3, ,625.1 Fiacial Aid e (298.2) Debt Service h (65.7) Capital Equipmet Expese b 95.1 (95.1) Depreciatio c , , ,630.9 Other Operatig Expeses f,g,j,l 1,639.1 (50.8) 1, , , ,462.9 Total Expeses 5,853.3 (140.8) 5, Reveues less Expeses (293.5) Trasfers Additios to Edowmet Pricipal a (110.2) Other Trasfers to Assets a (166.1) Net Iteral Reveue/Expese i 33.5 (33.5) Total Trasfers (242.8) Excess of Reveues Over Expeses After Trasfers (50.7) 114.7

38 22 CONSOLIDATED BUDGET FOR OPERATIONS GAAP to be show as expese i the period the employee ears the beefit. For 2017/18, GAAP expeses are expected to be higher tha budgeted expeses by $30.9 millio. e) Reclassify Fiacial Aid. GAAP requires that the tuitio portio of studet fiacial aid be show as a reductio of studet reveue. I the Cosolidated Budget, fiacial aid is reported as a operatig expese. Accordigly, $298.2 millio of studet fiacial aid expese is reclassified as a reductio of studet reveues i the Statemet of Activities, resultig i o chage i results. f) Adjust for Health Care Services. For GAAP purposes, health care services reveues received from the hospitals are reported et of expeses that the hospitals charge the uiversity. The Cosolidated Budget presets these reveues ad expeses o a gross basis. This adjustmet results i a reductio of $52.8 millio i both Other Operatig Expeses ad health care services reveues, with o et chage to the bottom lie. g) Adjust for Iteral Ivestmet Maagemet Expeses. Icluded i the Cosolidated Budget reveues ad expeses are $47.7 millio of expeses of the Staford Maagemet Compay ad the real estate operatios withi Lad, Buildigs & Real Estate. For GAAP purposes, these expeses, icurred as part of the geeratio of ivestmet returs, are etted agaist ivestmet earigs. This adjustmet reduces Other Ivestmet Icome, as well as reducig $30.1 millio from compesatio ad $17.6 millio from o-compesatio expeses, with o et chage i the bottom lie. h) Adjust for Debt Service. The Cosolidated Budget icludes all iteral debt service. It reflects the use of fuds to amortize pricipal ad iterest. O a GAAP basis, iterest expese is reported i the Statemet of Activities ad repaymet of debt pricipal is reported as reductios i Notes ad Bods Payable i the Statemet of Fiacial Positio. GAAP amouts also iclude iterest paymets for the Rosewood Hotel ad Sad Hill Road Offices, which are ot icluded i the Cosolidated Budget for Operatios. Therefore, Iteral Debt Service expese must be reduced by the amout of iteral pricipal amortizatio, icreased for the Rosewood Hotel ad Sad Hill Road Offices iterest, ad adjusted to accout for the differece betwee iteral ad exteral iterest paymets. These combied adjustmets reduce iteral debt service expese by $65.7 millio. i) Elimiate Net Iteral Reveue/Expese. The Statemet of Activities icludes the activity of all fud types, while the Cosolidated Budget does ot iclude plat fuds. Therefore, the et iflow of $33.5 millio from plat fuds ito the Cosolidated Budget for purchases of iteral services is elimiated. j) Iclude Staford Sierra Camp. The Statemet of Activities icludes the reveues ad expeses of the Sierra Camp that the Alumi Associatio rus as a separate limited liability corporatio. $5.6 millio i reveues ad $5.5 millio i expeses is added ($2.8 millio i Salaries ad Beefits ad $2.7 millio i Other Operatig Expeses) to the Cosolidated Budget for Operatios. k) Elimiate Hospital Equity Trasfers. Paymets received from the hospitals for which o services are required to be provided by the uiversity are cosidered trasfers of equity betwee the uiversity ad the Hospitals ad are ot icluded i operatig reveue i the Statemet of Activities. These iclude cotributios by Hospital costructio projects to the Staford Ifrastructure Program ad performace bouses related to Physicia Service Agreemets. I the Cosolidated Budget, they show as health care services icome. This adjustmet removes $41.1 millio of reveue. l) Iclude Staford Uiversity Power LLC. To more effectively maage Staford s Direct Access electricity procuremet program, the uiversity coducts all electricity procuremet trasactios through this LLC, which is ot icluded i the Cosolidated Budget. Icludig these electricity purchases i the Statemet of Activities icreases Other Operatig Expeses by $17 millio. I summary, the impact of these adjustmets decreases the Cosolidated Budget s projected $165.4 millio surplus by $50.7 millio, resultig i a projected surplus of $114.7 millio i the Statemet of Activities.

39 ACADEMIC UNITS 23 CHAPTER 2 ACADEMIC UNITS OVERVIEW OF ACADEMIC UNITS This chapter summarizes programmatic ad fiacial activity for each academic uit. The reveue expectatio i 2017/18 for these academic uits comprises early 75% of the uiversity total reveue. Overall, the academic uits project a operatig surplus of $158.1 millio. After trasfers to facilities ad edowmet, the uit budgets overall will achieve a $104.2 millio surplus. CONSOLIDATED BUDGET FOR OPERATIONS, 2017/18: ACADEMIC UNITS [IN MILLIONS OF DOLLARS] TOTAL RESULT OF TRANSFERS CHANGE IN REVENUES AND TOTAL CURRENT (TO)/FROM EXPENDABLE TRANSFERS EXPENSES OPERATIONS ASSETS FUND BALANCE Academic Uits Graduate School of Busiess (7.6) 0.6 (7.0) School of Earth, Eergy & Evirometal Scieces (6.3) 1.8 (4.5) Graduate School of Educatio (1.2) 0.1 School of Egieerig School of Humaities ad Scieces (9.5) 1.9 School of Law (6.7) 0.1 School of Medicie 2, , (43.8) 92.8 Vice Provost ad Dea of Research Vice Provost for Udergraduate Educatio Vice Provost for Graduate Educatio (2.1) (0.3) (2.4) Vice Provost for Teachig ad Learig Hoover Istitutio (3.4) 0.0 (3.4) Staford Uiversity Libraries SLAC (1.0) 0.0 (1.0) Total Academic Uits 4, , (53.9) /18 Cosolidated Expeses by Academic Uit Auxiliary $403.4 Millio SLAC 12% H&S 11% Egieerig 8% Admiistrative $1,195.8 Millio Academic Uits $4,806.8 Millio Medicie 48% GSB 5% Dea of Research 5% Other 1 4% Libraries 2% Law 2% Educatio 2% SE3 1% 1 Other is Hoover, VP for Udergraduate Educatio, VP for Graduate Educatio, ad VP for Teachig ad Learig.

40 24 ACADEMIC UNITS GRADUATE SCHOOL OF BUSINESS 2017/18 Cosolidated Reveues $256.5 Millio Executive Educatio 21% Other 5% Schwab 4% Edowmet Payout 32% Geeral Fuds 26% Gifts 12% [IN MILLIONS OF DOLLARS] 2015/ / /18 ACTUALS PROJECTION PLAN Total Reveues Expeses Salaries ad Beefits No-Salary Total Expeses Operatig Results (7.6) Trasfers From (to) Edowmet & Other Assets (10.8) (0.3) 0.6 Trasfers From (to) Plat Surplus / (Deficit) (8.0) 24.5 (7.0) Begiig Fud Balaces Edig Fud Balaces PROGRAMMATIC DIRECTIONS The Graduate School of Busiess (GSB) has a missio to create ideas that deepe ad advace the uderstadig of maagemet ad, with those ideas, to develop iovative, pricipled, ad isightful leaders who chage the world. The GSB remais focused o pairig faculty research ad teachig with the practical applicatio of that research to address the busiess ad maagemet challeges that exist i the world today. The GSB offers the two-year full-time MBA, PhDs i seve distict fields of study, ad the Master of Sciece i Maagemet. I additio, the GSB rus a host of custom, ope, olie, ad iteratioal executive educatio programs. Academic year 2016/17 was oe of leadership trasitio for the GSB, with the arrival of the ew dea ad the appoitmet of two ew faculty seior associate deas. The GSB created two committees to explore ad develop a visio for research ad maagemet educatio at the school over the ext years. The process is desiged to complemet the uiversity s log-rage plaig process. Faculty Research ad Teachig The GSB plas to maitai roughly 125 teure-lie faculty. I additio, roughly 150 lecturers brig i expertise from orgaizatios across the world. The school cotiues to emphasize support for faculty research through its Ceters ad Iitiatives for Research, Curriculum & Learig Experieces (CIRCLE). CIRCLE facilitates coectios to idustry leaders, provides highly techical support for data-drive research, provides research assistace, ad maages evets that dissemiate learigs. The Studet Experiece The breadth of the elective curriculum remais oe of the stregths of the GSB. Last year the school offered 173 electives that provided studets with opportuities to take courses matchig their passios ad priorities. Beyod the campus, the MBA program orgaized 22 Global Study Trips ad 3 Global Semiars that took early 600 studets to 23 differet coutries for 8-10 days. The Global Maagemet Immersio Experiece program set 90 first- ad secod-year studets to 32 coutries to hoe their iteratioal maagemet skills by workig i corporate, govermet, ad oprofit orgaizatios for a miimum of four weeks. The GSB cotiues to attract the highest-quality studets ito all of its degree programs. The studet body is more diverse tha ever, ad selectivity ad yield cotiue to icrease, a tred that parallels that of the uiversity s udergraduate program. Nearly 41% of the MBA class of 2018 are wome. The

41 ACADEMIC UNITS 25 GSB has a umber of pilot iitiatives i support of icreasig diversity. Oe successful pilot has bee the research fellows program. This is a postbaccalaureate program for eight highpotetial idividuals to gai valuable experiece as research assistats, take doctoral-level courses, ad participate i the itellectual commuity. The program targets studets from uderrepreseted groups ad covers the cost of their tuitio ad livig expeses. Its goal is to broade the pipelie of prospective PhD studets, with a emphasis o attractig wome ad miorities. The GSB s ewest residece, Highlad Hall, opeed i the fall of 2016, icreasig the umber of beds available for busiess studets from 280 to 480. The GSB ca ow provide housig to all of its sigle, first-year MBA studets. Immediately followig completio of Highlad Hall, the GSB bega reovatio of the Schwab Residetial Ceter, which will be completed i 2017/18. Global Impact The GSB cotiues to reach ito iteratioal markets to brig a rage of isights to studets, provide research opportuities for faculty, ad stay coected to dyamic treds i global busiess. The primary global programs are the Global Iovatio Programs, the Staford Istitute for Iovatio i Developig Ecoomies (Seed), ad the Executive Educatio Olie LEAD Certificate i Corporate Iovatio. Each year, the Global Iovatio Programs deliver leadership, iovatio, ad etrepreeurship programs i perso ad through distace educatio techology to 900 youg professioals, aspirig iovators, govermet leaders, ad prospective studets all aroud the world. More tha 170 studets from aroud the globe eroll i the two olie LEAD Certificate program cohorts aually. This itellectually rigorous, yearlog, multidiscipliary, high-touch program is delivered etirely olie with both sychroous ad asychroous elemets. It also ivolves extesive cohort-based learig ad etworkig experieces, sometimes usig a virtual reality platform. The eight-course, oe-year program has become a model for itegratig educatio techology to improve program curricula. Seed, with regioal ceters i West ad East Africa, will be opeig its third iteratioal ceter i souther Idia at the begiig of 2017/18. Seed s missio is to ed the cycle of poverty i developig ecoomies through i-coutry educatioal programs, studet iterships, ad research. After ruig its educatioal programs free of charge for four years, Seed bega chargig a small fee based o feedback that participats should have a stake i the programs. CONSOLIDATED BUDGET OVERVIEW The school projects a 2017/18 cosolidated budget with total reveue ad trasfers of $256.5 millio, expeses of $264.1 millio, ad a et deficit of $7.0 millio after $600,000 i trasfers from edowmet ad other assets. This et deficit compares to a $500,000 deficit i 2016/17, excludig a oetime trasfer ito the GSB of $25 millio from a bequeathed gift. The GSB expects $85.7 millio i fud balaces at yeared. The GSB projects that reveues ad trasfers for 2017/18 will icrease by $6.2 millio, or 2.5%. Edowmet icome is expected to icrease by $2.3 millio due to ivestmet gais ad ewly edowed gifts. This icrease is offset by $1.9 millio due to a coservative estimate of ivestmet icome. Gift reveue is plaed to grow primarily i Seed restricted fuds. Other reveue growth is plaed from Executive Educatio through the olie LEAD program ad ew faceto-face programs. Seed also plas to add reveue through its ew educatioal program fees. Fially, the completio of the Schwab Residetial Ceter Reovatios i early 2017/18 will result i higher reveue from GSB resideces. Overall, the Busiess School projects a $15.5 millio, or 6%, icrease i expeses i 2017/18. Compesatio is projected to icrease primarily due to merit icreases as well as staff growth i Seed. No-compesatio expeses are projected to icrease above iflatioary growth. The largest areas of expese growth withi the GSB are Seed, due to its ew regioal ceter; Executive Educatio; research support; ad fellowship support. Icreased expeses for Seed ad Executive Educatio are offset by their icreased reveue. The 7.5% decrease i fud balaces is projected to reduce urestricted fuds by $3.5 millio ad restricted fuds by $3.5 millio i 2017/18.

42 26 ACADEMIC UNITS SCHOOL OF EARTH, ENERGY & ENVIRONMENTAL SCIENCES 2017/18 Cosolidated Reveues $65.9 Millio Affiliates 11% Other 8% Geeral Fuds 20% Gifts 4% Sposored Research 17% Edowmet Payout 40% [IN MILLIONS OF DOLLARS] 2015/ / /18 ACTUALS PROJECTION PLAN Total Reveues Expeses Salaries ad Beefits No-Salary Total Expeses Operatig Results (2.7) (4.8) (5.8) Trasfers From (to) Edowmet & Other Assets Trasfers From (to) Plat 0.0 (1.9) 0.6 Surplus / (Deficit) (1.7) (5.7) (4.0) Begiig Fud Balaces Edig Fud Balaces PROGRAMMATIC DIRECTIONS The School of Earth, Eergy & Evirometal Scieces (Staford Earth, SE3) is dedicated to creatig kowledge to uderstad Earth ad sustai its ihabitats. I the summer of 2016, Staford Earth lauched a ew strategic plaig effort. This is a excitig process ad a importat oe to esure the health ad vibracy of the school. The plaig process cofirmed the priority of four challege areas that costitute the school s research focus o the eviromet ad sustaiability (the eergy future, climate solutios, reducig disaster risk, ad food ad water security) ad bega to idetify ew research challeges. More importatly, a umber of critical goals will guide activities ad ivestmet i 2017/18 ad beyod. Implemetatio of these goals is already uder way. The goals are: Egage all Staford studets i gaiig kowledge about Earth ad icreasig their awareess of its resource ad evirometal challeges. Ehace the life ad career success of graduate studets ad postdoctoral scholars. Support, foster, ad stregthe collaboratios both across departmets ad with others i ad outside the uiversity. Accelerate the impact of SE3 s research. Ehace orgaizatioal culture, work eviromet, ad diversity. Fud, desig, ad build a ew buildig for Staford Earth. The school s top strategic priority is icreasig Staford udergraduate egagemet ad deepeig its impact o udergraduate educatio. The school believes there is a eed for ew, flexible degree programs ad ew ways to touch the lives of all studets. The followig are a few examples of activities already uder way: A ew mior i Earth systems sustaiability ad a ew master s i sustaiability sciece ad practice i respose to demad for a sustaiability curriculum. Oe-uit courses, such as Kow Your Plaet, make it easy for all studets to egage, regardless of time commitmets to majors. A suite of Big Earth courses, semiars, ad iterships allows studets to combie a love of computatio ad data sciece with their applicatio to Earth ad sustaiability challeges. The secod goal is to erich the academic experieces of graduate studets ad postdoctoral scholars ad prepare them for careers. A rage of activities, icludig modifyig

43 ACADEMIC UNITS 27 the graduate admissios process, improvig metorig, ad creatig more professioal developmet offerigs, is i developmet. The third ad fourth goals focus o improvig opportuities for iterdiscipliary collaboratios withi ad outside of SE3, alog with acceleratig the impact of Staford Earth s research through ew parterships with decisio makers i govermet ad ogovermetal orgaizatios, as well as ew professioal educatio offerigs. Achievig these goals will take ivestmet from seed moey for iovative collaboratios to foster broader iteractios amog graduate studets ad postdocs, to the developmet of specific executive educatio curricula. While resources are limited, the school plas to experimet o a small scale to assess log-term impact. The fial two goals ehacig orgaizatioal culture ad diversity, ad securig fudig for a ew buildig for Staford Earth to replace the well-wor Mitchell Buildig will cotiue to evolve over the ext several years. I additio, 2017/18 will be a year of sigificat trasitio for Staford Earth. Dea Pamela Matso will step dow December 31, 2017, after leadig the school for 15 years. The growth ad evolutio of the school over this time has bee remarkable. Staford Earth has sigificatly expaded its areas of research ad teachig ad icreased its umber of faculty (ad disciplies covered) by 40% ad its graduate studet populatio by over 50% while oly growig its footprit by 8%. The strategic pla developed i 2016/17 will provide a excellet lauchig pad for a ew dea ad allow progress to cotiue despite the leadership chage. Fiacially, 2016/17 has bee a cautious year. As aticipated, because of zero edowmet payout growth ad laggig support from federal agecies ad the eergy idustry, SE3 will ed this fiscal year dippig sigificatly ito reserves for a third cosecutive year. Projectios for 2017/18 are lookig somewhat better, thaks i part to modest, as opposed to flat, edowmet icome growth, but more sigificatly to the allocatio of additioal base geeral fuds to address the lack of edowmet growth agaist cost rise. Federal fudig, particularly i the areas of climate chage ad sustaiability, will likely cotiue to drop i the ext several years, limitig SE3 s ability to ivest i ew activities ad icreasig reliace o reserves to weather the fiacial storm. CONSOLIDATED BUDGET OVERVIEW SE3 projects $65.9 millio i total reveues ad operatig trasfers i 2017/18 ad $71.7 millio i total expeses, with a resultig shortfall of $4.0 millio after $1.8 millio of asset trasfers. Slow reveue growth reflects modest edowmet payout growth ad flat gifts, desigated affiliate program icome, ad sposored reveue. At this time the future of these icome streams remais ucertai ad is subject to chage depedig o fudraisig success, oil ad gas idustry performace, ad federal research fudig availability. Asset trasfers accout for aother $1.8 millio; these comprise a $1.2 millio trasfer from edowmet pricipal to icome, as is madated by two veture fuds, ad a $600,000 repaymet of bridge fudig for the Huffigto Bar project, as the pledge is paid. There are o plaed capital projects requirig local fudig i 2017/18 ad cosequetly o trasfers out to plat. Of the total $71.7 millio i projected expeses, compesatio accouts for $53.9 millio ad o-compesatio for $17.8 millio. Two to three faculty hires are aticipated i 2017/18, largely ito existig billets vacated due to retiremets. Ay icremetal spedig will be limited ad carefully cosidered i the cotext of strategic pla goals ad costraied resources. The budgetary shortfall is expected to lead to reserve drawdows i all o-sposored fud types, icludig reserves held by the school, departmets, ad programs, as well as affiliate program reserves ad idividual start-up fuds, which are cotrolled by faculty. CAPITAL PLAN SE3 s capital pla for 2017/18 cotiues efforts from prior years. Most sigificatly, the ew Earth, Eergy ad Evirometal Scieces buildig will seek cocept ad site approval from the Board of Trustees i caledar The project has bee scaled back due to limited total fudig, from $115 millio to $100 millio. Detailed programmig ad desig developmet will be the focus for 2017/18. Costructio is slated to begi i 2019 with completio plaed for I fall 2017, Staford Earth plas to dedicate the Huffigto Bar at the O Doohue Family Staford Educatioal Farm. A geerous gift is allowig the school to build a 1,600-squarefoot structure that will provide critical teachig ad workig space for the ever-growig activities at the farm.

44 28 ACADEMIC UNITS GRADUATE SCHOOL OF EDUCATION Sposored Research 33% 2017/18 Cosolidated Reveues $76.4 Millio Other 10% Geeral Fuds 26% [IN MILLIONS OF DOLLARS] 2015/ / /18 ACTUALS PROJECTION PLAN Total Reveues Expeses Salaries ad Beefits No-Salary Total Expeses Edowmet Payout 17% Gifts 14% Operatig Results Trasfers From (to) Edowmet & Other Assets (10.8) (1.3) (1.2) Trasfers From (to) Plat Surplus / (Deficit) Begiig Fud Balaces Edig Fud Balaces PROGRAMMATIC DIRECTIONS Log-Rage Plaig ad New Iitiatives As the Graduate School of Educatio (GSE) begis its ceteial year, it is focusig o several strategic priorities that will guide programmatic ad fiacial plaig. While educatio is ecessarily a multidiscipliary field, the GSE is cocetratig o areas i which its uique balace of research ad traiig for practice ca have the greatest impact. Oe such area addresses learers i peril : studets who are disadvataged by social ad/or biological causes. These are the populatios who deped o a extraordiary educatio the most, but are at the greatest risk for ot receivig oe ad the least able to advocate for themselves. Immiet discoveries ad emergig research methods create ew possibilities of affectig the lives of coutless studets, together with their families ad commuities. New programs have emerged as a result of this focus. The GSE has lauched a doctoral specializatio i race, iequality, ad laguage i educatio, which will begi admittig studets i 2018/19. The dea has also coveed a iterdiscipliary committee to cosider establishig a ew program i special educatio, leveragig Staford s stregths i the euroscieces, adaptive techologies, ad public policy to complemet the GSE s leadership i learig sciece ad teacher traiig. As these ew iitiatives emerge ad take shape, the GSE will also cotiue to support areas of traditioal stregth, ragig from humaistic disciplies ad pedagogical research to learig techologies ad cogitive sciece. The GSE s budget priorities for 2017/18 iclude the support of these ew iitiatives, as well as of activities udertake i the past two years to stregthe collaboratio withi the school ad to help icrease ad sustai its commitmets to diversity ad iclusio. Achievemets ad Program Cotiuatio/ Ehacemets Studets: The GSE has expaded the doctoral fudig package to iclude two quarters of studet summer fudig. The primary goals are to provide packages to attract top doctoral talet ad to reduce the fiacial burdes o the doctoral studet populatio. The dea fuded fellowships for master s studets to ehace diversity withi the cohort i 2016/17 ad has expaded these fellowships for 2017/18. The GSE is pilotig a eeds-cosiderate fiacial aid program for master s studets as a way of attractig a more diverse applicat pool ad partially compesatig for the reductio of federal loa programs.

45 ACADEMIC UNITS 29 A faculty committee focused o improvig the PhD experiece will report fidigs ad recommeded actios i 2017/18. Faculty: The faculty have modified the GSE s processes for hirig ad promotio to ecourage greater efficiecy ad trasparecy. The GSE has lauched a ew juior faculty metorig program to help itegrate ew scholars ito the commuity ad icrease their chaces of success through the reappoitmet ad teure processes. GSE-Wide Commuity Iitiatives: The GSE has established ad filled a ew positio of chief iclusio officer (CIO). I 2017/18, the CIO will work with faculty, staff, ad studets to foster a greater sese of commuity ad iclusio across the school. The school has completed the programmig ad early feasibility phases of a ew buildig plaig process. I 2017/18, the GSE will start the ext phase of the buildig plaig ad begi short-term facilities reovatios to improve the quality ad efficiecy of curret school spaces. A uique research/practice partership with Sa Fracisco Uified School District cotiues, egagig early half of the GSE s faculty i helpig to resolve the most pressig issues facig the district leadership. The GSE will focus o the expasio of its parterships with local area schools ad districts i 2017/18. The GSE has lauched a regular SiriusXM radio show discussig research-based approaches to commo topics i educatio. CONSOLIDATED BUDGET OVERVIEW The GSE projects a 2017/18 cosolidated budget with total reveue ad trasfers of $76.4 millio ad expeses of $75.2 millio, resultig i a operatig surplus of $1.2 millio. After et asset trasfers of $1.2 millio, the school projects a very modest cosolidated surplus of $50,000. Compared with the 2016/17 year-ed projectio, 2017/18 reveues ad trasfers will decrease by $741,000 (1.0%), while expeses are projected to icrease by $420,000 (0.6%). The major driver of expese growth is compesatio. Total compesatio expese will grow by $1.2 millio; this icrease will largely be offset by a $700,000 reductio i other exteral expeses, due mostly to the expiratio of a off-campus lease. The GSE projects total sposored research activity to be flat i 2016/17 ad decrease 2.5% i 2017/18. As i recet years, fudig from federal sposors is tredig dowward, ad for the first time i over seve years, the GSE is also projectig a decrease i o-federal fudig. The coservative 4% decrease i o-federal fudig is due to retiremets of GSE faculty who have traditioally brought i large volumes of research grats. However, i spite of the declie, sposored research remais the largest fudig source for GSE, makig up 33% of the reveues i the budget. The GSE is closely moitorig the impact of the slow growth i edowmet payouts for 2016/17 ad 2017/18 o its operatios. The primary areas of impact are the studet aid ad faculty salary budgets. For 2017/18 the GSE aticipates a shortfall i operatig budget support from edowmets of roughly $200,000 that will eed to be covered with other GSE fuds. Accumulated balaces will provide sustaied fudig i the short term. However, the GSE will eed to seek sources of additioal fudig to support the status quo ad to make growth ad ew iitiatives possible. CAPITAL PLAN The GSE has substatial ad log-stadig facilities eeds that are icreasigly costraiig programmatic developmet ad growth. The GSE School of Educatio Buildig opeed i There have bee o sigificat reovatios sice the origial costructio. Although this buildig serves as a core facility for the GSE, the school cotrols oly oe-third of its usable square footage. Cosequetly, GSE faculty, staff, ad studets are located i multiple buildigs, o ad off campus, i cofiguratios of varyig size ad adequacy. The lack of sufficiet cotiguous space has adverse effects o cohesio ad commuity. As a log-term solutio, the GSE cotiues the ew buildig plaig process, completig the programmig ad early feasibility phases i 2016/17. The schematic desig phase will begi i 2017/18. I the short term, the GSE will create more efficiet ad moder spaces i the existig facilities ad brig more of the commuity to the core GSE buildigs. I 2017/18, the GSE will use a combiatio of cetral fudig ad school reserves (up to $4 millio) to reovate the School of Educatio buildig basemet, icludig relocatig the café ad creatig ew office ad meetig spaces for studets ad staff.

46 30 ACADEMIC UNITS SCHOOL OF ENGINEERING 2017/18 Cosolidated Reveues $400.2 Millio Other 10% Auxiliary Icome 1% Affiliates 4% Geeral Fuds 25% [IN MILLIONS OF DOLLARS] 2015/ / /18 ACTUALS PROJECTION PLAN Total Reveues Expeses Salaries ad Beefits No-Salary Total Expeses Sposored Research 36% Gifts 8% Edowmet Payout 16% Operatig Results Trasfers From (to) Edowmet & Other Assets (6.7) (9.1) 1.7 Trasfers From (to) Plat (4.7) (2.0) 0.0 Surplus / (Deficit) 19.4 (7.7) 3.7 Begiig Fud Balaces Edig Fud Balaces PROGRAMMATIC DIRECTIONS I February 2017 the School of Egieerig (SoE) welcomed a ew dea, Jeifer Widom, a professor of computer sciece ad electrical egieerig. Dea Widom was previously chair of the Computer Sciece Departmet, served as the seior associate dea for faculty ad academic affairs, ad was a key leader i the SoE Future strategic plaig process. The school has implemeted several of the operatioal recommedatios from SoE Future ad is o track to lauch a pilot of the Catalyst for Collaborative Solutios begiig i the fall of 2017/18. The Catalyst pilot will brig together dedicated cross-fuctioal teams icludig third-, fourth-, ad fifth-year graduate studets, postdocs, idustry experts, ad faculty from across Staford to address the grad challeges outlied i SoE Future. The $12 millio pilot will support four teams for three-year terms (two teams begiig i 2017/18 ad two teams begiig i 2018/19); it will be fuded through a combiatio of fudraisig ad a presidetial commitmet. The Catalyst will provide project fudig ad strategic workshops i support of iterdiscipliary research across SoE, the uiversity, ad beyod, to achieve impactful ad lastig solutios to the world s most pressig problems. These grad challege problems have a egieerig compoet as part of their core solutio, but egieers aloe will ot solve these problems. This eed to brig multidiscipliary researchers together is the drivig force behid the Catalyst. I the log ru, the Catalyst aspires to become a iteratioally recogized model of a purposeful, high-impact, ad iterdiscipliary research ecosystem. The school is facig a very competitive ladscape for faculty pursuig computatioal research, particularly i the Computer Sciece Departmet. Rapid expasio i the field of computer sciece ad applied computatio has created tremedous market-based pressure o faculty compesatio. Give Staford s locatio ad symbiotic relatioship with Silico Valley, there has log bee some loss of faculty to idustry, but the beefits of movig to idustry have bee balaced by those of pursuig a academic research ad teachig ageda at a world-class istitutio like Staford. However, the ladscape at peer ad opeer istitutios ad i idustry is chagig, ad the school s salary structure for this cohort places it at a competitive disadvatage i hirig ad retetio i this competitive area. A icremetal icrease i geeral fuds will provide targeted help to attract ad retai key faculty i this area. A cotiuig eed i SoE for several years has bee fudig for teachig assistats (TAs) to provide support for faculty i teachig. The uiversity has icreased the school s

47 ACADEMIC UNITS 31 TA fudig substatially i recet years. Recet data show a slowig i the growth rate of udergraduate erollmet, ad cosequetly, the school s allocatio for TA tuitio ad salary will oly grow by cost rise. CONSOLIDATED BUDGET OVERVIEW SoE projects a 2017/18 cosolidated budget with total reveue ad trasfers of $400.2 millio ad expeses of $398.2 millio, resultig i a et surplus of $3.7 millio after $1.7 millio of trasfers from edowmet pricipal. Compared with 2016/17 year-ed projectios, 2017/18 reveues will icrease by 5.4% ad expeses by 4.4%. Sposored research remais the largest sigle compoet of SoE fiaces at approximately 36% of reveue. Federal grats are projected to grow 5% i 2017/18, due to icreased spedig i the Bioegieerig Departmet. No-federal sposored research will see small growth from 2016/17 levels but has icreased by 32% sice 2015 due to ogoig, large research grats from idustry. Other reveue sources are projected to icrease by $6.5 millio. Expedable gifts ad edowmet icome are expected to icrease by $3.8 millio combied, ad a $1.1 millio icrease i base geeral fuds support from the uiversity will help SoE address faculty salary cocers ad provide additioal support staff. The majority of edowmet payout schoolwide supports faculty salaries ad studets through edowed chairs ad fellowships. Miimal growth i edowmet payout, combied with faculty merit ad market retetio icreases, may cause the school to use reserve balaces to meet faculty payroll i the short term. Departmets are maagig graduate studet admissios to esure erollmets are aliged with available fellowship icome. Although there is o schoolwide pla to reduce expeses due to edowmet payout cocers, there may be some targeted cutbacks, ad programmatic growth ad iovatio that would have bee fuded via edowmet payout growth will be curtailed. The overall school reserve positio is strog, but the fuds are asymmetrically distributed amog faculty, departmets, ad the school. Of the total reserves, idividual faculty ad laboratory groups cotrol 91% ($107.8 millio) of desigated fud balaces ad 90% ($93 millio) of expedable gift balaces, most of which are earmarked for research. The majority of reserves cotrolled by the school are restricted to faculty ad studet support, which leaves the dea without much fiacial flexibility. To address the edowmet growth problem ad the lack of flexible operatig fuds, SoE made the strategic decisio to trasfer $10 millio from school-cotrolled fuds to fuds fuctioig as edowmet i 2016/17 to support geeral operatios. CAPITAL PLAN The SoE is focusig o reovatios ad plaig for the future. The school bega operatios i two ew shared fabricatio facilities i the Alle Buildig i 2016/17. The Experimetal Fabricatio Facility ad the Systems Prototypig Facility were desiged to meet the eeds of researchers ad studets today, while helpig iform the school about future directios i fabricatio as it explores alteratives for the agig clea room i Alle. Research activity i both facilities is rampig up i lie with projectios. Reovatios to both the Durad Buildig ad the Gates Buildig bega i 2016/17. The Durad Reovatio Phase 4, the fial phase, bega i April The Durad reovatio will allow for growth i the Aeroautics ad Astroautics ad the Materials Sciece ad Egieerig departmets by makig use of space vacated by Mechaical Egieerig ad the Staford Ceter for Professioal Developmet. Reovatios to the third floor of the Gates Buildig will improve office space ad icrease studet, faculty, ad staff desity to support growth i Computer Sciece. The Gates loadig dock is beig relocated to accommodate the costructio of the Bass Biology Buildig. The school will ivest $4 millio to reovate labs for ew faculty i the Durad, Shriram, ad Mechaical Egieerig buildigs. The school is doig log-rage plaig to address the growig itersectios of computatio with almost every other field of iquiry at the uiversity. The school evisios a ew facility sited ad desiged i a way that cultivates ad urtures these itersectios, ad it iteds to begi formal programmig for a ew buildig i 2017/18.

48 32 ACADEMIC UNITS SCHOOL OF HUMANITIES & SCIENCES 2017/18 Cosolidated Reveues $540.3 Millio Other 9% Auxiliary Icome 1% Sposored Research 17% Edowmet Payout 31% Geeral Fuds 38% Gifts 4% [IN MILLIONS OF DOLLARS] 2015/ / /18 ACTUALS PROJECTION PLAN Total Reveues Expeses Salaries ad Beefits No-Salary Total Expeses Operatig Results Trasfers From (to) Edowmet & Other Assets (13.9) (4.5) (4.5) Trasfers From (to) Plat 4.7 (18.6) (5.0) Surplus / (Deficit) 28.4 (2.4) 12.4 Begiig Fud Balaces Edig Fud Balaces PROGRAMMATIC DIRECTIONS The School of Humaities & Scieces (H&S) remais i a positio of stregth despite tighteig budget costraits. Several years of ivestmets i faculty ad facilities have reiforced the school s strog academic ad programmatic stadig, but also greatly reduced urestricted reserves. Durig , H&S grew its faculty by 10%, replacig losses that occurred after the 2008 recessio. Faculty size is ow sufficiet to meet academic eeds but is also straiig fiacial ad space capacities. H&S retured to a replacemet rate of hirig three years ago, but large faculty start-up costs from the hirig surge will cotiue to impact its budget for several more years. For the foreseeable future, additioal faculty growth will target geder ad racial diversity ad the euroscieces ad Chemistry, Egieerig ad Medicie for Huma Health (ChEM-H) iitiatives. With the goal of icreasig udergraduate studet iterest i the humaities ad social scieces, H&S has lauched several ew programs ad curricular ehacemets, icludig feeder programs for promisig high school studets ad placemet programs for graduates. These iitiatives have cotributed to small icreases i humaities udergraduate course ad degree erollmets across the past four years. I this same vei, several iitiatives i the social scieces focus o data sciece, the aalysis of massive data sets, ad how behavioral research iforms the work of egieers ad others i applied fields. Doctoral studet erollmets icreased 9% betwee 2007 ad 2014 but have bee flat durig the past two years. Selectivity of the graduate studet body cotiues to icrease, but some competig istitutios are begiig to offer a additioal year of guarateed fudig, raisig cocers about loger-term competitiveess. The availability of fewer academic jobs has impacted time to degree as some studets delay graduatio to gai additioal experiece ad become more competitive i the job market. While erollmet is projected to remai stable, the ChEM-H ad euroscieces iitiatives ad the Kight-Heessy Scholars program should ehace the school s ability to attract ad support top doctoral studets. CONSOLIDATED BUDGET OVERVIEW For 2017/18, H&S projects reveues ad operatig trasfers of $540.3 millio ad expeses of $518.4 millio, resultig i a operatig surplus of $21.9 millio. After $9.5 millio of et trasfers to assets, the school projects a icrease

49 ACADEMIC UNITS 33 i cosolidated fud balaces of $12.4 millio, with a edig balace of $305.4 millio. Fud balace growth is projected primarily i restricted gift ad faculty-cotrolled research fuds. Dea s Office urestricted reserves have declied from a high of $74 millio i 2010/11 to a projected $17 millio at the ed of 2017/18. $50 millio of reserves has bee used to fud sigificat portios of ew arts ad scieces facilities otably the Bass Biology, ChEM-H, ad McMurtry Art ad Art History buildigs. Reserves are also beig used to fud a portio of the faculty hire start-up packages associated with the post-recessio hirig surge. This et use will cotiue ito 2017/18 ad for several more years, gradually dimiishig as the impact of replacemet-rate hirig takes effect. Laggig edowmet payout durig 2016/17 ad 2017/18 is placig additioal stress o the school s fiaces. H&S is highly depedet o edowmet payout for fudig core operatios ad also icremetal activities that may rage from ew academic programmig to essetial staffig. The $3.7 millio fudig gap betwee cost rise ad miimal edowmet payout icreases was maaged i 2016/17 by reducig graduate aid allocatio to departmets, elimiatig oessetial expeditures, ad usig departmet ad program reserves. The 2017/18 fudig gap is projected to be $3.1 millio. A sigificat portio of the gap will be mitigated by additioal geeral fudig, while the remaider will be accommodated through a secod year of budget reductios ad uses of reserves. The effects of these fudig reductios o operatios ad accumulated fud balaces will ot be fully kow util fiscal year-ed for both of these years. The Dea s Office will closely moitor these impacts ad work with departmets ad programs to esure the sustaiability of operatios. After several years of volatility, grat ad cotract volume icreased sharply i 2015/16, a result of several seior faculty hires ad large grat reewals. Federal grat ad cotract volume is projected to be flat durig 2016/17 ad decrease slightly i real terms durig 2017/18. A small icrease i ofederal grat ad cotract volume is projected for 2016/17, with volumes flatteig i 2017/18. H&S has ot yet see the major volume declies experieced by other schools, but projectios idicate slow or o growth durig the upcomig years. Cosolidated budget umbers iclude programs (Cator Ceter for Visual Arts, Staford Arts Istitute, Staford Live, Big Cocert Hall, Aderso Collectio, ad Istitute for Diversity i the Arts) that will move out of H&S ad to the vice presidet for the arts i the upcomig year. This move will reduce the school s aual expeditures by $20 millio ad accumulated fud balaces by approximately $25 millio. CAPITAL PLAN H&S cotiues to maage the largest capital pla i its history. Durig the upcomig two years, the school will focus o developmet of the ew sciece quad ad evaluatio of humaities ad arts performace spaces. The Bass Biology Buildig will be completed i summer 2018, triggerig faculty moves from the Mudd Chemistry Buildig ad its subsequet demolitio. Durig summer 2017, the Physics Learig Ceter will move ito ewly reovated space i Buildig 60 o the mai quad, ad studets will begi takig courses there i fall The Sapp Ceter for Teachig ad Learig opeed recetly, providig iovative teachig ad study spaces for udergraduate studets. The Roble Gym ow houses the Departmet of Theater & Performace Studies alog with a black box theater, dace studios, ad a arts gym.

50 34 ACADEMIC UNITS SCHOOL OF LAW 2017/18 Cosolidated Reveues $96.9 Millio Executive Educatio 4% Sposored Research 2% Geeral Fuds 37% [IN MILLIONS OF DOLLARS] 2015/ / /18 ACTUALS PROJECTION PLAN Total Reveues Expeses Salaries ad Beefits No-Salary Total Expeses Edowmet Payout 44% Gifts 13% Operatig Results Trasfers From (to) Edowmet & Other Assets (1.8) (15.1) (5.0) Trasfers From (to) Plat 0.0 (4.0) (1.7) Surplus / (Deficit) 10.5 (10.9) 0.1 Begiig Fud Balaces Edig Fud Balaces PROGRAMMATIC DIRECTIONS Staford Law School (SLS) graduates excel i a wide variety of professioal settigs, ad the school is ehacig its degree programs by focusig o two primary areas: curricular iovatio ad faculty recruitmet. The Law School cotiues to iovate i its curriculum to better prepare its graduates for their professioal futures, ad it has prioritized the hirig of ew, diverse faculty members to facilitate chages to the curriculum as well as to support the iterdiscipliary iterests of SLS studets. SLS recogizes that future lawyers should uderstad the levers of policy makig ad implemetatio, that globalizatio of the ecoomy requires lawyers to have a global perspective, ad that techological advaces are trasformig the delivery of legal services. To address these issues, the Law School is pursuig a set of ew curricular iitiatives. The first of these iitiatives, the Law ad Policy Lab, provides opportuities for studets to tackle real-life policy challeges for actual cliets. Across 60 practicums over the past three years, studets ad faculty have worked with ad advised cliets o issues such as iteratioal security, patet trolls, wildlife traffickig, ad copyright policy. The secod iitiative exposes studets to trasatioal issues across substative areas of the law. To uderscore the importace placed o this iitiative, SLS has created a ew positio of associate dea for global programs that focuses o buildig a high-quality curriculum exposig studets to the world of global legal practice. The third iitiative addresses how techological chages are trasformig the delivery of legal services. These chages both threate curret models for deliverig legal services ad hold the promise of expadig access to legal services for people who are curretly uderserved. Creatig a curriculum to address these issues is challegig, but SLS is well placed to lead i this critical field ad is actively explorig how the curriculum should evolve to reflect these developmets. The practical legal traiig studets receive through work i the Mills Legal Cliic, where they represet actual cliets uder the close supervisio of cliical faculty, will leverage the tools ad kowledge they gai through the ew iovative curricular offerigs. Through uiversity support ad cotiued fudraisig, the school ow offers 11 cliics coverig areas such as itellectual property, educatio law ad policy, crimial defese, evirometal law, ad iteratioal huma rights. I respose to the curret chages i immigratio policy, SLS is expadig its Immigrats Rights Cliic, through which faculty have provided advice, iformatio, ad cousel to members of the Staford commuity who are directly

51 ACADEMIC UNITS 35 affected by these policy chages. The itesive traiig SLS studets receive i the cliics serves them well as they begi their professioal lives after graduatio, ad ca spark or reiforce their dedicatio to pursuig public iterest careers. The SLS studet populatio is small, ad admissio is extremely selective. I order to cotiue to attract a extraordiary, diverse studet body with varied professioal iterests, the school s fiacial aid program seeks to make a law school educatio affordable to all. A relatively flat edowmet payout i recet years has created some pressure o the fiacial aid program, but admissio decisios are eed-blid, ad the school cotiues to meet all idetified fiacial eed of admitted studets. SLS has made fudraisig for fiacial aid a high priority, ad the school will cotiue its strog commitmet to a eed-based fiacial aid program. I additio, the school makes sure that graduates ca pursue legal careers i public service ad public iterest law through a geerous loa forgiveess program. The faculty is small ad exceptioal, ad the school cotiues to expad its raks to support the excitig developmets takig place i the study ad practice of law. Like may schools, SLS is i the midst of a geeratioal shift i its faculty. I aticipatio of future retiremets, 17 idividuals have joied the faculty over the past few years. These additios to the faculty recogize the desire of SLS studets to explore studies i a variety of disciplies by reflectig a cotiued commitmet to iterdiscipliary research ad teachig. Three of the ew faculty members have joit appoitmets (two with the School of Medicie ad oe with the Freema Spogli Istitute), ad may of the teured ad teure-track faculty have a PhD as well as a JD. The recruitmet ad retetio of faculty remais a high priority for the school ad a area of focused effort ad activity. CONSOLIDATED BUDGET OVERVIEW The 2017/18 cosolidated budget comprises total reveues ad operatig trasfers of $96.9 millio, expeses of $90.1 millio, ad trasfers to assets of $6.7 millio. SLS projects a icrease i expedable fud balaces of $100,000. The trasfers to assets iclude $3.5 millio to studet loa to cover SLS Loa Repaymet Assistace Program obligatios; $1.7 millio trasferred to plat for cotiuatio of the Crow Quadragle reovatio; ad $1.5 millio of uused restricted edowmet icome reivested ito fuds fuctioig as edowmet. Cosolidated reveue, exclusive of operatig trasfers, is aticipated to icrease 2% to $62.8 millio. Desigated icome ($5.2 millio), expedable gifts ($12.6 millio), ad edowmet icome ($43.0 millio) will each grow by 2%. Sposored research remais steady ad will geerate $2.2 millio, of which $1.5 millio will be spet o the U.S. Departmet of State multiyear grat to support the Afghaista Legal Educatio Project. Fially, geeral fuds will icrease by 6% to $35.3 millio. Total cosolidated expeses are projected to rise by 5% to $90.1 millio. With operatig expeses targeted to grow faster tha icome i 2017/18, the Law School is shiftig resources from log-term programmig ad capital projects to curret operatios. Additioal staff ad salary icreases mea that compesatio is expected to grow by 5% to $64.6 millio, ad o-compesatio will grow by 6% to $25.5 millio. Graduate studet fiacial aid is icreasig to $9.3 millio, while o fiacial aid expeses are remaiig costat at $16.2 millio. SLS cosolidated expedable fud balaces will icrease by $100,000 to $23.8 millio. Of this balace, $13.6 millio is classified as ocash ivestmets i housig loas ad ot available for use. The remaiig $10.2 millio is available ad cosists of $6.4 millio for restricted purposes, such as academic programs ad ceters ad fiacial aid, ad $3.8 millio for urestricted purposes.

52 36 ACADEMIC UNITS SCHOOL OF MEDICINE 2017/18 Cosolidated Reveues $2,459.8 Millio Other 10% Auxiliary Icome 2% Patet Icome 1% Desigated Cliic 41% Geeral Fuds 5% Gifts 5% Edowmet Payout 7% Sposored Research 29% [IN MILLIONS OF DOLLARS] 2015/ / /18 ACTUALS PROJECTION PLAN Total Reveues 2, , ,459.8 Expeses Salaries ad Beefits 1, , ,466.6 No-Salary Total Expeses 1, , ,327.8 Operatig Results Trasfers From (to) Edowmet & Other Assets (48.5) (2.2) (15.6) Trasfers From (to) Plat (44.9) (20.4) (28.2) Surplus / (Deficit) Begiig Fud Balaces , ,219.3 Edig Fud Balaces 1, , ,307.5 PROGRAMMATIC DIRECTIONS The School of Medicie is a academic medical ceter. Combied, the medical ceter, Staford Health Care (SHC), ad Staford Childre s Health (SCH) are kow as Staford Medicie. Staford Medicie s missio is to promote fudametal, cliical, ad traslatioal discovery; to trai the biomedical leaders of tomorrow; ad to trasform patiet care. Staford Medicie recetly iitiated a itegrated strategic plaig process. The full strategic pla is expected to lauch by December Staford Medicie s visio is to lead the biomedical revolutio i precisio health: to precisely predict, prevet, ad cure. Precisio health is a fudametal shift to proactive ad persoalized health care that empowers people to lead healthy lives. Staford Medicie is drivig this trasformatio by leveragig the art ad sciece of medicie to predict ad prevet disease before it strikes ad cure it decisively if it does. Over the past year, a precisio health committee, which icluded may idividuals across Staford Medicie ad the uiversity, egaged i a thoughtful ad collaborative process to develop a strategic pla for the visio. The committee idetified umerous itercoected ad overlappig priorities, icludig developig the sciece of behavior chage, buildig a data system that lears from every patiet egagemet, ad facilitatig the traslatio of ew techologies ito cliical diagostics. Through the Itegrated Cliical Strategy Committee, the school ad hospital leaders have established three strategic priorities for the cliical eterprise: (1) reachig pre-emiece i key precisio health service lies through measured growth i depth ad breadth of cliical services ad biomedical iovatio; (2) expadig off-campus ad outpatiet services to provide care through low-capital etworks ad parterships while cocetratig complex care o campus; ad (3) maitaiig strog fiacial performace by improvig cost structure, developig capabilities to maage populatios, ad differetiatig through cosumer-facig techology. To recogize ad ehace teachig ad metorig throughout Staford Medicie, the school has lauched a Teachig ad Metorig Academy with a competitive grat program ad a faculty traiig bootcamp. It has also lauched the Digital Medical Educatio Iteratioal Collaborative (Digital MEdIC), which leverages its expertise i pedagogy ad olie educatio. With the goal of icreasig global access to high-quality medical educatio, Staford Medicie has begu coversatios with potetial parters i Idia, developig a strategic pla, ad selectig a platform for dissemiatig cotet.

53 ACADEMIC UNITS 37 Natioally, effective levels of Natioal Istitutes of Health fudig have decreased over the last decade. Despite this, the school has successfully maitaied ad grow its research fudig. This i part is due to the recruitmet of highpotetial ad highly prolific ivestigators ad to the provisio of $5.2 millio i seed grat fudig to faculty from 2013 to 2016 to help esure that the most iovative studies cotiue to get supported. I the first two years of the program, the school distributed $3.7 millio i seed grats; this ivestmet has retured $20.0 millio i ew grat fudig. Also boostig research efforts, Staford Medicie was recetly selected to be a foudig member of two sigificat philathropic parterships i biomedicie, the Cha Zuckerberg Biohub ad the Parker Istitute for Cacer Immuotherapy. Despite the curret challegig research fudig eviromet ad political proposals that could create eve greater ucertaity about future research fudig, the school recogizes the risks, ad the curret projectios do ot reflect a impact from these possibilities. CONSOLIDATED BUDGET OVERVIEW The school projects total reveues ad trasfers of $2,459.8 millio i 2017/18 ad expeses of $2,327.8 millio, yieldig a operatig surplus of $132.0 millio. After trasfers to plat ad fuds fuctioig as edowmet (FFE) of $43.8 millio, the et chage i curret fuds is $88.2 millio. The major growth areas are health care services ad sposored research, ad ivestmet icome as payout to the expedable fuds pool (EFP) i 2017/18 is projected to improve from the prior year. Offsettig this growth is the expected declie i patet reveues from the expiratio of a key patet i 2015/16. Total reveues ad trasfers are projected to icrease 9.2%, or $207.8 millio, to $2,459.8 millio i 2017/18. Key drivers iclude the followig: The school reewed a five-year fuds flow agreemet with SHC i 2015/16 ad reewed its agreemet with SCH i 2016/17. The fuds flow chages will spur growth of 12.7%, or $128.8 millio, i health care services reveues, which will reach $1,145.4 millio i 2017/18. This growth is drive by a cotiued icrease i cliical program activities ad by icremetal faculty ad cliicias. Cotiued faculty recruitmet leads to a projected 6.1% icrease i combied federal ad o-federal sposored research, 5.1% i federal ad 9.0% i o-federal. With the merged pool projected retur improvemet i 2016/17, edowmet icome, icludig ew gifts, is projected to icrease 3.3%, ad the EFP is projected to achieve the full payout. Expeses are projected to icrease 9.3%, or $198.3 millio, to $2,327.8 millio i 2017/18. Major icreases will result from the followig: Net recruitmet of 32 faculty is projected, 20 i the medical ceter lie ad 12 i the uiversity teure lie. I additio, 70 cliicia educators are projected to joi Staford Medicie i 2017/18. Aual total compesatio for faculty, cliicias, ad staff is aticipated to icrease 10.6%. The mai drivers are icreases i cliical activity, icremetal recruitmet, ad the aual merit program. Projected growth i sposored research ad health care services reveue will drive related o-compesatio expeses higher. Ret expeses are also expected to rise as ret abatemet for oe leased facility eds i 2016/17 ad the full-year impact of aother lease begis i 2017/18. Trasfers of $28.2 millio to plat iclude projects for Ceter for Academic Medicie I (CAM 1), the Staford Oak Garde Childre s Ceter, ad Li Ka Shig Ceter Reovatio Phases 2 ad 3; etitlemet paymets to the City of Palo Alto; ad retur of bridged fuds o the Lorry I. Lokey Stem Cell Research Buildig ad the lease o 1520 Page Mill Road. Trasfers to assets iclude ivestmets by departmets to FFE. CAPITAL PLAN The school s two ew buildigs, BioMedical Iovatios Buildig 1 (BMI 1) o Pasteur Drive ad CAM 1 o Quarry Road, are o schedule to complete by The CAM 1 project will begi precostructio activities durig summer 2017 ad will add 170,000 square feet of offices, coferece spaces, ad other ameities. The project also icludes the costructio of a udergroud parkig garage with over 800 parkig spaces alog with the adjacet 10,000-square-foot Staford Oak Garde Childre s Ceter. The total project cost is estimated at $230.4 millio, joitly fuded by the school, SHC, ad SCH. BMI 1 precostructio activities commeced durig witer 2016, with full costructio to begi i sprig The project will add 215,500 square feet of research space at a estimated cost of $210 millio.

54 38 ACADEMIC UNITS VICE PROVOST AND DEAN OF RESEARCH 2017/18 Cosolidated Reveues $237.2 Millio Other 6% Auxiliary Icome 2% Affiliates 2% Geeral Fuds 27% [IN MILLIONS OF DOLLARS] 2015/ / /18 ACTUALS PROJECTION PLAN Total Reveues Expeses Salaries ad Beefits No-Salary Total Expeses Sposored Research 34% Gifts 13% Edowmet Payout 16% Operatig Results Trasfers From (to) Edowmet & Other Assets Trasfers From (to) Plat 0.0 (8.7) (1.5) Surplus / (Deficit) Begiig Fud Balaces Edig Fud Balaces The Office of the Vice Provost ad Dea of Research (DoR) is resposible for facilitatio of faculty research ad scholarship across all of the schools ad departmets ad serves as cogizat dea for the 18 uiversity-wide idepedet laboratories, istitutes, ad ceters. These istitutes provide itellectual ad physical eviromets for research that ivite scietific ad scholarly dialogue, facilitate iterdiscipliary collaboratios, support policy-relevat research, ad icrease the success of faculty i obtaiig research fudig. The office has oversight for the implemetatio of research policies ad maages the compliace ad admiistrative offices that support research. DoR also oversees major shared facilities that support a broad rage of research ad scholarly activities. PROGRAMMATIC DIRECTIONS Through all of its activities, DoR seeks to support faculty competitiveess i research ad scholarship. This is particularly importat as obtaiig extramural fudig becomes icreasigly challegig. It will pursue this goal through the followig four program objectives i 2017/18: Creatig opportuities for iterdiscipliary research through the idepedet laboratories, istitutes, ad ceters; Providig state-of-the-art shared facilities; Miimizig compliace ad admiistratio burdes for faculty ad staff; ad Mitigatig research-related safety risks. Staford ad SLAC are establishig a ew Cryo-Electro Microscopy (cryo-em) Ceter to be located at SLAC. Advaces i the desig of cryo-em istrumets durig the past few years have created remarkable ew opportuities to study cellular structures ad their costituet proteis ad other molecular iteractios at a level of precisio ot previously possible. The impact of this developmet is trasformative for biology ad biomedical scieces. Staford ad SLAC are exceptioally well positioed to exploit this recet breakthrough ad create a world-leadig ceter for cryo-em. The idepedet istitutes are lauchig several ew iterdiscipliary iitiatives. Bits & Watts is a ew Precourt Istitute for Eergy iitiative focused o iovatios for the 21st-cetury electric grid. A ew grid paradigm is eeded to icorporate large amouts of clea power ad a growig umber of distributed eergy resources, while simultaeously eablig grid reliability, resiliece, security, ad affordability. The Staford Istitute for Ecoomic Policy Research (SIEPR) lauched a predoctoral research fellows program for recet

55 ACADEMIC UNITS 39 graduates who are cosiderig a PhD to work closely with oe or more faculty ad take oe Staford course per quarter before applyig to graduate school. The Woods Istitute for the Eviromet is hostig a Youg Evirometal Scholars Coferece that will allow graduate studets ad postdoctoral scholars to preset their research i a ovel iterdiscipliary cotext that brigs together graduate-level researchers from all seve schools. CONSOLIDATED BUDGET OVERVIEW The 2017/18 cosolidated budget for DoR shows total reveues ad trasfers of $237.2 millio ad expeses of $234.0 millio, resultig i a et operatig surplus of $3.2 millio. After estimated trasfers of $3.3 millio from assets, DoR projects a plaed surplus of $6.5 millio. Staford Neuroscieces Istitute (SNI) received a uplaed edowmet gift of $54 millio ad a expedable gift of $29 millio for program support i 2016/17. If the oe-time gift of $29 millio to SNI is removed as a outlier from 2016/17 reveues, the total reveue i 2017/18 is projected to icrease by $5.5 millio, or 3%, from 2016/17. This is primarily due to icreases i edowmet payout ($2.3 millio) geerated from the ew edowmet i SNI, gift reveue ($1.1 millio), ad o-federal research ($1.5 millio), drive by the extesio of the Global Climate ad Eergy Project activity through 2018/19 ad a icrease i sposored fudig for ew seior fellows i SIEPR. Federal sposored research is expected to remai at the same level ($47.1 millio), based o historical treds over the past five years. The Tita Krios G2 equipmet purchases totalig $15 millio i 2016/17, $10 millio of which was uplaed, iflated equipmet expese ad trasfers to DoR. Equipmet purchases ad trasfers to DoR are therefore expected to be sigificatly lower i 2017/18. As a result, total expeses i 2017/18 are expected to decrease overall by $7.5 millio, or 3%. CAPITAL PLAN The SNI ad the Chemistry, Egieerig ad Medicie for Huma Health Istitute (ChEM-H) will reside i a ew 235,000-square-foot facility. This facility will be home to more tha 40 laboratories, core research facilities, ad meetig spaces. It is strategically located proximate to egieerig, medicie, ad the basic scieces. Strog coectig pathways amog the Neuro/ChEM-H Research Complex, the Sciece ad Egieerig Quad, the Bass Biology Buildig, ad Bio-X are itegral to the desig. The research ceter will comprise two mai buildigs. Each buildig will have four floors, oe below grade ad three above, with laboratory, meetig, ad commual spaces throughout the buildig. The labs are desiged to be highly flexible, accommodatig a wide variety of research approaches, icludig cell ad molecular biology, electrophysiology ad behavior, imagig ad microscopy, huma eurosciece ad egieerig, ad theoretical ad computatioal eurosciece. Each eighborhood of three to five labs will share a commo space adjacet to lab support rooms for specialized equipmet ad procedures. The project cost is $257 millio ad is beig fuded by gifts ad istitutioal support. Costructio of the buildigs bega i witer 2017 ad is scheduled for completio i sprig 2019.

56 40 ACADEMIC UNITS VICE PROVOST FOR UNDERGRADUATE EDUCATION 2017/18 Cosolidated Reveues $64.3 Millio Other 3% Auxiliary Icome 6% Geeral Fuds 38% [IN MILLIONS OF DOLLARS] 2015/ / /18 ACTUALS PROJECTION PLAN Total Reveues Expeses Salaries ad Beefits No-Salary Total Expeses Edowmet Payout 49% Gifts 4% Operatig Results 1.0 (0.8) (1.2) Trasfers From (to) Edowmet & Other Assets Trasfers From (to) Plat Surplus / (Deficit) 1.2 (0.8) (1.1) Begiig Fud Balaces Edig Fud Balaces Reveues ad expeses i this chart ad table iclude $16.4 millio of activity that is accouted for as operatig trasfers i Appedix A. PROGRAMMATIC DIRECTIONS The Office of the Vice Provost for Udergraduate Educatio (VPUE) fuctios as the heart ad cosciece of udergraduate educatio at Staford, advocatig for udergraduates ad parterig with faculty, staff, ad studets to educate kowledgeable, egaged citizes ad creative, cofidet leaders. VPUE resources are aimed at coectig studets with opportuities at Staford, ivolvig faculty with udergraduate educatio, ad realizig fully the visio of a broad liberal educatio. VPUE s strategic plaig process has coalesced aroud three critical themes uder the broad umbrella of rethikig liberal educatio: trasformig the pivotal first-year/ sophomore experiece, expadig experietial educatio, ad reaffirmig residetial educatio. Notably, VPUE s missio ad strategic iitiatives have bee sigificatly impacted by a rapidly evolvig cultural ad academic eviromet from which the major challeges facig udergraduate educatio at Staford emerge. Staford udergraduates, gifted ad capable as they are, are decidedly differet from icomig classes of 5 to 10 years ago i terms of their itellectual iterests, scholarly preparatio, socioecoomic backgrouds, ad egagemet with techology. Give these realities, the uiversity s comprehesive ad systematic process of log-rage plaig has the potetial to produce profoud ad yet-ukow chages i udergraduate educatio, alog with a cocomitat call for additioal fiacial resources to implemet these chages. Rethikig liberal educatio will require a willigess to shed some previously held assumptios about both what is taught ad how it is taught. It will ivolve a commitmet to develop ew pedagogies that more actively capitalize o social ad racial differeces, ad that itegrate attetio to studet well-beig ad creative cofidece ito academic progress from the outset rather tha as a cocer outside the classroom. I a iitiative that is ew this year ad saliet to efforts to reaffirm the residetial experiece, VPUE has led the Residetial Cabiet through its residetial programs faculty director, James Campbell. The Residetial Cabiet, composed of five vice provosts, brigs together uiversity leaders operatig i the residetial area to esure broad, coheret strategic visio, cosistet oversight, ad a more robust faculty presece. The cabiet preseted its cosolidated visio to the Budget Group this past witer, demostratig sychroicity by reallocatig resources across orgaizatioal lies to achieve priorities. I 2017/18, ext steps will iclude formig a faculty advisory board to oversee processes for creatig, sustaiig, ad, where ecessary, susettig residetial programs. I additio, a residetial learig eviromets

57 ACADEMIC UNITS 41 workig group will be created to esure effective collaboratio i desigig ad allocatig residetial spaces. Fially, VPUE will begi preparig for a secod itegrated learig eviromet a livig/learig program for first-year studets focused o issues of social justice ad diversity. VPUE s ewest pilot i experietial learig, the Staford i New York program, lauched a quarter focused o media ad fiace this past witer. Through a itesive academic quarter of study, reflective practice, ad experietial learig, studets hoe their itellectual skills ad capacities, develop their abilities as adaptive learers, ad icrease their creative cofidece. New York also provides uparalleled opportuities for studets to egage i iterships i dyamic orgaizatios, icludig educatioal, arts, ad cultural istitutios; govermet ad public agecies; social service orgaizatios; ad corporatios. I 2017/18, Staford i New York will expad to three quarters. The ew sprig quarter will focus o New York as a global city ad will feature iterships i ad aroud issues of global developmet, icludig at the Uited Natios. Studet respose ad other program evaluatio measures cotiue to be very positive. The class of 2017 will be the first class to graduate fulfillig the Ways of Thikig/Ways of Doig (Ways) breadth requiremets. The Ways cocept shifted the udergraduate program from a discipliary breadth model to a focus o essetial capacities, which may be attaied outside or withi the major. The Ways requiremets aim to itegrate geeral educatio more comprehesively with studet experieces, to provide a persuasive ratioale for academic exploratio, ad to give studets the flexibility to pursue topics of iterest across a broad array of course optios. VPUE fiacially supports academic departmets expadig Ways offerigs, particularly i areas with capacity cocers such as Creative Expressio ad Ethical Reasoig. VPUE has partered with Istitutioal Research & Decisio Support to uderstad better how studets fulfill their Ways requiremets ad the implicatios of these choices. I 2016/17, the Big Overseas Studies Program (BOSP), VPUE s flagship program i experietial learig, uderwet two sigificat programmig chages with budgetary implicatios. With the assistace of the provost, BOSP offered summer fiacial aid to udergraduates attedig summerquarter programs i Satiago ad Cape Tow. Summer erollmets subsequetly doubled. Also i 2016/17, due to challeges i attractig studets ad faculty i residece as well as difficulties with academic programmig, the BOSP faculty director decided to susped the Beijig program for 2017/18. VPUE remais committed to overseas study programs i Asia ad will support BOSP s exploratio of ew programmig for ext year. BOSP will reexamie Beijig ad will also cosider potetial alterate locatios such as Shaghai. CONSOLIDATED BUDGET OVERVIEW The 2017/18 cosolidated budget shows total reveues ad operatig trasfers of $64.3 millio ad expeses of $65.5 millio, yieldig a operatig deficit of $1.2 millio. Reveues ad trasfers are expected to icrease by $0.5 millio from 2016/17, due maily to slight improvemets i edowmet payout, icreases i base ad oe-time geeral fuds, ad the first approved icrease to New Studet Orietatio fees i ie years. Expedable gifts are expected to decrease by $230,000 from 2016/17 as Iovatio Fud ad other highdollar pledges tail off. Expeses are expected to grow by $1.0 millio, due primarily to operatioal costs related to addig a third quarter to the Staford i New York program ad icreases to support udergraduate research. This year, VPUE applied results of a three-year expese category aalysis to cotrol o-compesatio cost growth of cotiuig programs. Vice Provost Office expeses were reduced 1.6%. VPUE s other uits cotaied their cost rise to less tha 3%. Workig with the Office of the Treasurer, VPUE ad BOSP fiacial leadership took advatage of the strog dollar to lock a currecy hedge early for 2017/18, resultig i $831,000 of aticipated savigs i BOSP operatig expeses. VPUE s fiacial strategy is to sustai base programs, to pilot ew iitiatives, ad to assess their educatioal outcomes. VPUE has fuded pilot programs with oe-time uiversity fuds ad expedable gifts ad sustaied core programs through edowmet payout ad geeral fuds. Each year, VPUE assesses several of its pilot programs, lookig at their achievemet of educatioal aims ad their cost-effectiveess. This process has led VPUE to alter, stregthe, expad, ad eve suset programs. VPUE s fud balace is expected to be $20.7 millio begiig i 2017/18, with approximately half of that urestricted. Fud balaces will absorb the deficit for 2017/18.

58 42 ACADEMIC UNITS VICE PROVOST FOR GRADUATE EDUCATION Edowmet Payout for Graduate Fellowship 80% 2017/18 Cosolidated Reveues $43.7 Millio Geeral Fuds 20% [IN MILLIONS OF DOLLARS] 2015/ / /18 ACTUALS PROJECTION PLAN Total Reveues Expeses Salaries ad Beefits Graduate Studet Support No-Salary Total Expeses Operatig Results (1.3) (2.4) (2.1) Trasfers From (to) Edowmet & Other Assets (0.3) (0.3) (0.3) Trasfers From (to) Plat Surplus / (Deficit) (1.6) (2.6) (2.4) Begiig Fud Balaces Edig Fud Balaces Reveues ad expeses i this chart ad table iclude $33.2 millio of activity that is accouted for as operatig trasfers i Appedix A. PROGRAMMATIC DIRECTIONS The Vice Provost for Graduate Educatio (VPGE) plays a key leadership role, workig collaboratively across the uiversity s seve schools, i ehacig the quality of graduate educatio for 9,300 studets pursuig degrees i more tha 200 graduate degree programs ad departmets. VPGE addresses several critical uiversity priorities. VPGE admiisters seve uiversity-wide fellowships; fosters iovatio by providig opportuities for studets professioal developmet; ad serves as a catalyst for supportig iovative iitiatives withi graduate programs, advacig diversity, ad facilitatig iterdiscipliarity. VPGE s programs ad fellowships reach roughly 4,500 graduate studets (over 800 o fellowships) aually. The largest uiversity-wide fellowship program is the Staford Graduate Fellowships (SGF) Program i Sciece ad Egieerig, used to attract the best studets i the world to doctoral study i these fields at Staford. More tha 1,500 SGFs have eared doctoral degrees so far. These prestigious three-year fellowships have ecouraged creative approaches to global problems approaches such as buildig highly efficiet solar-powered batteries; developig a chemical catalyst to make biodegradable plastics from orgaic, reewable materials; ad combiig 3-D imagig ad 3-D pritig to create realistic physical models of rocks that are difficult to access i perso. The Staford Iterdiscipliary Graduate Fellowships (SIGFs) have also gaied mometum with 170 fellowships awarded. These graduate studets are advacig kowledge i uaticipated ways, eve defiig ew lies of iquiry. SIGF alumi are ow teachig or coductig research at istitutios such as Priceto, Yale, Harvard, Duke, MIT, ad Berkeley, i additio to workig i idustry, govermet, ad the oprofit sector. VPGE programs ad staff support the fellows pursuit of pioeerig research iterests that spa disciplies ad help them prepare for ucharted iterdiscipliary career trajectories. VPGE fellowship fudig will icrease 8% from 2016/17 to 2017/18, despite miimal growth i edowmet payout. The umber of SGFs will remai costat. The SIGF program, o the other had, will be growig as pledge paymets are received. The umber of SIGFs will icrease util the program goal of awardig 33 ew fellows per year is reached. After the ext few years, the umber of fellowships awarded may require adjustmet if edowmet icome does ot bouce back. Fellowship stiped ad tuitio amouts will icrease by 3.5% ext year. Fud balaces will cover this expected icrease i graduate studet support.

59 ACADEMIC UNITS 43 A top priority for VPGE is to provide iovative programs i collaboratio with Staford s seve schools to recruit studets from diverse backgrouds ad ehace their educatioal experieces while at Staford. The Diversifyig Academia, Recruitig Excellece (DARE) Doctoral Fellowship Program for advaced PhD studets has become atioally kow, with 166 fellows. Sevety-five percet of DARE alumi work i the academic sector; recetly two have wo prestigious earlycareer awards, ad two have already become teured faculty. I additio, VPGE has scaled up the Ehacig Diversity i Graduate Educatio (EDGE) Doctoral Fellowship Program, which supports icomig PhD studets i five of Staford s seve schools. EDGE provides metorig ad professioal developmet resources to support the academic success of doctoral studets i their first two years, with ogoig access to research fuds. A ew iitiative awards Diversity ad Iclusio Iovatio Fuds o a competitive basis to graduate studets ad postdocs across the uiversity. This fud was a prototype for the uiversity-wide fud just lauched by the Diversity Cabiet. This year VPGE cotiued to focus o developig ew resources ope to all graduate studets uder the baer of Graduate Professioal Developmet (GPD). These resources iclude expaded iitiatives i leadership developmet ad preparatio for faculty careers. The GPD framework itself has become a more sophisticated iteractive tool, ad more graduate studets are usig it to assess their skill levels, determie priorities for gaiig proficiecy, ad locate resources at Staford may of which are provided by VPGE. The major domais are specialized cotet kowledge ad skills, teachig, commuicatio, leadership ad maagemet, career developmet, ad persoal developmet. Where possible, programs are recorded for a video archive, to be available for asychroous use. VPGE is i a strog fiacial positio, leveragig ad extedig its reach with iovative programs ad graduate studet fudig across the uiversity. Jauary 2017 marked the 10th aiversary of VPGE s foudig. As VPGE takes stock ad plas for the future, it will seek iput widely from across the uiversity commuity to lear what is most valued ad what more ca be doe to ehace graduate educatio ad graduate studets experieces over the ext decade. CONSOLIDATED BUDGET OVERVIEW VPGE projects a 2017/18 cosolidated budget with total reveue ad trasfers of $43.7 millio ad expeses of $45.9 millio, resultig i a operatig deficit of $2.1 millio. After asset trasfers of $0.3 millio, a overall deficit of $2.4 millio is expected. Reveues ad trasfers comprise mostly edowmet payout ad geeral fuds. For these two majority compoets, edowmet payout is expected to be $35.1 millio, ad $8.4 millio is expected from geeral fuds. After trasfers of $400,000 to departmets for SCORE (Stregtheig the Core) ad SPICE (Staford Program o Iteratioal ad Cross-Cultural Educatio) fudig, reveues ad trasfers total $43.7 millio. Cosolidated expeses comprise 86% direct graduate studet support, 10% compesatio ad beefits, ad 4% programmatic o-compesatio expeses. VPGE will provide $38.3 millio i direct graduate studet fudig for several fellowship programs i 2017/18, a icrease of approximately 6% from $36.3 millio i 2016/17. Tuitio ad salary/stiped rate icreases ad studet growth i fellowships ad programs drive this icrease. Compesatio ad o-compesatio expeses are expected to icrease slightly to $4.9 millio ad $2.6 millio, respectively. Most of VPGE s graduate studet fudig is idetified as trasfers from its edowmet accouts to school/departmet operatig budgets. The budget pla is to sped dow the cosolidated fud balace, usig reserves to cover additioal expeses for graduate studet fudig ad programs as well as aticipated declies i edowmet icome for multiyear fellowships. This will reduce the cosolidated fud balace to $49.6 millio at year-ed. VPGE s fudig to graduate studets ad operatioal expeses will cotiue to icrease as both ogoig programs ad ew pilot programs are selectively exteded to reach more graduate studets i ew ways. Over the ext three years, forecast models idicate cosolidated deficits of $2.5 millio aually. Fud balaces will be used to cover the deficits, ultimately brigig the cosolidated fud balace to $40.7 millio by 2019/20. Fudig commitmets will cotiue to be determied based o how they ca best meet uiversity priorities. The use of reserves will be moitored as decisios are made about program offerigs i light of feedback from log-rage plaig.

60 44 ACADEMIC UNITS VICE PROVOST FOR TEACHING AND LEARNING 2017/18 Cosolidated Reveues $39.5 Millio Executive Educatio/ Other 62% Geeral Fuds 38% [IN MILLIONS OF DOLLARS] 2015/ / /18 ACTUALS PROJECTION PLAN Total Reveues Expeses Salaries ad Beefits No-Salary Total Expeses Operatig Results (6.6) 0.7 (0.5) Trasfers From (to) Edowmet & Other Assets Trasfers From (to) Plat Surplus / (Deficit) (6.0) 0.7 (0.5) Begiig Fud Balaces Edig Fud Balaces The Office of the Vice Provost for Teachig ad Learig (VPTL) broadly supports teachig ad studet learig across all of Staford s programs. VPTL s missio i support of faculty-led programs ad iitiatives is to help Staford ivet the future research uiversity by supportig teachig ad learig iovatio for udergraduate, graduate, professioal, ad lifelog learig. VPTL s activities ad services draw o core competecies i pedagogy, techology, learig eviromets, academic busiess developmet, ad cooperative actio. I 2016/17, VPTL joied forces with the Staford Ceter for Professioal Developmet (SCPD), formerly housed withi the School of Egieerig. This move positioed every school i the uiversity to embark o bigger ad broader educatioal iitiatives that require a rich mix of capabilities. The year 2016/17 also marked the completio of the learig maagemet system trasitio from CourseWork to Cavas, cosolidatio of VPTL s studet services ito the ewly created Lathrop Learig Hub, ad experimetatio with a ew coordiated public egagemet model iitially focused o the presidetial electios. PROGRAMMATIC DIRECTIONS Like much of the rest of the uiversity, i 2017/18 VPTL will be egaged i Staford s log-rage plaig effort. Additioally, VPTL will evolve its ifrastructure to support emergig programs ad seek to uderstad the eeds of future learers. Evolvig VPTL s Ifrastructure to Support Emergig Programs Combiig several orgaizatios sice 2015, VPTL is focused o supportig effective pedagogy i all programs ad examiig ways to evolve its ifrastructure to gai operatioal efficiecies. Specifically, VPTL staff are icreasig campus services aroud commuicatios; evolvig digital strategies, icludig course delivery, platforms, ad modes; ad visioig for the redesig of Staford s cetrally held classrooms. I 2017/18, VPTL will embark o a ifrastructure project that will eable schools to maage a catalog of offerigs for lifelog learers that ca be displayed both at olie.staford. edu ad at school sites. This effort will create a frot door for exteral learers, allow Staford s kowledge ad expertise to be dissemiated more broadly, egage learers aroud the globe, ad drive website traffic to programs withi schools ad departmets.

61 ACADEMIC UNITS 45 VPTL also has the opportuity to optimize the uiversity s approach to course delivery usig a rage of media, from recorded lectures to studio- ad o locatio produced courses created collaboratively by faculty ad VPTL s istructioal desigers. I doig so, VPTL proactively leverages faculty time by esurig that their olie course cotet reaches as may audieces as effectively as possible. VPTL will idetify the most efficiet combiatio of digital platforms to eable course delivery to the full rage of olie ad o-campus learers. I the future, VPTL expects that lecture classes will icreasigly be complemeted by classes that use other, more active ad participatory learig modalities ad have high levels of istructor/studet ad peer iteractio. The classrooms that support these models require more space ad more flexibility tha the majority of Staford s traditioal classrooms provide. As experts i desig of covetioal ad iovative learig spaces, VPTL staff will participate i ew classroom desig ad reovatio with the schools ad Lad, Buildigs ad Real Estate (LBRE) to esure ew learig modalities are cosidered i these projects. VPTL will also work with the schools ad LBRE to develop a roadmap for the thoughtful redesig of strategically selected cetrally maaged classrooms. Uderstadig Future Learers VPTL recogizes that each geeratio of learers is differet. Studets today are icreasigly ivested i persoal meaig ad public service. This is reflected i the Staford 2025 sloga Fid a missio, ot a major. Milleials will chage jobs six times betwee ages 22 ad 32. They grew up with 9/11, the great recessio, iteret coectivity, ad social media. I a eviromet of rapid chage ad pletiful digital iformatio, today s learers eed critical thikig skills, the ability to reaso from evidece, skill i avigatig oisy sources of sometimes ureliable iformatio, the ability to collaborate effectively with others, ad iterdiscipliary problem-solvig skills. I 2017/18, VPTL will ivestigate with its campus parters what kids of educatioal tools, pedagogically iovative techiques, ad learig assessmet Staford should offer its studets to best equip them to develop their full potetial, lead fulfillig lives, ad be productive citizes i tomorrow s society. Guided by a faculty advisory board, VPTL will codefie ad facilitate a rage of collaborative iitiatives ad programs aroud the topic of future learers. VPTL will parter with appropriate schools ad academic support uits to ivolve studets, faculty, ad staff i purposeful egagemet aroud issues impactig Staford ad higher educatio more broadly. Programmig will be desiged to promote scholarly iquiry, meaigful dialogue, ad thoughtful listeig. It will take several forms: pael discussios, learig symposia, studetcetered special projects, field trips, ad more. Aspects of programmig will egage the broader U.S. ad iteratioal higher educatio commuity. CONSOLIDATED BUDGET OVERVIEW The 2017/18 cosolidated budget for VPTL projects total reveues of $39.5 millio ad expeses of $39.9 millio, resultig i a plaed et operatig deficit of $500,000. VPTL will be i the fial year of trasitio from presidetial start-up fuds to geeral fuds at $1 millio per year. Total reveues i 2017/18 are projected to decrease by $3.2 millio, or 7.6%, from 2016/17. This decrease is primarily due to the susettig of two large professioal certificate programs withi SCPD i 2016/17. It also reflects the $1 millio i oe-time presidetial support provided i 2016/17 for the 408 Paama Mall studio fit-up. Total expeses i 2017/18 are projected to decrease by $2.1 millio, or 4.9%, from 2016/17. Compesatio expeses are projected to icrease by $877,000, or 3.6%, but VPTL aticipates slightly fewer fixed-term ad cotiget positios i 2017/18. No-compesatio expeses are projected to decrease by $2.9 millio, or 16.4%, due primarily to the completio of the studio fit-up at 408 Paama Mall ad the reductio of exteral parter paymets related to the edig of two large programs at SCPD. VPTL expects to have a $9.5 millio fud balace. VPTL plas to utilize this balace to support the plaed deficit, program developmet for residetial ad olie studets, ad a techology reserve to refresh its techology-rich spaces throughout campus.

62 46 ACADEMIC UNITS HOOVER INSTITUTION 2017/18 Cosolidated Reveues $68.6 Millio Other 4% Sposored Research Geeral Fuds 1% 2% Edowmet Payout 41% Gifts 52% [IN MILLIONS OF DOLLARS] 2015/ / /18 ACTUALS PROJECTION PLAN Total Reveues Expeses Salaries ad Beefits No-Salary Total Expeses Operatig Results (3.2) (3.6) (3.4) Trasfers From (to) Edowmet & Other Assets Trasfers From (to) Plat (20.0) Surplus / (Deficit) (20.8) (3.6) (3.4) Begiig Fud Balaces Edig Fud Balaces PROGRAMMATIC DIRECTIONS The Hoover Istitutio seeks to geerate ideas from its fellowship, collect kowledge i its library ad archives, ad commuicate such kowledge ad ideas to a broad audiece, particularly udergraduate studets at Staford ad elsewhere. A strategic plaig process is curretly uder way to provide directio for the istitutio as it eters its secod cetury. Operatioal plas are beig developed to achieve pre-emiece for the istitutio as a public policy research ceter; a collector of materials o social, political, ad ecoomic chage i the 20th ad 21st ceturies; ad a educator o policy issues broadly speakig, to focus o its core missio of research ad educatio. The broad outlies of this strategic pla iform the program ad budget plas for 2017/18. I the ext fiscal year, the istitutio will see additios to the fellowship ad research program, growth i the collectio of archival materials, improvemets i access for the library ad archives, ad further expasio of a broad educatio program. Developmet ad cosolidatio of admiistrative services ad fudraisig activities will scale relative to the eeds of the expaded Hoover program. The stregth of Hoover s research program lies i the exceptioal ability of its scholars; thus, idetifyig ad attractig leadig academics to refresh the fellowship will be a key priority. Hoover will focus o recruitig the people ecessary to advace its missio ad to advace scholarship i related social sciece ad humaities disciplies, while de-emphasizig research i areas outside the istitutio s core focus. To this ed, Hoover will develop a more rigorous recruitig process withi the ext year, with the goal of addig oe et ew fulltime seior fellow per year. For 2017/18, the budget icludes oe ew fellow specializig i Chia. Hoover cotiues to view the coveig of scholars to tackle chages i public policy as a essetial fuctio. The primary mechaisms for gatherig these teams are cofereces ad semiars. The istitutio will expad o existig efforts i this area, ot oly o the Staford campus but i Hoover s Washigto, D.C., offices as well. It will place reewed emphasis o producig output iteded to reach ad impact audieces beyod those able to atted these meetigs. Program activities for scholar groups studyig labor productivity, immigratio reform, climate chage, ad structural macroecoomic modelig are i the plas for 2017/18. Hoover plas to grow specific collectig areas i support of the missio, buildig o core stregths ad expadig ito ew areas of strategic iterest to scholars ad policy makers. For 2017/18, Hoover will expad its collectig efforts

63 ACADEMIC UNITS 47 i the Middle East ad North Africa ad i Japa s moder diaspora. Techology ehacemets will expad access to Hoover s collectios. Hoover plas to leverage its recetly implemeted cotet maagemet system to deliver collectios to a broad olie public. As a complemet to this ew ifrastructure, Hoover is proceedig with digitizatio o two frots: (1) digitizig its most importat ad edagered soud, video, ad paper collectios i house; ad (2) workig i partership with iteratioal ad U.S. istitutios ad with private-sector compaies o larger-scale projects. The project curretly uder way to digitize 5,000 rare ewspaper titles held by Hoover ad Staford Uiversity Libraries is a relevat example of these parterships. As educatio is a essetial fuctio for Hoover, the istitutio cotiues to look for opportuities to dissemiate its work more broadly. The Educatig Americas i Public Policy iitiative is iteded to traslate the research of Hoover s fellows ito accessible, shareable cotet. I 2017/18, Hoover will leverage the recetly lauched PolicyEd.org website to expad its offerigs of short videos, edited ad augmeted segmets of olie courses, ad digital commuities to iform the public o matters of public policy. Locally, the David ad Joa Traitel Buildig opeig later this year will provide opportuities to egage with the broader Staford commuity, especially udergraduates. This summer, Hoover will use this ew facility to host a iaugural Summer Policy Bootcamp for udergraduates, a oe-week itesive program led by Hoover scholars. Cotiuatio of this bootcamp is i the budget for 2017/18. Fially, Hoover plas to expad upo its curret educatioal programs (Cyber Bootcamp, Cogressioal Fellowships, Leadership Forum, Media Fellowships, ad Media Roudtables) to reach ew audieces. CONSOLIDATED BUDGET OVERVIEW For 2017/18, Hoover projects reveues of $68.6 millio ad expeses of $72.1 millio, for a operatig deficit of $3.4 millio. Net of these results, ed-of-year fud balaces are expected to be $38.9 millio, with reductios occurrig primarily i restricted reserves. Reveues are projected to icrease by $5.4 millio, or 8.6%, over 2016/17. While edowmet icome is expected to grow by oly 2.3%, Hoover is optimistic about accelerated expedable givig growth as a offset due to recet ivestmets i the developmet fuctio. Expedable gifts are expected to grow sigificatly, icreasig by $4.0 millio over 2016/17. Expese growth is expected to track with reveue growth, icreasig by $5.3 millio, or 7.9%. Real growth of expeses is cocetrated i areas where large restricted balaces have accumulated due to past fudraisig successes. Fudraisig has preceded expeditures i these areas, with sigificat prepaymet of log-rage pledges buildig restricted reserves. The deficit betwee curret reveues ad expeses will result i drawdows of these accumulated balaces. Expese growth will be limited to available reveue ad is expected to occur primarily i the followig areas: Oe ew fellow appoitmet is budgeted, with the additioal support staff ad research fuds required. I cojuctio with this appoitmet ad other recet fellow additios, research activity will icrease. Icreased expeses for professioal services, scholar paymets, ad geeral program costs for the Educatig Americas i Public Policy iitiative will cotiue i 2017/18. The ew David ad Joa Traitel buildig will icur costs for operatios ad prevetive ad deferred maiteace. Retal icome is expected to partially offset ew costs. New staff is aticipated i the admiistrative ad developmet fuctios to support growth i other areas. CAPITAL PLAN Based o fidigs from a Master Pla study, Hoover determied a eed to make improvemets to fellow office spaces ad Library ad Archives facilities ad storage; to create a sigle secure poit of etry for visitors; ad to better coect existig buildigs. The curret pla calls for reovatig major iterior portios of the Herbert Hoover Memorial ad Lou Hery Hoover buildigs, as well as select areas of Hoover Tower. The project is estimated at $93.2 millio ad will be fuded locally by Hoover. Due to recet plaig discussios, the optio of demolishig existig buildigs ad replacig them with ew facilities is beig cosidered, with a fial determiatio expected later this year. A sigificat issue associated with the project will be the idetificatio of alterate storage facilities for Hoover s library ad archive materials.

64 48 ACADEMIC UNITS STANFORD UNIVERSITY LIBRARIES 2017/18 Cosolidated Reveues $89.5 Millio Other 9% Uiversity Press 8% Sposored Research 2% Edowmet Payout 18% Gifts 1% Geeral Fuds 62% [IN MILLIONS OF DOLLARS] 2015/ / /18 ACTUALS PROJECTION PLAN Total Reveues Expeses Salaries ad Beefits No-Salary Total Expeses Operatig Results Trasfers From (to) Edowmet & Other Assets (0.1) Trasfers From (to) Plat Surplus / (Deficit) Begiig Fud Balaces Edig Fud Balaces PROGRAMMATIC DIRECTIONS The Staford Libraries support studets, faculty, ad staff through a extesive set of research support services ad istructioal programs, as well as the cotiued curatio of a world-class set of iformatio resources. While collectios i all their forms will always be a core focus of the libraries, the service suite that they offer is expadig to iclude more direct faculty egagemet ad iteractio with the research process. I additio, the libraries are actively egaged with peer istitutios to exted the breadth ad impact of that service suite. As a foudig member of the Iteratioal Image Iteroperability Framework (IIIF) cosortium, the libraries have brought together a global suite of istitutios to support ad eable resource sharig i a way that supports all our programs. IIIF helps esure that the Staford Digital Repository, which cotiues to expad i terms of both collectios housed ad use of materials, is leveraged to its fullest capacity ad serves the global good. Similarly, the libraries are parterig with colleague istitutios to support the developmet of liked data services that have the potetial to dramatically improve access to research. More locally, the libraries are parterig directly with faculty to support ew pedagogical approaches. Oe excellet example is the Massively Multiplayer Humaities project, which allows larger classes tha ever before to work hads-o with origial materials from the Staford Archives ad Special Collectios. Where i the past, history studets might ot have accessed these primary sources util their seior year, this program is allowig large freshma classes to have the experiece. Facilities are cetral to the libraries service portfolio, as users look to library spaces both for access to collectios ad as places for private study ad team collaboratio. The ewly opeed Robi Li & Melissa Ma Library i the Sapp Ceter is a woderful example of both. The library brigs together collectios from biology, chemistry, math, ad statistics i a sigle facility ad offers a spectrum of study spaces ad classrooms for studets ad faculty. Returig to collectios, this year the libraries have worked extesively with the uiversity s Budget Office to review treds i pricig for library materials. For may years, prices for iformatio resources have icreased at a rate sigifi-

65 ACADEMIC UNITS 49 catly exceedig the rate of iflatio. This has i large part bee drive by dramatic icreases i prices amog for-profit joural publishers; however, sigificat pressure has also arise from the eed to acquire more extesive data sets ad from challeges aroud academic use of ebooks. I the future, the libraries hope this improved uderstadig of cost drivers i the idustry will allow more careful assessmet of appropriate budget levels. Fially, the libraries cotiue to face challeges i recruitig ad retaiig academic staff. This has bee a ogoig cocer for some years, ad the libraries cotiue to seek ew approaches to attract the taleted ad qualified staff that are eeded to cotiue to provide the iovative services that are the hallmark of the Staford Libraries. As the uiversity, uder its ew presidet ad provost, moves ito a strategic plaig phase, recruitmet ad retetio will be a key focus. CONSOLIDATED BUDGET OVERVIEW Cosolidated reveues ad trasfers are expected to total $89.5 millio. They cosist of $55.2 millio i geeral fuds, $10.5 millio i auxiliary reveue ad trasfers, ad $23.9 millio i restricted fuds. Cosolidated expeses are projected to total $89.1 millio, resultig i a operatig surplus of approximately $400,000. Compesatio expeses are budgeted at $51.7 millio, operatig expeses at $13.7 millio, ad library materials acquisitios at $23.7 millio. The base budget for library material acquisitio is projected to grow about 4% from the 2016/17 level. Fud balaces at the ed of 2017/18 are expected to be $12.9 millio. The libraries project balaces of approximately $400,000 i the operatig budget, $1.3 millio i desigated fuds, $1.6 millio i restricted expedable fuds, $5.3 millio i restricted edowed fuds, $2.2 millio i LOCKSS auxiliary reserves, ad $2.1 millio i LOCKSS auxiliary operatios. The $400,000 i the operatig budget will cover ogoig special projects that will coclude i 2018/19.

66 50 ACADEMIC UNITS SLAC NATIONAL ACCELERATOR LABORATORY 2017/18 Cosolidated Reveues $563.6 Millio DOE Costructio Fuds 42% Uiversity Fuds 1% DOE Research Fuds 57% [IN MILLIONS OF DOLLARS] 2015/ / /18 ACTUALS PROJECTION PLAN Total Reveues Expeses Salaries ad Beefits No-Salary SLAC Costructio SLAC Fee Paid to Staford Total Expeses Operatig Results 1.6 (1.0) (1.0) Trasfers From (to) Edowmet & Other Assets Trasfers From (to) Plat Surplus / (Deficit) 1.6 (1.0) (1.0) Begiig Fud Balaces Edig Fud Balaces PROGRAMMATIC DIRECTIONS Staford Uiversity operates SLAC for the Departmet of Eergy (DOE) through a maagemet ad operatig cotract. SLAC has two primary, itegrated strategic goals: iovatig ad operatig premier accelerator-based facilities ad leveragig those facilities to develop ew scietific pursuits. Staford developed a ew model cotract for the maagemet ad operatio of SLAC with the DOE i caledar year This ew model, which is curretly i the first year of a three-year pilot at SLAC, tailors DOE requiremets to the circumstaces ad risk profile at SLAC. It also eables SLAC to take greater advatage of existig Staford policies ad systems. For example, the model allows SLAC to rely o Staford s cyber security policies ad systems. The model is expected to improve SLAC s systems ad flexibility ad thus cotribute to SLAC s missio, ad if the pilot is successful, the model could be expaded to other atioal laboratories. Separately, ad idepedet of the developmet of this ew model, the Secretary of the Departmet of Eergy has approved a cotract extesio for SLAC, to be effective October 1, Scietific User Facilities SLAC s user facilities draw more tha 2,700 researchers from aroud the world aually, with Staford users represetig more tha 10%. The laboratory operates two X-ray scietific user facilities: Liac Coheret Light Source (LCLS) ad Staford Sychrotro Radiatio Light Source (SSRL). LCLS is the world s first hard X-ray free electro laser (FEL). This facility has trasformed the field of X-ray sciece ad positioed SLAC as a world-leadig ceter for FEL sciece. I order to maitai pre-emiece, SLAC ad DOE are costructig a upgrade to the facility (LCLS-II) that will expad the accelerator s rage of X-ray eergies, sigificatly ehacig SLAC s scietific capability ad capacity. SSRL provides X-ray beams ad advaced istrumetatio for research ragig from eergy storage to drug discovery. A large umber of faculty groups from four of Staford s schools pursue research eabled by SSRL. Staford is cotributig fudig towards a ew Macromolecular Crystallography beamlie, to be completed i 2017, which will eable structural biology research i areas of biomedical, biological, ad bioeergy scieces. SSRL is also buildig a eergy materials

67 ACADEMIC UNITS 51 beamlie that will further leverage materials research programs at Staford. Aother SLAC user facility, Facility for Advaced Accelerator Experimetal Tests (FACET), completed its plaed ru i 2016/17 ad has bee successful with breakthrough sciece, especially i the area of plasma wakefield acceleratio of electros ad positros. FACET II, a upgrade to FACET, received DOE approval i December While the project is adversely affected by the 2016/17 cotiuig resolutio, the lab has a mitigatio strategy to keep it movig forward. Sciece Programs SLAC recogizes that providig world-class research facilities is ot eough. To esure that SLAC carries out the best sciece, the laboratory must cotiually take a leadership role i idetifyig ad pursuig ew sciece opportuities. SLAC s core scietific competecies recogized by the DOE iclude accelerator sciece ad techology, advaced istrumetatio, chemical ad molecular sciece, codesed matter physics ad materials sciece, high eergy desity sciece, ad particle physics. SLAC s sciece directorate pursues part of its research through joit Staford-SLAC istitutes, icludig the Photo Ultrafast Laser Sciece ad Egieerig Ceter (PULSE), the Staford Istitute for Materials ad Eergy Scieces (SIMES), ad the SUNCAT Ceter for Sustaiable Eergy through Catalysis. The PULSE Ultrafast Electro Diffractio electro camera captures some of ature s speediest processes, revealig trillioth-of-a-secod motios of electros ad atomic uclei. SIMES is developig ext-geeratio battery techologies, ad SUNCAT is expadig carbo dioxide fuel research with a five-year, $7.5 millio grat from the DOE s Joit Ceter for Artificial Photosythesis. The chemical scieces divisio is developig ew programs i core-level X-ray spectroscopy, eabled by the capabilities of LCLS-II. SLAC also parters with Staford to develop the followig capabilities: Macromolecular Structure Kowledge Ceter Seed fudig from Chemistry, Egieerig ad Medicie for Huma Health ad the School of Egieerig (SoE) will eable SLAC to provide scietific expertise ad state-ofthe-art equipmet for the productio, purificatio, ad characterizatio of biological macromolecules. Cryo-electro microscopy Staford ad SLAC are hirig a joit faculty member to build what will become a forefrot capability i itegrated structural biology ad imagig. Computer sciece divisio at SLAC Seed fudig from SLAC, SoE, ad the Dea of Research will fud faculty from Staford s Computer Sciece Departmet to support the extreme data maagemet eeds at SLAC. System prototypig facility SLAC ad SoE capabilities will be joied to support electroic subsystem desig for cuttig-edge research across campus. CONSOLIDATED BUDGET OVERVIEW The 2017/18 SLAC cosolidated budget projects expeses of $564.6 millio, which icludes $322.6 millio for direct research, $236.8 millio for major capital projects, ad $5.2 millio for Staford-related activities. Cosolidated expeses are expected to decrease 13.1% i 2017/18 from the $649.7 millio projected for 2016/17 due to the costructio sped profile of LCLS-II, which begis to taper dow i 2017/18. The direct research programs, however, reflect growth over the 2016/17 plaed level cosistet with SLAC s strategy of 2% growth by addig ew sposors to the traditioal fudig sources. Icluded i the DOE cotract is a $4.6 millio performace fee paid to the uiversity for operatios. I retur, the uiversity makes available to SLAC $1.9 millio of geeral fuds ad $1.0 millio of director discretioary fuds. CAPITAL PLAN SLAC s log-rage developmet pla supports future scietific program directio by cosolidatig research activities, upgradig ifrastructure, reovatig facilities, ad demolishig substadard structures. This pla serves as a workig documet ad resource guide beyod the immediate future of plaed capital projects. SLAC has two major federally fuded costructio projects ogoig. The $1,045 millio LCLS-II project builds o the success of LCLS to esure that the Uited States maitais a world-leadig capability for advaced research i eergy, materials, biology, ad chemistry. The $168 millio, 3.2-gigapixel Large Syoptic Survey Telescope (LSST) camera is the largest digital camera ever built for astroomy. It is curretly uder costructio i Chile. The LSST will survey the etire visible souther sky every few days for a decade, providig a public archive of data that will dramatically advace our kowledge

68 52 ACADEMIC UNITS of dark eergy ad dark matter, as well as galaxy formatio ad potetially hazardous asteroids. Additioally, SLAC is udertakig federally fuded costructio to improve its ifrastructure. The uiversity-fuded Photo Scieces Laboratory Buildig shell was completed by Staford i December 2016, makig way for the $57 millio DOE-fuded outfittig of the first two floors to commece i February 2017, with tetative occupacy i This highperformace, evirometally sustaiable facility will iclude wet labs, dry labs, a characterizatio suite, ad clearoom spaces, as well as office ad collaboratio areas to support SLAC s photo sciece missio. The DOE is also providig fudig for improvemets i SLAC s utilities ifrastructure to support the ew major scietific facilities. As part of the uiversity s major Residetial & Diig Eterprises reovatio pla over the ext three years, expasio of the Staford Guest House, located at SLAC, is aticipated. SLAC s desire is to have the expasio project completed by the time that LCLS-II trasitios ito operatio i 2020.

69 ADMINISTRATIVE & AUXILIARY UNITS 53 CHAPTER 3 ADMINISTRATIVE & AUXILIARY UNITS This chapter focuses o iitiatives ad priorities i the admiistrative ad auxiliary uits of the uiversity. CONSOLIDATED BUDGET FOR OPERATIONS, 2017/18: ADMINISTRATIVE & MAJOR AUXILIARY UNITS [IN MILLIONS OF DOLLARS] TOTAL RESULT OF TRANSFERS CHANGE IN REVENUES AND TOTAL CURRENT (TO)/FROM EXPENDABLE TRANSFERS EXPENSES OPERATIONS ASSETS FUND BALANCE Admiistrative Uits Busiess Affairs (0.9) (0.3) (1.2) Office of Developmet (0.7) (0.0) (0.7) Geeral Cousel ad Public Safety (0.2) 0.0 (0.2) Lad, Buildigs ad Real Estate (6.2) (0.7) Offices of the Presidet ad Provost Office of Public Affairs Staford Alumi Associatio (0.3) 0.0 (0.3) Studet Affairs (1.2) 0.0 (1.2) Uiversity Commuicatios (0.0) 0.0 (0.0) Uiversity Huma Resources (0.5) 0.0 (0.5) Staford Maagemet Compay (0.4) 0.0 (0.4) Udergraduate Admissio ad Fiacial Aid (0.9) 0.0 (0.9) Major Auxiliary Uits Athletics Residetial & Diig Eterprises (1.8) 0.0 (1.8) Total Admiistrative & Auxiliary Uits 1, , (5.9) (0.7) 2017/18 Cosolidated Expeses by Admiistrative & Auxiliary Uits Academic $4,806.8 millio Admiistrative & Major Auxiliary Uits $1,599.2 millio Athletics 8% Admissio & Fiacial Aid 12% Residetial & Diig 17% Presidet & Provost 7% Busiess Affairs 15% Other 1 7% Developmet & Alumi 9% Studet Affairs 5% Lad, Buildigs & Real Estate 20% 1 Other is Staford Maagemet Compay, Geeral Cousel & Public Safety, Public Affairs, Uiversity Commuicatios, ad Uiversity Huma Resources.

70 54 ADMINISTRATIVE & AUXILIARY UNITS BUSINESS AFFAIRS The Busiess Affairs orgaizatio provides admiistrative ifrastructure, systems, services, ad support for the beefit of the uiversity commuity. Busiess Affairs visio is, Together we will make admiistratio seamless ad efficiet to eable ad support teachig, learig ad research. Busiess Affairs uits iclude Fiacial Maagemet Services (Cotroller s Office, Treasurer s Office, Purchasig & Paymets); Uiversity IT (IT Services, Admiistrative Systems, Iformatio Security Office, UIT Shared Services); Office of Research Admiistratio; Audit, Compliace, Risk ad Privacy; ad Busiess Developmet. The 2017/18 cosolidated budget for Busiess Affairs shows reveues ad operatig trasfers of $235.9 millio ad expeses of $236.7 millio. After a additioal $300,000 i trasfers to assets, total fud balaces are projected to be approximately $34 millio at the ed of 2017/18, a use of $1.2 millio. Reserves will fud oe-time strategic priorities i operatios ad eterprise IT systems projects. Total expeses are projected to be 3% higher tha i 2016/17. Busiess Affairs is projectig FTE growth of 18 (2%) ad is absorbig $1.0 millio of gift-processig activity previously hadled by the Office of Developmet ad Staford Maagemet Compay. Icreased aual etwork ad academic systems support costs are also projected. These icreases are offset by decreases of $1.1 millio i service ceter ad IT systems project expeses due to completio of oe-time projects. Reveues ad trasfers will icrease by $7.0 millio. The icrease is primarily from geeral fuds ad reveue growth of 1%, offset by trasfers to other uits. Of the geeral fuds icrease, $4.8 millio is growth i base, while $1.8 millio relates to a modificatio of sources from iteral reveue ad trasfers to geeral fuds. The remaider is from icreasig etworkig ad IT systems expeses. Each year Busiess Affairs focuses o a specific group of pricipal iitiatives, may of which spa multiple years, with aual milestoes ad deliverables. These iitiatives are focused o cotiuous improvemet i deliverig excellet cliet service, makig admiistrative processes ad systems more efficiet, ad mitigatig eterprise risk. The top pricipal Busiess Affairs iitiatives iclude the followig: Iformatio Security Provide security solutios such that Staford has o icidets attributable to a lack of best practices. This is a multiyear iitiative with two major iitiatives focused o protectig high-risk data i 2017/18: (1) implemetig miimum security stadards for all uiversity-maaged servers ad applicatios hadlig high-risk data, ad (2) stregtheig iitial autheticatio to third-party services, such as payroll ad beefit parters. Talet Developmet I support of growig Busiess Affairs iteral talet, cotiue a multiyear program for staff developmet that icludes exposure, experiece, ad educatio. Busiess Affairs is implemetig a pilot program i which three employees will participate i yearlog rotatioal assigmets. Itegrated Idetity ad Access Maagemet Program Implemet a moder, scalable idetity ad access maagemet solutio that will be replicated i the cloud ad will replace the existig system. Evolve ad Cosolidate Fiacial Plaig ad Reportig Cosolidate ad update tools for fiacial maagemet reportig, movig fiacial reportig cotet to OBIEE (aalysis ad Busiess Itelligece Publisher). This multiyear program is earig completio ad is addressig campus huger for comprehesive ad reliable fiacial reportig capability. Commuicatio/Collaboratio Parter with other uits ad the Chief Iformatio Officer Coucil to evolve Staford s itegrated collaboratio/commuicatio solutio to iclude voice, video, ad istat messagig i additio to ad caledar, ad to support robust solutios amog the mai campus, Redwood City, ad other remote sites. Purchase to Pay Coduct a multiyear, multifocused effort to improve i the sped maagemet ad purchasig marketplace areas. Expadig from a pilot to regular operatios, the office is focusig o establishig a collaborative approach to produce higher ad more sustaiable levels of adoptio. It has established a uiversity-wide sped advisory board, which for the first time icludes represetatio from SLAC ad the hospitals. Procuremet is also itroducig Amazo as the uiversity s purchasig marketplace, with built-i compliace that is simple ad easy to use ad requires little traiig.

71 ADMINISTRATIVE & AUXILIARY UNITS 55 OFFICE OF DEVELOPMENT The Office of Developmet (OOD) projects reveues ad trasfers of $91.6 millio ad total expeses of $92.2 millio i 2017/18, resultig i the plaed use of $712,000 i reserves. OOD fud balaces are aticipated to declie due to icreased short-term ivestmets i Earth, Eergy & Evirometal Scieces; Egieerig; ad other developmet programs. OOD s mai fudig sources remai geeral fuds ad support from the School of Medicie ad Staford Health Care for Medical Ceter developmet costs. Total expeses for 2017/18 are 9.1% higher tha the 2016/17 year-ed projectio. Much of this growth results from a comprehesive replacemet of OOD s IT ifrastructure. Both the 2016/17 year-ed projectio ad the 2017/18 budget have icreased over previously reported figures because of the trasitio of a departmet the Office of Special Evets ad Protocol from the Office of Public Affairs to the Office of Developmet. I 2015/16, philathropic support for Staford Uiversity reached $951.2 millio, a figure that icludes both of the uiversity s affiliated hospitals. A declie from the prior year was due i large part to receipt of sigificat gifts of art i 2014/15. Over half of all gifts made i 2015/16 were of $100 or less, which is a testamet to the dedicatio of our alumi ad frieds to the breadth of disciplies ad activities at Staford. Lookig ahead to 2017/18, OOD will remai actively egaged with existig ad prospective doors to support key uiversity ad hospital priorities, icludig programs i the euroscieces ad Chemistry, Egieerig ad Medicie for Huma Health; the Accelerator for Collaborative Egieerig; ogoig postcampaig priorities i Staford Medicie; ad the Staford Istitute for Iovatio i Developig Ecoomies (Seed). OOD will ivest geeral fuds ad reserves i critical areas cosistet with its strategic goals: Create a eviromet that attracts top cadidates ad provides employees with opportuities for growth ad developmet OOD s talet maager has created a pipelie of iteral ad exteral cadidates for fudraisig roles, ad he will cotiue efforts to grow that pipelie. OOD will also remai focused o creatig opportuities for advacemet withi the orgaizatio ad across the uiversity for all employees. OOD must esure that top staff are retaied ad urtured durig the may phases of their careers. Support the uiversity s log-rage plaig process With all uits focused o the future, developmet staff are beig thoughtful about how best to orgaize ad ready OOD for what comes after the process is complete. Egage voluteer leaders OOD has lauched a pilot called LEAD (Lifelog Egagemet ad Advocacy for Developmet), a program aimed at idetifyig ad ispirig future leadership voluteers, ad will cotiue to focus o creatively ivolvig voluteers i uiversity life. Develop systems ad busiess processes that maximize Staford s ability to egage doors ad prospects i timely, meaigful, ad persoalized ways OOD is actively egaged with the Staford Alumi Associatio to retire shared 20-year-old IT ifrastructure ad move to Salesforce ad other techologies. The ADAPT (Alumi ad Developmet Applicatio Trasformatio) project lauched i July 2015 ad will take place over five years. It covers all aspects of OOD s system eeds, icludig costituet maagemet, commuicatios, evets, marketig automatio, gift processig, reportig ad busiess itelligece, ad stewardship. GENERAL COUNSEL AND PUBLIC SAFETY Office of Geeral Cousel The Office of Geeral Cousel (OGC) projects a balaced budget of $18.9 millio i 2017/18. Of this, $11.4 millio is a direct pass-through for health care legal services, $2.6 millio is from uiversity uits that reimburse OGC for legal services o a aual basis, ad approximately $5 millio is geeral fuds, icludig a carryforward of $300,000 from 2016/17. Not icluded i these umbers is about $9 millio for outside cousel fees that will be reimbursed by other uiversity schools ad departmets, for a total of about $28 millio i legal spedig. The 2017/18 budget reflects a 3% icrease from the 2016/17 year-ed projectios. Cliet demad for legal services has icreased ad cotiues to icrease the volume of work that is required. Based o cliet demad, OGC added a ew FTE (real estate attorey) i 2016/17, ad it expects to hire a additioal attorey i 2017/18 to meet the growig demad for legal services i other areas. OGC is also reviewig salary levels for lawyers, as they appear to be below market.

72 56 ADMINISTRATIVE & AUXILIARY UNITS OGC will cotiue to focus o its mai strategic priorities: (1) proactively tryig to costrai costs by icreasig efficiecy; (2) idetifyig risk to miimize it; (3) coductig prevetative couselig ad more comprehesive cliet traiig; ad (4) resolvig disputes early. OGC will cotiue its effort to maitai a optimal balace betwee iside ad outside cousel to provide cost-effective, high-quality service. Public Safety The Departmet of Public Safety (DPS) budget projects a surplus of $78,000 for 2017/18, assumig aticipated salary savigs from vacat positios ad projected reveue from evet security operatios. Cosolidated reveues ad trasfers of $23.5 millio are offset by budgeted expeses of $23.4 millio. The fire ad emergecy commuicatio services cotract costitutes approximately 32% of the total DPS budget at $7.5 millio for 2017/18. The cotract with the City of Palo Alto for fire prevetio services expired i October Staford ad the city have agreed to a short-term extesio that allows the Palo Alto Fire Departmet to cotiue to serve Staford while the parties cotiue workig towards fializig a ew agreemet for fire services. The fire cotract budget projectio for 2017/18 of $7.5 millio is based o the fixed-fee model described i the curret extesio to the cotract. The actual 2017/18 expeses to Staford could chage based o the outcome of curret labor egotiatios. Programmatic chages for DPS i 2017/18 iclude icreasig the umbers of swor ad oswor persoel to support evolvig security eeds o campus; implemetig a ew fire services cotract; improvig the fuctioality of the uiversity s AlertSU emergecy commuicatios system; ad implemetig a couty-madated radio system to ehace iteragecy commuicatio. Movig forward with the desig phase of the ew Public Safety facility will also be a area of focus for 2017/18. LAND, BUILDINGS AND REAL ESTATE Lad, Buildigs ad Real Estate (LBRE) is resposible for the uiversity s Capital Pla; commercial real estate o edowed lads; campus utilities, grouds, ad parkig ad trasportatio; ad stewardship for 8,180 acres of campus ad cotiguous lad, as well as costructio ad operatioal maagemet of the Staford Redwood City campus. LBRE also maages operatios ad maiteace (O&M) for over 320 academic buildigs ad 6 parkig structures totalig over 10 millio square feet (sf). Durig 2017/18, LBRE estimates reveues ad trasfers of $327.6 millio ad expeses of $322.1 millio. After accoutig for et trasfers to plat of $6.2 millio for capital reewal projects, LBRE forecasts a $718,000 deficit, which will be covered by begiig reserve balaces. Total expeses i 2017/18 are expected to icrease by $5.9 millio, or 1.9%, over 2016/17 as a result of: A icrease of $2.9 millio i exteral eergy ad water utility expeses, offset by a decrease of $911,000 i debt service; Icremetal O&M costs of $1.6 millio for ew campus structures (Bass Biology, the Kigscote Reovatio, Educatio Farm, Athletic Academic Advisig ad Rowig, ad Evirometal Health & Safety Expasio); ad Geeral icreases i compesatio ad materials. I additio to the resposibilities listed above, LBRE leads umerous iitiatives that typically spa years from cocept to completio. These iitiatives are described i detail i Chapter 4, Capital Pla ad Capital Budget, ad iclude: Staford Redwood City Escodido Village Graduate Resideces Geeral Use Permit (GUP) Growth ad trasportatio Parkig ad circulatio Additioally, LBRE is curretly implemetig the followig operatioal iitiatives: Facilities 2020, the Itegrated Cotrols ad Aalytic Program (icap), ad the Electricity Purchase Strategy. Facilities 2020 Facilities 2020, a iitiative that moves facilities operatios from a cetral shops orgaizatio to a hybrid district orgaizatio, will retur 55,000 GUP sf from LBRE to academic (or other) use as determied by the uiversity. Additioally, it will save sigificat travel hours for maiteace techicias ad, as a result, will reduce both the workforce ad depedece o vehicles. Four district work ceters (DWCs) will be costructed i strategic locatios o campus to allow the techicias to be closer to the buildigs they serve, therefore ehacig customer service. Three DWCs will be located o or ear Memorial Way, the Roth Garage, ad the

73 ADMINISTRATIVE & AUXILIARY UNITS 57 Hase Experimetal Physics Lab; the fourth will utilize part of the existig bookstore. A reovated Boair hub will house fuctios that caot be decetralized. Occupacy of the DWCs is plaed for October Oce fully implemeted, Facilities 2020 is projected to retur $1.6 millio aually to geeral fuds ($2.2 millio savigs et of $611,000 i debt service for costructio of the DWCs). Itegrated Cotrols ad Aalytic Program icap will moderize the cotrol systems that regulate basic processes i buildigs: heatig ad coolig, vetilatio, lightig, ad more. Moder computer-based cotrols offer the potetial to itegrate all of these processes uder oe system. A master buildig cotrols upgrade pla targets the largest 105 buildigs o campus over a 10-year period, aligig the work with existig facilities reewal, eergy efficiecy, ad maiteace programs, thereby avoidig the eed for icremetal fudig. icap costs iclude the purchase of buildig cotrols ad aalytic software. The total program is estimated to cost $50 millio over 10 years. Eergy ad O&M savigs are projected to be $8 millio per year (oce all phases are implemeted), resultig i a simple payback of 6.25 years. Electricity Purchase Strategy I 2015, Staford executed log-term power purchase agreemets for ew o- ad off-site solar electricity geeratio equivalet to 56% of total campus electricity use (53% offsite ad 3% o-site). Off-site solar geeratio commeced December 22, 2016, with o-campus geeratio followig o March 31, Power geerated from the rooftop facilities is cosumed directly by uiversity buildigs. However, i accordace with state electrical grid operatig procedures, power from the off-campus solar facility is sold ito the grid at the poit of geeratio i Souther Califoria, ad eergy is purchased at the poit it is take off the grid i Norther Califoria. Sice August 2016, the uiversity has purchased 100% of its electricity from the day-ahead market. However, it cotiuously reviews other optios, which may iclude fixed-price block agreemets, additioal geeratio from reewable sources, ad/or a combiatio of all of the above. Purchase optio cosideratios iclude cost, price stabilizatio, sustaiability goals, ad regulatory compliace. To more effectively maage Staford s Direct Access electricity procuremet program, the uiversity established the wholly owed subsidiary Staford Uiversity Power LLC. All electricity procuremet trasactios have bee or will soo be trasferred to the LLC. OFFICES OF THE PRESIDENT AND PROVOST The budget of the Offices of the Presidet & Provost (PPO) for 2017/18 will cosist of reveues ad operatig trasfers of $119.7 millio; expeses of $114.5 millio; ad trasfers from assets of $650,000, resultig i a et chage i fud balaces of $5.9 millio. These figures represet chages over the 2016/17 year-ed projectios of 5.5% i reveues ad operatig trasfers, 5.4% i expeses, ad 20.5% i trasfers from assets (to support the housig loa programs withi the Faculty/Staff Housig Office). Most of the icrease i fud balaces results from uspet edowmet payout supportig the ew Kight-Heessy Scholars program. Begiig i fall 2018, the Kight-Heessy Scholars program, a ew graduate-level scholarship, will select up to 100 high-achievig studets with demostrated leadership ad civic commitmet who will receive full fudig to pursue a graduate educatio at Staford. I additio to their core Staford degree programs, these scholars will have additioal opportuities for leadership traiig, metorship, ad cohortbased experietial learig across multiple disciplies. The PPO comprises a collectio of admiistrative uits. The uit has chaged i size ad compositio as groups have bee moved admiistratively aroud the uiversity. I additio to the operatios of the Presidet s Office ad the Provost s Office, the PPO icludes the Uiversity Budget Office, the Academic Secretary s Office, the Ombuds Office, Cotiuig Studies, the Office for Religious Life, the Office of Istitutioal Equity ad Access, ad several other small uits that support uiversity-wide services. I 2016/17, five offices were brought together uder the umbrella of the Office of Istitutioal Equity ad Access: Title IX, Sexual Assault & Relatioship Abuse Educatio, Sexual Harassmet Policy Office, Diversity & Access, ad the Office of the Uiversity Ombuds. The seior associate vice provost is cotiuig to assess programmatic eeds ad aticipates there may be some reorgaizatio of office resposibilities to best serve the Staford commuity i achievig the collective

74 58 ADMINISTRATIVE & AUXILIARY UNITS missio of prevetig discrimiatio, harassmet, ad sexual violece, ad respodig to ad redressig allegatios of miscoduct. Several ew educatioal programs have bee developed specific to the eeds of udergraduate ad graduate studets. Some PPO uits, the Office of Religious Life i particular, are workig to develop plas for programs ad staffig levels i the cotext of slower growth i edowmet icome. The vice provost for faculty developmet ad diversity is plaig several iitiatives that will be fuded with reserves. Programs such as Writer s Retreat ad workshops o maagemet ad metorig have bee well received. A atioal, two-day itesive leadership program ad metorig workshop for academic wome of color was a huge success, ad similar programs will cotiue. The Staford Distiguished Careers Istitute (DCI) offers accomplished idividuals from all walks of life the opportuity to come to Staford for a yearlog residetial program of persoal reewal ad commuity egagemet. DCI is desiged to ehace ad improve the life jourey through reewed purpose, commuity ad etwork buildig, ad a recalibratio of health ad welless for idividuals. As the program eters its third year of operatio, erollmet ad program size are projected to remai costat ad reveue flat. Cotiuig Studies Programs (CSP) shares the rich educatioal resources of the uiversity with eighborig, matriculated, ad returig studets to urture a vibrat learig commuity, to ourish the life of the mid, ad to promote the pleasures of itellectual exploratio ad exchage. CSP cotiues to record stroger-tha-aticipated erollmet growth; i particular, the high school ad visitig udergraduate studet populatio has grow 4%-5%. I 2017/18, Summer Sessios (SS) is lookig to expad its olie course offerigs to complemet special programs such as Vetera Accelerator 2.4 ad Horizo Scholars. These programs provide full scholarship opportuities ad tailored programmig for selected studets. Developig ad maitaiig highquality olie courses allows CSP/SS to cotiue reachig ew studets from a icreasigly diverse populatio. Fially, the trasitios of the presidet ad provost have had a impact o the immediate operatios of the PPO as they make decisios about staffig levels to meet ew iitiatives. OFFICE OF PUBLIC AFFAIRS The Office of Public Affairs (OPA) projects total reveues ad trasfers of $4.3 millio ad expeses of $4.3 millio, resultig i a balaced budget. Total reveues ad trasfers are budgeted to decrease 9% from $4.7 millio i 2016/17, ad total expeses are expected to decrease 12% from $4.9 millio. Icremetal base geeral fuds allocated to OPA iclude fudig to support its missio. OPA forecasts a edig balace of $634,000, of which approximately $460,000, or 73%, represets a very modest urestricted reserve to support iteral ad exteral strategic programs. I cosultatio with uiversity leadership, OPA s Govermet ad Commuity Relatios Office (GCR) leads Staford s egagemet with federal, state, ad local govermets, as well as fosterig Staford s relatioship with eighborig commuities. GCR promotes the uiversity s research ad educatio missio through cotact with public officials, trackig of pertiet legislatio ad regulatory proposals, ad, whe appropriate, lobbyig o behalf of the uiversity o a wide variety of issues ragig from lad use policies to fudig for the basic scieces. How Staford strategically ad thoughtfully uses its lad ad ifrastructure systems to serve its missio is cotrolled by several local govermet etities, most sigificatly Sata Clara Couty ad the City of Palo Alto. The applicatio for a ew Geeral Use Permit from Sata Clara Couty will be a area of sigificat activity i 2017 ad ito Public egagemet will be icreasig as fiscal year 2017/18 begis, assumig Sata Clara Couty s draft evirometal impact study is released o the curret schedule. The aalysis of key impacts of Staford s proposed developmet o, e.g., traffic cogestio ad the eed for affordable housig will geerate sigificat commuity discussio. The egotiatio of mitigatio measures to offset potetial impacts will be part of the discussio. The curret federal govermet policy eviromet requires sigificatly icreased effort ad resources to defed ad advace the uiversity s research ad educatio missio. There will be opportuities to advace some priorities, icludig regulatory reform at research fudig agecies ad the Departmet of Educatio, as well as Bay Area trasportatio upgrades as a part of trasportatio ifrastructure fudig

75 ADMINISTRATIVE & AUXILIARY UNITS 59 legislatio. However, OPA expects to cofrot the most challegig policy eviromet it has faced i may years regardig research fudig, college costs, edowmets ad tax reform, the Affordable Care Act, ad immigratio, amog other areas. Other key topics of importace to the uiversity iclude admissio ad fiacial aid policies, studet services ad rights, campus sexual assault ad campus safety, studet athlete rights, privacy protectio of research ivolvig huma samples, treatmet of aimals used i research, state research fudig, lad use/zoig policies, affordable housig, ad resources for oprofit orgaizatios. STANFORD ALUMNI ASSOCIATION The Staford Alumi Associatio (SAA) projects $49.3 millio i gross reveue ad operatig trasfers ad $49.6 millio i total expeses i 2017/18, resultig i a reductio of $317,000 i its cosolidated fud balace. Reserve balaces are projected to stad at $2.7 millio at the ed of 2017/18. Busiess ad program reveues, coupled with icome from lifetime membership, buildig, ad other edowmet fud pay-outs, will geerate over 75% of SAA s gross reveue. The remaiig reveue will come from base ad oe-time geeral fuds ad presidetial fuds. Gross reveue ad gross expese will icrease 5% from 2016/17 projected levels. This icrease reflects the iclusio of special oe-time programmig for a multicity presidet s welcome tour fuded by presidetial fuds as well as ivestmets i graduate-oly studet ad alumi programmig. I 2015/16 ad 2016/17, SAA self-fuded a pilot program to tailor a set of programs, commuicatios, ad cotet to meet the eeds of graduate-oly costituets. The goal was to icrease the coectio to Staford ad to other graduateoly studets ad alumi, a segmet which is traditioally uderrepreseted i SAA activities. These efforts resulted i egagemet growth of 11% for graduate-oly alumi over this period, as compared to 7% growth i udergraduate ad dual-degree alumi egagemet. These early successes have oly begu to scratch the surface of the potetial to egage this growig segmet of the alumi populatio. The icremetal base ad oe-time geeral fuds received for 2017/18 to ehace ad develop ew graduate-oly studet ad alumi offerigs will allow SAA to cotiue makig headway with this segmet. As it did throughout the pilot, SAA will cotiue to collaborate with the major graduate studet orgaizatios across campus. New geeral fuds i 2017/18 will also allow SAA to cease volutary-cotributio fudraisig efforts that have historically supported Staford magazie. While solicitatios to readers of the magazie have bee a effective meas of garerig fiacial support for it, there has bee icreasig pushback from alumi to these solicitatios ad a growig risk of damagig the tremedous goodwill that has bee built through Staford magazie. SAA lauched a multicity welcome tour for Presidet Marc Tessier-Lavige i 2016/17. This program gives alumi a opportuity to hear from ad meet the ew Staford presidet. The welcome tour will cotiue through 2017/18, supported by presidetial fuds. The multiyear ad critically importat SAA/Office of Developmet (OOD) techology trasitio project (ADAPT) cotiues to be a top priority for SAA. The migratio of the shared SAA/OOD costituet database to a Salesforce platform is uder way ad paves the path for both orgaizatios to better serve ad meet the digital eeds ad expectatios of alumi, doors, ad campus parters. From targeted ad dyamic commuicatios to digital cotet o topics ad platforms relevat to alumi, this techology overhaul will allow SAA to coect with ad egage a icreasigly diverse alumi body. Global ecoomic ad political istability will cotiue to preset a challege to SAA busiesses i 2017/18. More specifically, SAA s Travel/Study program, a key iteral geerator of fudig for SAA-subsidized program offerigs, has become subject to icreased volatility. I respose, SAA remais focused o opportuities for reveue ehacemet ad cost savigs across its portfolio. SAA s missio is to reach, serve, ad egage all alumi ad studets; to foster a lifelog itellectual ad emotioal coectio betwee the uiversity ad its graduates; ad to provide the uiversity with goodwill ad support. The strategic ivestmets discussed above are expected to deliver a sigificat retur to the uiversity i heighteed coectio, icreased egagemet, ad a stroger commuity of alumi ad studets.

76 60 ADMINISTRATIVE & AUXILIARY UNITS STUDENT AFFAIRS The missio of Studet Affairs is to educate studets to make meaigful cotributios as citizes of a complex world. Studet Affairs offers a rage of services ad programs desiged to ehace the academic eterprise ad to empower studets to embody commuity stadards of respect, resiliece, idividual leadership, ad collective resposibility. The goal is to support, sustai, ad egage studets i programs that cultivate good habits of mid, ethical behavior, empathy, ad itellectual curiosity. Studet Affairs comprises seve uits ecompassig more tha 25 offices that provide udergraduate ad graduate studets with a rage of services, opportuities, ad resources. The seve uits, led by associate vice provosts, are Admiistratio; BEAM (Bridgig Educatio, Ambitio & Meaigful Work), Staford Career Educatio; Commuity Egagemet ad Diversity (CED); Dea of Studets; Residetial Educatio; Uiversity Registrar ad Studet ad Academic Services; ad Vade Health Ceter. For 2017/18, Studet Affairs projects total reveues ad operatig trasfers of $76.0 millio ad expeses of $77.3 millio, resultig i a plaed operatig deficit of $1.2 millio. Primary drivers of the deficit iclude expeses related to expasio of the Haas Ceter s Cardial Service iitiative ad risig costs of laboratory ad other health care expeses at Vade Health Ceter. The deficit will be supported by drawdows agaist expedable gifts i the case of the Haas Ceter ad by accumulated reserves i the case of Vade. A icrease i reveue totalig $3.2 millio is due i part to a accoutig process adjustmet providig greater visibility of Residetial Educatio house dues, resultig i a $1.6 millio pass-through of reveue ad expese. Cosolidated fud balaces of $26.6 millio are expected at year-ed. Projected growth i fudig is modest ad icludes icreased levels of restricted icome to support the Haas Ceter s Cardial Service iitiative ad the First-Geeratio ad Low- Icome Program s Opportuity Fud. Fudig is expected to cotiue for the Office of Commuity Stadards, i partership with the Title IX Office, to address issues related to sexual assault, relatioship violece, ad other coduct prohibited by Title IX. These efforts iclude a pilot program for ivestigatig ad adjudicatig alleged icidets of sexual miscoduct. Fudig also is expected to cotiue for the Cofidetial Support Team, which has bee supported with soft fuds ad is joitly sposored by the School of Medicie ad Vade, to provide a coordiated respose to studets who may have experieced sexual miscoduct. A combiatio of oe-time geeral fuds ad base fudig allocatios was grated for 2017/18 to support the uiversity s commitmet to iclusivity specifically CED s work focused o diversity educatio for all studets ad support for first-geeratio ad low-icome studets. Three-year bridge fudig has bee exteded to the Markaz: Resource Ceter, which has bee critical i workig with studets affected by executive orders issued by the federal govermet regardig travel ad immigratio. I additio, Bechtel Iteratioal Ceter has received emergecy fudig to support icreased demads for documet processig ad outreach, also a byproduct of federal executive orders. Oetime, oe-year fudig for 2017/18 will support a studet leadership developmet program desiged by Studet Activities ad Leadership, expasio of Cardial Quarter Fellowships focused o commuities served by CED, ad resources i BEAM to help studets maximize coectios ad opportuities by leveragig digital eviromets. Oetime fudig cotiues to support the Office of Alcohol Policy ad Educatio s alcohol educatio programs ad alcohol-free activities. Greg Boardma, vice provost for studet affairs, who has led Studet Affairs for more tha a decade, will retire at the ed of 2016/17, markig a leadership chage for the divisio. Studet Affairs strategic plaig iitiative, etitled The Future of Studet Affairs, will cotiue uder ew leadership ad i tadem with Staford s uiversity-wide log-rage plaig process. UNIVERSITY COMMUNICATIONS The Office of Uiversity Commuicatios assists Staford to ifluece ad ispire a chagig world by broadly sharig discoveries, expertise, ad ideas i compellig, sophisticated ways with millios of people aroud the world. It serves as Staford s primary, trusted source of iformatio about the uiversity, its expert resource for professioal commuicatios advice ad support, ad its leader i commuicatios iovatios, stadards, ad traiig. Uiversity Commuicatios oversees all cetral iteral ad exteral commuicatio programs for the uiversity, icludig executive commuicatios; istitutioal media relatios; primary Web, mobile, digital, ad social platforms; visual

77 ADMINISTRATIVE & AUXILIARY UNITS 61 idetity ad brad maagemet crisis respose; the Staford News Service; Staford Report; ad Staford Video. The uit maages uiversity-wide commuicatios policies, icludig those o filmig ad photography, Web accessibility, social media, visual idetity, ad use of the Staford ame. It also maages special programs such as TEDx Staford, a pilot with SiriusXM radio, ad shares maagemet oversight of Staford Web Services with Uiversity IT. It also provides leadership, tools, guidelies, traiig, ad resources to a etwork of more tha 150 commuicatios professioals i campus uits ad the seve schools. The Office of Uiversity Commuicatios projects total reveues ad trasfers of $8.3 millio ad expeses of $8.3 millio, resultig i a balaced budget. Total reveues ad trasfers are budgeted to icrease 12% from $7.4 millio i 2016/17, ad total expeses are expected to icrease 11% from $7.5 millio. Icremetal base geeral fuds allocated iclude fudig to support a broad spectrum of services provided by Uiversity Commuicatios to the campus commuity, as well as resources to address some of Uiversity Commuicatios priorities ad iitiatives for 2017/18, such as: Providig commuicatios leadership to the campus at large ad support for major campus iitiatives such as log-rage plaig, studet support services, the Geeral Use Permit applicatio process, the Redwood City campus, the Kight-Heessy Scholars, graduate studet housig, ad sustaiability. Coveyig the eed for ogoig federal support for research ad the value of iovatio to ecoomic growth. Highlightig the stregth ad importace of the humaities, ad of studet exposure to a broad, liberal educatio. Lauchig a redesig of the Staford.edu home page, Staford Report, ad Staford Mobile i mobile-friedly, resposive formats. Refiig cotet delivery to provide more timely iformatio about Staford ad compellig stories across all platforms. Idetifyig platforms to better meet the uique commuicatios eeds of studets ad faculty. Creatig a more robust brad ad idetity toolkit to make it easier for the campus commuity to icorporate Staford ito commuicatios ad evets. Plaig for emergecy ad crisis commuicatios by stregtheig emergecy plaig ad preparatio across Uiversity Commuicatios, icludig additioal traiig, role playig, ad real-time respose exercises. Uiversity Commuicatios forecasts a modest edig balace of $119,000, of which approximately $93,000, or 78%, is restricted to specific projects ad edowmet-related expeditures. UNIVERSITY HUMAN RESOURCES Uiversity Huma Resources (UHR) advaces Staford s missio of excellece i teachig, learig, ad research by cultivatig a eviromet of high employee egagemet, performace, ad productivity while supportig the chagig ature of work to esure the uiversity s workforce is prepared to meet its future eeds. UHR delivers programs ad services that foster cotiuous improvemet, streamlie employee admiistrative processes, ad esure staff at Staford feel valued, supported, ad respected. The uits withi UHR are talet maagemet ad workforce strategy, employee ad labor relatios, cliet services, compesatio, beefits (icludig the Work Life Office, childcare ceters, ad the Faculty Staff Help Ceter), ad HR commuicatios. UHR s strategic pla was developed i collaboratio with the Admiistrative Plaig Executive Committee ad the HR commuity, ad i keepig with the results of the staff survey. Strategic areas of focus iclude workforce plaig, talet attractio, talet maagemet, employee egagemet, ad HR excellece. The 2017/18 cosolidated budget shows reveues ad operatig trasfers of $14.8 millio ad expeses of $15.3 millio. The budget pla commits approximately $545,000 of prior years operatioal savigs to supplemet reveues ad trasfers, which will be used to support the iitiatio of projects critical to the lauch of HR s strategic pla. The projected fud balace at the ed of 2017/18 is $2.8 millio, of which approximately two-thirds are i the operatig budget ad the remaider desigated for childcare ceters. These fuds will maitai UHR s ability to address uforesee emergecies, self-fud emergig same-year iitiatives, maage shortfalls due to frige volatility, meet the uiversity s evolvig priorities, ad, with desigated fuds, cotiue to ivest i priorities for Staford s childcare ceters, icludig

78 62 ADMINISTRATIVE & AUXILIARY UNITS closure of the Pepper Tree ad Raibow ceters, expasio ad relocatio of the Childre s Ceter of the Staford Commuity, ad opeig of the ew childcare ceter at Staford Redwood City. UHR will cotiue to focus o the strategic priorities established i its three-year pla: Workforce plaig Pilotig a workforce plaig process to idetify ad pla for the workforce eeded, the optimize HR ad related plas (for better decisio makig ad resource allocatio). Pilots have bee iitiated i the School of Egieerig ad Busiess Affairs. Talet attractio Evaluatig results of a ed-to-ed recruitig process assessmet to develop plas ad programs to ehace talet attractio. Prelimiary recommedatios upo which ehacemets will be based are to improve tools ad resources, develop shared cadidate pools, ad ehace iteral movemet of staff. Talet maagemet Leadig the chage maagemet process for the relocatio of 2,700 employees to the ew Staford Redwood City campus i While the early emphasis is o the orgaizatios ad employees who will move, the chage maagemet iitiatives also address the chages likely for faculty ad staff who will remai o the origial Staford campus. I additio, UHR is i the early stages of addig maager developmet courses to augmet its curret programs. Employee egagemet UHR cotiues to advise ad support staff survey actio plaig, implemetatio, ad commuicatio. UHR is also i the early stages of assessig optios to ehace beefits offerigs ad/ or programs as well as to improve staff recogitio ad rewards programs. HR excellece UHR is committed to cotiuous improvemet of its programs. I 2017/18, it will expad its HR shared-services model more completely to icrease efficiecy while focusig o the quality of how it delivers its services. UHR is also reviewig HR policies ad processes to esure clarity, cosistecy, ad ay chages eeded to support the move to the Staford Redwood City campus.

79 ADMINISTRATIVE & AUXILIARY UNITS 63 MAJOR AUXILIARY UNITS The budget lies for the School of Medicie, the Graduate School of Busiess (GSB), Humaities & Scieces (H&S), the Vice Provost for Udergraduate Educatio (VPUE), ad Staford Uiversity Libraries (SUL) iclude auxiliary reveues ad expeses. These auxiliary operatios iclude the Schwab Ceter of the GSB, Staford Uiversity Press i SUL, Big Overseas Studies i VPUE, ad Staford i Washigto ad Big Nursery School i H&S. These items are separately idetified i the schools cosolidated forecasts i Appedix A. The major idepedet auxiliaries are Athletics ad Residetial & Diig Eterprises (R&DE). Due to the size of the Staford Uiversity Press it is also icluded i this chapter. ATHLETICS The fiscal outlook for the Departmet of Athletics, PE, ad Recreatio (DAPER) appears more favorable i 2017/18 tha it has i past years. DAPER projects a surplus of approximately $1.5 millio i 2017/18 based o projected reveues of $135.9 millio ad expeses of $134.4 millio. Sigificat chages i reveues are aticipated i key areas, creatig a overall expected icrease of 2.9% over the projectio for 2016/17. Overall expeses are expected to grow by 4.0% from the projectio for 2016/17. DAPER s cosolidated budget cosists of three distict sets of activities: auxiliary operatios ($102.8 millio), fiacial aid ($26.1 millio), ad desigated activities ($7.0 millio). Auxiliary Operatios Auxiliary operatios are made up of two primary areas, itercollegiate activities ad acillary activities, with et icome from the latter helpig to support the former. Itercollegiate Activities Reveues ad trasfers from itercollegiate activities i 2017/18 are projected to be $78.4 millio. Projected expeses are $79.6 millio. The $1.2 millio deficit is fuded through et icome from acillary operatios, specifically the golf course ad camp operatios. Itercollegiate reveues are projected to be up approximately 3.9% i 2017/18. This is due to the combiatio of a sigificat icrease (approximately $2.0 millio) i reveue from football ticket sales because of a more favorable home schedule, moderate icreases i reveue from broadcastig ad restricted gifts, ad a moderate decrease i reveue from the NCAA/Pac-12 due to the assumptio that oly oe Pac-12 team will play i a major bowl game. Expeses related to itercollegiate activities are expected to icrease by 4.3%, most sigificatly i two key areas. Compesatio expeses are icreasig due to cotractual obligatios ad a geerous salary program plaed to match the overall uiversity program. Additioally, facilities expeses are icreasig as DAPER cotiues to maage sigificat deferred-maiteace eeds ad icorporate operatig expeses for ew facilities. Acillary Activities Reveues ad trasfers from acillary activities i 2017/18 are projected to be $24.4 millio. These reveues comprise geeral fuds (primarily to support the PE, Recreatio, ad Welless area of the departmet); a cotributio from the uiversity beefits pool (to support facilities ope to all studets, faculty, ad staff); ad reveues from the golf course, the equestria ceter, the Staford Campus Recreatio Associatio, ad camp operatios. Expeses related to these activities are projected to be $21.8 millio i 2017/18. The golf course ad camp operatios produce a surplus of approximately $2.6 millio that supports the itercollegiate side of DAPER s operatios. All areas of acillary activities are projected to have oly iflatioary growth i reveues ad expeses over 2016/17 projectios. Fiacial Aid DAPER s fiacial aid edowmet cotiues to be a sigificat asset to the departmet. However, fiacial aid expeses will cotiue to exceed edowmet payouts i 2017/18, ad DAPER projects eedig a trasfer of approximately $2.9 millio from operatig reveues to balace the fiacial

80 64 ADMINISTRATIVE & AUXILIARY UNITS aid budget. Projected reveues (icludig this trasfer) are $26.1 millio, ad expeses are $26.0 millio. This budget provides approximately 340 scholarships that beefit over 500 studet-athletes. This compares to projected 2016/17 reveues ad expeses of $25.1 millio. The icrease i expeses is due primarily to geeral growth i tuitio, room, ad board rates. Desigated Activities DAPER s desigated activities cosist primarily of camps, which are maily pass-through operatios ad ot actively maaged by the departmet. The remaiig activities geerate reveues that are trasferred to support auxiliary operatios. Sigificat chages are ot expected i ay desigated activities i 2017/18. I total, reveues ad expeses from desigated activities are projected to be $7.0 millio i 2017/18, compared to a projected $6.9 millio i 2016/17. RESIDENTIAL & DINING ENTERPRISES Residetial & Diig Eterprises (R&DE) is a uiversity auxiliary geeratig reveues primarily through room ad board, cofereces, cafés, caterig, a guest house, cocessios, ad other eterprises. R&DE houses over 13,000 udergraduate ad graduate studets ad their depedets ad serves approximately 6.5 millio meals aually, while providig stewardship for 5 millio square feet of physical plat. R&DE supports the uiversity s academic missio by providig highquality services to studets ad the Staford commuity i a sustaiable ad fiscally resposible maer. R&DE esures critical facility eeds for life safety ad code compliace are met while maitaiig safe, comfortable, ad cotemporary livig ad diig spaces. The 2017/18 budget pla projects a break-eve auxiliary budget with total reveues ad et trasfers of $269.1 millio to offset related expeses. The auxiliary budget pla also icludes a plaed use of $2.0 millio of reserves for maiteace ad capital projects. The 2017/18 combied udergraduate room ad board rate icrease is 3.5% (4.4% for room ad 2.2% for board), while the graduate housig room ret rate icrease is 4.75%. Overall room ad board reveues are projected to icrease by $6.5 millio. R&DE total auxiliary reveue (excludig trasfers) for 2017/18 is projected to icrease by $10.0 millio (4.3%) over the prior-year projectio. R&DE plas to use the projected icreases i reveue alog with cotiued efficiecies i operatios to address debt service o ew ad reovated facilities, iflatioary impacts o operatig costs (icludig the higher cost of attractig ad retaiig labor, elevated utility rates, ad the icreased security measures i techology), ad plaed escalatio i asset reewal. The 2017/18 budget pla reflects trasfers i to fud certai debt service related to the capital pla ad to help maitai room retal rates at reasoable levels vis-à-vis the market. The pla also icludes reveues, expeses, ad additioal offsettig trasfers i to provide housig for studets at campus rates i the local commuity. The pla icludes strategic fudig to support residetial livig ad learig; R&DE plas to trasfer out approximately $11.0 millio to Residetial Educatio, Residetial Computig, the Graduate Life Office, ad Summer Sessio, amog others. R&DE cotiues to make sigificat ivestmets i its physical plat. R&DE has developed a log-rage capital pla ad a log-rage plaed maiteace program to address its facility reewal eeds, with expeditures of $31 millio i 2016/17 ad $39 millio i 2017/18, as well as additioal ivestmets i future years, o a variety of reovatio projects. R&DE has also iitiated a pla to address a backlog of deferred maiteace across residetial ad diig facilities. The log-rage capital pla ad deferred-maiteace backlog pla both address life-safety system upgrades to meet curret code; iterior ad exterior restoratios; ad widow, roof, plumbig, mechaical, ad electrical replacemets across the studet housig ad diig system. R&DE s 2017/18 capital project pla will maily focus o mechaical, electrical, plumbig, ifrastructure, ad hardscape repairs ad improvemets i umerous locatios; life-safety ad restroom upgrades i certai residetial facilities; ad several reovatios to residet fellow apartmets. Staford is i the desig stage of costructig additioal graduate housig i Escodido Village. This ew housig will iclude approximately 2,400 ew bed spaces, replacig approximately 400 that are beig demolished, for a et icrease of 2,020 bed spaces. The R&DE 2017/18 budget pla reflects the impact of the reductio of bed spaces durig the demolitio ad costructio period.

81 ADMINISTRATIVE & AUXILIARY UNITS 65 R&DE operates i a dyamic ad chagig eviromet; therefore, it is essetial to pla for ucertaities. This is doe by costatly pursuig excellece, diversifyig reveue sources, maagig costs, mitigatig risk, icreasig iteral cotrols, drivig busiess results, ad maitaiig appropriate reserves. STANFORD UNIVERSITY PRESS The Staford Uiversity Press cosolidated budget for 2017/18 projects reveue ad expeses of $7.6 millio, which icludes $2.3 millio i uiversity subsidies. The growth i ebook sales across the publishig marketplace over the past decade has halted, ad ideed retreated, with prit books remaiig the domiat format over 80% of Press sales are from prit. Cosolidatio withi various retail ad wholesale outlets has cotiued to arrow the distributio chai, but this also allows the Press to tighte its chael marketig to be more efficiet. The Press expects a output of titles i 2017/18. A major strategic effort for the Press durig 2016/17 was the evaluatio of its North America distributor. The North America marketplace accouts for close to 90% of sales, ad thus this is the most sigificat partership for the Press. After a extesive request-for-proposals process, the Press bega operatios through Igram Academic o March 1, Igram Academic is ow resposible for all sales ad distributio of Press prit ad digital output. This shift allows access to a broader atioal etwork of sales represetatives, roughly 15 times the size of the previous etwork, as well as a state-of-the-art digital ifrastructure that will greatly aid experimetatio with ew cotet ad distributio forms. The Press expects a strog fiacial retur o this move withi 12 moths. The program of iteractive scholarly works (ISW), fuded by the Adrew W. Mello Foudatio, lauched its first project, Echatig the Desert, by Nicholas Bauch, i the sprig of 2016 with a Facebook livestreamed evet i the David Rumsey Map Ceter. The Press ow has a strog pipelie of projects to publish over the remaiig two years of the grat. The ISW team has bee workig closely with the staff of the Staford Libraries o issues of maiteace ad archivig, ad these discussios are also positively impactig the preservatio outlook of the book ad prit program of the Press. Efforts to icrease the profile of the Press i the broader public debate, through its trade publishig program ad the growig promiece of its academic author pool have begu to bear fruit. I 2016/17 there were promiet reviews of Press titles i the New York Review of Books, Forbes, ad Salo, as well as frequet media appearaces o CNN, MSNBC, ad NBC News. This year a Press title was also awarded the prestigious Prose Award for Social Sciece.

82 66 ADMINISTRATIVE & AUXILIARY UNITS

83 CAPITAL PLAN AND CAPITAL BUDGET 67 CHAPTER 4 CAPITAL PLAN AND CAPITAL BUDGET Staford s 2017/ /20 Capital Pla ad 2017/18 Capital Budget are based o projectios of the major capital projects that the uiversity plas to pursue i support of its academic missio. The rollig Capital Pla icludes projects that are i progress or are expected to commece durig the ext three years. The Capital Budget represets the aticipated capital expeditures i the first of these years. Both the Capital Pla ad the Capital Budget are subject to chage based o fudig availability, budget affordability, ad uiversity priorities. At almost $4.3 billio, the Capital Pla reflects the largest capital program i Staford s history. It demostrates the sigificat ivestmet Staford cotiues to make i its facilities, drive by the academic priorities for teachig, research, ad related activities, described i Chapter 2, ad the iitiatives of the admiistrative ad auxiliary uits that support the academic missio, described i Chapter 3. It also demostrates Staford s commitmet to studet ad faculty housig, with 47% of the pla allocated to buildig, acquirig, or reovatig ew ad existig housig ivetory. Sigificat examples of this commitmet are the $1.1 billio Escodido Village (EV) Graduate Resideces, which will icrease the graduate studet housig stock by 2,020 et ew beds, ad the $500 millio Housig Acquisitio Iitiative for faculty ad staff. With the 2016/17 project completios, Staford will have ivested approximately $6 billio i its facilities, ifrastructure, ad commercial real estate sice Across the campus, agig facilities have bee replaced with ew ad reovated buildigs capable of supportig cuttig-edge sciece, egieerig, medicie, ad the collaborative research amog them, as well as with ew facilities for busiess, athletics, law, ad the arts. Off-campus commercial developmet projects provide additioal icome to the uiversity. I additio to the may projects curretly uder way ad previously forecasted, the Capital Pla ow icludes the followig ew projects: Teat Improvemets at 3145 ($58.8 millio) ad 3172 ($15.8 millio) Porter Drive, a ew Emergecy Operatios Ceter/Electroic Commuicatios Hub (EOC/ECH) ($35.1 millio), ew faculty homes at Cabrillo/ Dolores ($18 millio), ad reovatios at both the Li Ka Shig Ceter ($10 millio) ad the Ceter for Advaced Study i Behavioral Scieces ($9.8 millio). The followig te sigificat projects make up 81% of Staford s Capital Pla: the EV Graduate Resideces ($1,091.7 millio), Staford Redwood City Phase 1 ($568.8 millio), the Housig Acquisitio Iitiative ($500 millio), the Neuro/ChEM-H (Chemistry, Egieerig & Medicie for Huma Health) Research Complex ($257 millio), Ceter for Academic Medicie 1 (CAM 1) ($222.9 millio), BioMedical Iovatios Buildig 1 ad Tuel (BMI 1) ($210 millio), Middle Plaza at 500 El Camio Real Residetial ($182 millio), Uiversity Terrace Faculty Homes ($176.5 millio), the Ae T. ad Robert M. Bass Biology Research Buildig (Bass Biology Buildig) ad associated projects ($152.2 millio), ad the ew Earth, Eergy & Evirometal Scieces Buildig ($100 millio). The remaiig 19% of the Capital Pla comprises 24 projects ad 8 ifrastructure programs. For a detailed listig of all Capital Pla projects ad programs, see the tables o pages The Capital Pla accouts for the log-term budget impacts o operatios, maiteace, ad utilities (O&M) ad debt service. These obligatios are icluded i the uiversity s log-rage budget plaig. This chapter provides a overview of the capital plaig process, describes curret strategic iitiatives, presets the 2017/ /20 Capital Pla ad related costraits, ad discusses the 2017/18 Capital Budget.

84 68 CAPITAL PLAN AND CAPITAL BUDGET CAPITAL PLANNING OVERVIEW CAPITAL PLANNING AT STANFORD Staford s Capital Pla is a three-year rollig pla with commitmets made for projects with fully idetified ad approved fudig. Cash flow expediture forecasts for these projects exted beyod the three-year period, ad budget impacts o O&M ad debt service will commece at costructio completio. The pla icludes forecasts of both cash flow ad budget impacts by year, as well as the impacts of projects beyod the three-year period (see tables o page 76). The Capital Pla is set i the cotext of a loger-term capital forecast. The details of this forecast, particularly fudig sources ad schedules, are less clear tha those of the threeyear pla, as the eeds ad fudig sources that may emerge over the log-term horizo are difficult to aticipate. Plas ted to evolve as some projects prove more feasible tha others based upo shiftig fudig realities ad academic priorities. STRATEGIC INITIATIVES The followig uiversity strategic iitiatives are itegral to this year s Capital Pla: Staford Redwood City EV Graduate Resideces Geeral Use Permit Growth ad trasportatio Campus circulatio ad parkig Staford Redwood City Staford s plas for a off-site admiistrative campus i Redwood City cotiue to move forward. Cosistet with the strategic developmet evisioed with the 2005 acquisitio of the Redwood City property, select admiistrative staff will relocate to this site i order to preserve core campus space for the uiversity s highest academic priorities. Plas have commeced to implemet a comprehesive Phase 1 developmet of 653,647 square feet (sf) 565,777 sf of office buildigs, 78,262 sf of ameity buildigs, ad 9,608 sf of utility ad IT ifrastructure as well as parkig for 1,702 vehicles. Site work, demolitio, ad foudatios have commeced with costructio for the core ad shell aticipated to begi i sprig Full build-out of the 35-acre parcel is capped at 1,518,000 sf, as detailed i the Staford i Redwood City Precise Pla. Staford does ot have specific plas for the timig or compositio of the remaiig square footage of the campus at this time. The prospective Phase 1 will accommodate about 2,700 staff: School of Medicie (SoM), icludig Medical Ceter Developmet (946); Busiess Affairs (893); Lad, Buildigs ad Real Estate (LBRE) (170); the Office of Developmet (154); Uiversity Huma Resources (135); Cotiuig Studies (85); Libraries (73); Residetial & Diig Eterprises (R&DE) (73); the Vice Provost for Teachig ad Learig (25); ad other teats yet to be cofirmed (100). The developmet ad subsequet move will free up almost 150,000 sf o campus as well as i the Staford Research Park; space i the latter will the be re-leased to third-party teats at market rates, icreasig reveues to Staford. Staford Redwood City gives the uiversity a opportuity to provide its admiistrative staff with a outstadig, sustaiable, ad healthy workplace eviromet. This ew campus will comprise Class A office buildigs, coferece ad diig facilities, a fitess ceter with lap pool, ad a child care ceter. A 2.5-acre park, multiple courtyards, ad a greeway coectig the etire campus will create a attractive settig. EV Graduate Resideces Staford s bold commitmet to build a 1.8 millio-sf residetial complex with 2,431 ew graduate beds respods to a critical eed to provide additioal graduate studet housig o campus i a udersupplied ad escalatig housig market. The costructio of the EV Graduate Resideces supports the campus lad use strategy to icrease the desity of Escodido Village i order to provide adequate housig for a growig graduate studet populatio, ad eables the uiversity to devote other areas of the core campus to udergraduate housig ad academics. The ew complex will primarily house sigle graduate studets, although uits will be available for couples without childre. Demolitio of existig two-story buildigs that house approximately 400 studets will be required, resultig i a overall gai of 2,020 et ew beds. The variety of apartmets builds upo the suite models of premium studios, two-bedroom suites, ad juior studio suites, as offered i the eighborig Keedy Graduate Resideces. The four ew residece halls will each provide louges, huddle rooms, laudry rooms, exercise areas, ad music practice spaces.

85 CAPITAL PLAN AND CAPITAL BUDGET 69 I additio to housig studets, a primary objective of this project is to provide opportuities to build a vibrat sese of commuity amog the graduate studets ad to ecourage strog coectios to the campus. The two-story market pavilio, etry tower, ad associated arcade will face the campus ad defie a ivitig gateway ito Escodido Village from the termius of Serra Mall. These commuity gateway compoets, which will iclude a café/bar, a grad louge, ad a mii-market for olie shoppig ad pick-up, will also provide a architectural scale that is comfortable ad tempers the height of the residetial wigs. The arcaded court ad hardscape, as well as the more casual commos space, will support programs that will serve as the hub for graduate life. The cetral commos will face ad egage the existig EV greeway ad be programmed ad eergized by a rage of activatio compoets (i.e., outdoor seatig ad eatig, evet space, coffee cart, art, etc.). This project icludes two ew udergroud parkig structures to support the graduate studets ad commuity. Mazaita Garage will house 850 parkig spaces with passive recreatio space above. The EV parkig structure to be costructed alog Serra Street will house 350 parkig spaces with additioal spaces above to accommodate ADA requiremets, loadig, ad service. The costructio of the EV Graduate Resideces ad parkig garages will take place over three years, with occupacy targeted for fall Geeral Use Permit Staford has submitted a applicatio to Sata Clara Couty for a updated Geeral Use Permit (GUP) to guide campus plaig over the ext two decades. This permit is kow as the 2018 GUP due to expected approval i Staford has bee operatig uder two key Sata Clara Couty etitlemet documets: a Commuity Pla ad a 2000 GUP. The Commuity Pla provides a set of rules ad policies to guide the uiversity s lad use plaig over a exteded period of time. The GUP implemets those policies ad icludes specific coditios to miimize the impacts of Staford s developmet. The 2000 Commuity Pla ad GUP were iteded to provide Staford with flexibility i its lad use withi a agreedupo framework, with accoutability to the couty, eighbors, ad the campus commuities. Staford s applicatio for the 2018 GUP icludes a developmet request for millio sf of academic facilities ad 3,150 housig uits/studet beds, with costructio expected to be completed by This ext GUP will help Staford address emergig teachig, research, ad housig eeds over this time period. Growth ad Trasportatio Reductio of trips to the campus is likely the most difficult challege ad oe that may costrai the uiversity s future growth. Though Staford has a tremedous track record with its award-wiig Trasportatio Demad Maagemet (TDM) programs, the uiversity must do more, ot oly for the core campus but also for other Staford lads. Iformed by extesive studies with multiple trasportatio experts as well as a iovative trasportatio mode choice model, Staford has developed a matrix of choices ad actios that ca be implemeted to improve the local trasportatio etwork. The regio s etwork is at capacity at peak times, ad o silver bullet exists to solve this regioal problem. It will likely take years of costat prioritizatio to make a positive impact. The uiversity will cotiue to focus o this effort ad work collaboratively with large private employers, eighbors, local agecies, ad trasportatio specialists to idetify ad implemet icremetal programs that mitigate traffic impacts ad improve the regioal etwork. Staford will also cotiue recet efforts to support ad facilitate developmet of large-scale regioal solutios, such as Caltrai electrificatio ad the 101 High Occupacy Vehicle (HOV) lae through Sa Mateo Couty. A umber of lad use plaig efforts focused o future growth are ow uder way. These iclude strog emphases o major circulatio patters ad trasit system optios as well as o idetifyig how lad use choices ca optimize trasportatio ad TDM optios. Campus Circulatio ad Parkig As Staford cotiues to expad its core campus footprit as well as icrease its desity, campus plaers have idetified alteratives for improvig circulatio, reducig cogestio, ad promotig safety. The measures that the uiversity has prioritized will have positive impacts o campus circulatio ad service, vehicular traffic, ad the safety of bicyclists ad pedestrias. East Campus Circulatio Circulatio ad parkig will be recofigured o the east campus to accommodate sigificat capital projects icludig the EV Graduate Resideces, Public Safety Buildig, ad the EOC/ECH. The compoets of the work i this area iclude:

86 70 CAPITAL PLAN AND CAPITAL BUDGET STANFORD S COMMITMENT TO HOUSING From its earliest days, Staford has focused o supportig a residetial academic eviromet. Curretly, Staford provides o-campus housig for almost all udergraduate studets, just over 50% of graduate studets, ad about oe-third of Staford faculty members. Staford prioritizes use of its core academic lads to house studets ad faculty because housig studets ad faculty i close proximity fosters collaboratio ad learig. Staff ad other affiliated housig has bee provided outside of the academic campus lads, i earby jurisdictios. Staford s commitmet to housig of all types is evidet i the curret Capital Pla. I total, housig projects represet $2.0 billio, or almost half of the etire 2017/ /20 Capital Pla. The table below provides a cosolidated list of all curret housig projects followed by a more detailed descriptio of the idividual projects: EV Graduate Resideces is the largest capital project i Staford history. The project will add 2,020 et ew graduate beds i Escodido Village, raisig the percetage of graduate studets housed to approximately 75%, from just over 50% today. The project icludes costructio of approximately 1,200 parkig spaces (750 et ew) i two udergroud structures. Uit types will iclude premium studio, two-bedroom, ad juior studio apartmets. Ameities are plaed to iclude a market pavilio that houses a café, mii-market, ad grad evet louge; a large multi-purpose room; meetig ad huddle spaces; music practice spaces; ad techology resource spaces. The Housig Acquisitio Iitiative recogizes that Staford s housig strategies are ecessarily multi-proged. The Board of Trustees approved this iitiative to expad Staford s housig supply by acquirig lad or residetial uits proximate to, or withi easy trasit of, campus. The Coloade apartmet commuity was purchased uder this iitiative ad provides 167 uits of housig for faculty ad staff. The program is aticipated to yield a combiatio of retal uits for faculty ad staff ad sigle-family homes available for purchase by faculty o the affordable restricted groud lease. Middle Plaza Residetial is a ew mixed-use developmet uder applicatio with the City of Melo Park. The project is expected to iclude 215 multi-family retal uits, which will be made available to faculty ad staff. Uit types are expected to comprise both oe- ad two-bedroom apartmets. Uiversity Terrace Faculty Homes is a 17-acre developmet i Palo Alto cosistig of 68 sigle-family homes ad 112 codomiiums. All uits will be made available to faculty for purchase at affordable prices through use of the restricted groud lease. Ameities will iclude a commuity ceter buildig, fitess ceter, ad pool. Cabrillo/Dolores Faculty Homes is curretly uder desig developmet ad will cosist of 8 homes i the faculty subdivisio. Two uiversity-owed homes located alog Dolores will be demolished to make way for this project, which will add much-eeded affordable homes withi the eighborhood. Reovatios of Rais ad Schwab support ad maitai Staford s existig studet housig stock. 2017/ /20 Number of Capital Pla Project Descriptio Residet Type Beds/Uits (i millios of dollars) New Housig Additios EV Graduate Resideces Graduate Studets 2,020 et ew beds 1,091.7 Housig Acquisitio Iitiative Faculty ad Staff uits Middle Plaza Residetial Faculty ad Staff 215 uits Uiversity Terrace Faculty Homes Faculty 180 uits Cabrillo/Dolores Faculty Homes Faculty 8 uits 18.0 Reovatios of Existig Housig Various Reovatios Graduate Studets /a 59.9 Total 2, Acquisitios of 270 uits are aticipated over the ext 7-8 years

87 CAPITAL PLAN AND CAPITAL BUDGET 71 l l l l l l Campus Drive/Serra Street Roudabout The roudabout will replace two separate existig itersectios, improve pedestria crossigs, ad recofigure the barrels of Campus Drive with dedicated bike laes ad a uiform ladscaped media. Serra Mall Closure The pla to close Serra Mall from Galvez Street to Campus Drive for pedestrias, bikes, ad shuttles requires the completio of eablig projects icludig recofigured service areas ad parkig at Ecia Hall, service improvemets at Burham Pavilio, ad a ew drop-off at Schwab Graduate Resideces. These projects are importat because Serra Mall is the primary path for ifrastructure improvemets for the major capital projects o the east side of campus. Serra Street Recofiguratio Ehacemets plaed o Serra Street from Campus Drive to El Camio iclude improvig vehicular laes, recofigurig itersectios ad pedestria crossigs, upgradig bike laes, ad addig trasit ad drop-off areas. Mazaita Garage This facility will build o the best practices of the Wilbur ad Roble parkig structures, with parkig below grade ad a recreatio field above. The 850 ew spaces will support, i part, the eeds of the EV Graduate Resideces. EV Parkig Structure This below-grade facility alog Serra Street will iclude 350 spaces with additioal parkig above. Boair Sidig Road To provide safe access to the ew Public Safety Buildig ad EOC/ECH, Boair Sidig Road will be recofigured to iclude appropriate vehicular laes, bike laes, sidewalks, ad lightig. West Campus Circulatio Modificatios to the circulatio o the west side of campus will accommodate the future Neuro/ChEM-H Research Complex, the Bass Biology Buildig, ad CAM 1. The compoets of this work iclude: l l Serra Mall Extesio To promote coectios, improve pedestria safety, ad facilitate Marguerite shuttle circulatio, Serra Mall will exted to a improved itersectio at Foudatios Way ad Campus Drive. Via Pueblo Extesio To facilitate service, Via Pueblo will exted from Via Ortega to Paama Street. l l North/South Axis Improvemets to the North/ South Axis from Serra Mall to Roth Way will provide a safe bike/pedestria coector. New Parkig Structure 854 ew parkig spaces (550 et ew) will be costructed below the CAM 1 buildig. Roudabouts The roudabout istallatios o Campus Drive at the itersectios of Escodido Road, Bowdoi Street, Sata Teresa Street, ad Galvez Street are evidece of how circulatio ca improve without compromisig bicycle ad pedestria safety. I additio to the Campus Drive/Serra Street roudabout that is a key compoet of our east campus improvemets, three additioal roudabouts will be studied at the itersectios of Galvez Street/Arboretum Road, Campus Drive/Mayfield Aveue, ad Campus Drive/Roth Way. THE CAPITAL PLAN, 2017/ /20 Staford s academic campus, icludig SoM but excludig the hospitals, has over 700 facilities providig early 18.8 millio sf of space, icludig approximately 5.3 millio sf for studet housig uits ad 2.4 millio sf for parkig structures. The physical plat has a historical cost of $9.3 billio ad a estimated replacemet cost of $12.7 billio. The Capital Pla icludes a forecast of Staford s aual programs to restore, maitai, ad improve campus facilities for teachig, research, housig, ad related activities ad outlies Staford s eeds for ew facilities. The Capital Pla is compiled, reviewed, ad approved i a coordiated maer across the uiversity. The pla carefully balaces istitutioal eeds for ew ad reovated facilities with the challegig costraits of limited developmet etitlemets, available fudig, ad budget affordability. Projects listed i the Capital Pla are those approved by the provost. May are uder the purview of the Board of Trustees. Board-level approval is required for projects meetig specific criteria, icludig: Projects with a total cost of $10 millio ad above. New buildig costructio (icludig faculty housig). Projects that use 5,000 or more ew sf withi the academic growth boudary.

88 72 CAPITAL PLAN AND CAPITAL BUDGET Chages i lad use. Projects with major exterior desig chages. Projected expeditures i the 2017/ /20 Capital Pla, which iclude major costructio projects i various stages of developmet ad umerous ifrastructure projects ad programs, total $4.3 billio. The table below provides a compariso of the curret ad the last two Capital Plas. COMPARATIVE CAPITAL PLANS [IN MILLIONS OF DOLLARS] 2017/ / /16 Desig/Costructio 2, , ,521.9 Forecasted , Ifrastructure ad Other Total 4, , ,898.2 This year s pla is $194.3 millio (5%) higher tha last year s. New projects ad scope ad correspodig budget icreases for existig projects have more tha offset projects completig i 2016/17. PROJECTS IN DESIGN AND CONSTRUCTION Projects i desig ad costructio total $2.89 billio (68% of the pla). Costructio of these projects is cotiget upo fudraisig of $130.1 millio (5%). This category comprises 18 projects, as show i the table o page 82. The cost of projects i desig ad costructio has goe up by $677.2 millio from 2016/17 as a result of the advacemet of projects from the forecasted category ad budget icreases, partially offset by project completios. Projects movig from the forecasted to the desig ad costructio stage iclude CAM 1 ($222.9 millio), BMI 1 ($210 millio), the Public Safety Buildig ($31.5 millio), Ecia Complex Upgrades ($25.8 millio), the Athletic Academic Advisig ad Rowig Buildig (AAARB) ($25 millio), Deig House ($23.1 millio), Evirometal Health & Safety Facility Expasio ($16.5 millio), two childre s ceters ($19 millio total), Schwab Residetial Ceter Reovatios ($11.3 millio), ad four District Work Ceters ($8.5 millio). Projects scheduled to be completed i 2016/17 ad thus excluded from the pla iclude the David ad Joa Traitel Buildig ($65 millio) ad the Kigscote Reovatio ($17.5 millio). FORECASTED CONSTRUCTION PROJECTS Forecasted projects are those aticipated to receive Board of Trustees approval over the ext three years. These projects total $608.5 millio (14% of the pla) ad are listed o page 83. Like those i desig ad costructio, these projects are cotiget upo fudig. For this group, $161.8 millio (27%) remais to be fudraised, ad $24.9 millio (4%) has yet to be idetified. Project costs withi this category have decreased by $453.6 millio from 2016/17. A umber of projects have moved ito the desig ad costructio category, as oted above. This decrease is partially offset by ew projects added to this year s Capital Pla, icludig Teat Improvemets at 3145 ($58.8 millio) ad 3172 ($15.8 millio) Porter Drive, a ew EOC/ECH ($35.1 millio), ew faculty homes at Cabrillo/ Dolores ($18 millio), ad reovatios at both the Li Ka Shig Ceter ($10 millio) ad the Ceter for Advaced Study i Behavioral Scieces ($9.8 millio). INFRASTRUCTURE AND OTHER PROGRAMS The Housig Acquisitio Iitiative ad Staford s ogoig efforts to reew its ifrastructure are reflected i a budget of $779.7 millio (18% of the pla) ad are listed o page 84. Ifrastructure ad Other Programs costs have decreased $29.3 millio from last year. The largest program i this category is the Housig Acquisitio Iitiative. Established i 2014, this program reflects the high priority that Staford places o its ability to provide affordable housig optios for existig ad prospective faculty ad staff. I recogitio of this critical eed, the Board of Trustees has icreased the overall fudig of this program, origially established at $200 millio, to a total of $500 millio. Ifrastructure programs iclude the Ivestmet i Plat (Plaed Maiteace) Program, the Staford Ifrastructure Program (SIP), the Capital Utilities Program (CUP), upgrades to Iformatio Techology ad Commuicatios Systems, the R&DE Major Reovatio Pla, Whole Buildig Eergy Retrofit Program Group 2, Storm Draiage projects, ad a Campus Drive roudabout. SIP projects are fuded through costructio project surcharges. The other projects are fuded by cetral fuds, debt, ad/or service ceter charge-out rates.

89 CAPITAL PLAN AND CAPITAL BUDGET 73 Ivestmet i Plat (Plaed Maiteace) Program Aual Ivestmet i Plat assets represet the maiteace fuds plaed to be ivested to preserve ad optimize Staford s existig facilities ad ifrastructure (e.g., pathways, outdoor structures, ad grouds). These projects are based o life cycle plaig, the key cocept beig that life expectacies of facility subsystems are kow ad, as a result, maiteace schedules ca be predicted. The three-year estimated program cost is $156.4 millio. Staford Ifrastructure Program SIP cosists of campus ad trasportatio projects ad programs for the improvemet ad geeral support of the uiversity s academic commuity, hospitals, ad physical plat. SIP expeditures are expected to total $43.2 millio over the ext three years (excludig fudig for replacemet parkig spaces). SIP projects iclude campus trasit, parkig lot ifrastructure, ad site improvemets; ladscape desig ad ehacemets; bicycle, cart, ad pedestria path costructio; ad lightig, sigage, ad outdoor art istallatios. This year s pla icludes $25.4 millio to fud campus ifrastructure projects. Capital Utilities Program The $36.2 millio, three-year CUP pla will improve electrical, hot water, water, chilled water, ad wastewater utility systems. The CUP covers expasio of systems as required by campus growth ($20.5 millio) ad replacemet of systems that are ear the ed of their useful life ($15.7 millio). Iformatio Techology ad Commuicatios Systems The uiversity s computig ad commuicatios systems provide comprehesive data, voice, ad video services to the campus commuity. Over time, these systems must be improved ad/or replaced to maitai a cosistetly high level of service. Additioally, ew techologies provide more efficiet, faster, ad/or more cost-effective solutios. Plaed upgrades to these critical uiversity systems total $16.8 millio, icludig $2.4 millio to replace systems at two ECHs. R&DE Major Reovatio Pla This Residetial & Diig Eterprises (R&DE) program addresses health ad safety issues, seismic upgrades, code compliace, eergy coservatio ad sustaiability, ad major programmatic improvemets i the studet housig ad diig physical plat. Projects aticipated over the ext three years total $11.4 millio ad iclude phased istallatio of ew spriklers ad fire alarm systems i Escodido Village high-rise ad low-rise housig. Completed projects will be maitaied through the Staford Housig, Diig, ad Hospitality Asset Reewal Programs. Whole Buildig Eergy Retrofit Program Group 2 This retrofit program seeks to reduce eergy cosumptio i Staford s largest eergy-itesive buildigs. The program bega i 2003/04 with studies of the top 12 eergy-cosumig buildigs, represetig $15.9 millio of eergy expeses per year, or early 36% of the campus total. It has sice bee expaded to additioal large eergy-cosumig buildigs. The retrofits completed thus far have delivered aual eergy cost savigs of $4.7 millio (a payback of less tha four years) ad PG&E rebates of $2.2 millio. The forecasted cost for future projects is $7.2 millio. Details of this program are show i the table o the followig page. Storm Draiage The ogoig storm draiage program icludes projects for improvig ad expadig the capacity of the campus storm draiage system, buildig storm water detetio facilities, replacig deteriorated pipes, ad improvig draiage aroud buildigs. I additio, recetly adopted storm water quality regulatios ecessitate ew storm water treatmet approaches, such as bioswales ad bioretetio facilities, to miimize coveyace of cotamiatio from commo storms to atural water bodies. These approaches will be icorporated regioally or o ew buildig sites, as appropriate. New approaches ivolvig storm ad irrigatio water ruoff capture ad reuse will also be implemeted where appropriate. The Capital Pla also icludes improvemets to the storm draiage system i the faculty/staff housig area of campus, addig storm draiage ifrastructure where oe exists ad upgradig existig draiage ifrastructure to covetioal levels of protectio. The three-year estimated program cost is $4.5 millio. Campus Drive Roudabout As previously discussed, Staford plas to costruct a roudabout at Campus Drive ad Serra Street at a cost of $4 millio.

90 74 CAPITAL PLAN AND CAPITAL BUDGET WHOLE BUILDING ENERGY RETROFIT PROGRAM ESTIMATED ANNUAL ACTUAL PROJECT RETROFIT STATUS CONSUMPTION SAVINGS SAVINGS Stauffer I - Chemistry Complete 38% 46% Gordo & Betty Moore Materials Research 1 Complete 32% 10% Paul Alle Ceter for Itegrated Systems (CIS) Complete 15% 14% Forsythe (George) Hall Complete 8% 8% Stauffer II - Physical Chemistry Complete 38% 43% Gates Computer Sciece Complete 29% 27% Beckma Ceter for Molecular ad Geetic Medicie Complete 46% 32% Gilbert Biological Scieces Complete 35% 32% Cator Ceter for Visual Arts Complete 13% 14% Big Wig (Gree Library West) Complete 16% 50% Packard Electrical Egieerig Complete 26% 37% Arrillaga Alumi Ceter Complete 27% 31% RAF I Complete 11% 11% RAF II Complete 30% 30% CIS Distributed Digital Cotrol 2 Complete 5% TBD Clark Ceter 2 Complete 11% TBD Gree Earth Scieces Desig 15% Varia Physics Laboratory Desig 24% Mechaical Egieerig Laboratory Costructio 24% Keck Sciece Study complete 20% Ceter for Cliical Scieces Research (CCSR) Study complete 13% 1 Costructio scope reduced from origial survey. 2 Actual savigs to be verified. Other Staford Etities I a effort to preset a comprehesive view of uiversityplaed costructio, the capital plaig process has icluded Staford s commercial real estate ivestmets, Staford Health Care (SHC), Lucile Packard Childre s Hospital (LPCH), ad SLAC Natioal Accelerator Laboratory. Although the tables at the ed of this chapter do ot iclude these etities (with the exceptio of academic projects maaged by Staford Real Estate), brief descriptios of the real estate, SHC, ad LPCH capital programs follow. The SLAC capital programs are addressed i Chapter 2. Real Estate LBRE s Real Estate departmet (Real Estate) is maagig te projects totalig $1.25 billio i various stages of plaig ad developmet o Staford lads. Six of these are commercial real estate ivestmet projects. These are 3170 Porter Drive, 3181 Porter Drive, 3406 Hillview Aveue, 2131 Sad Hill Road, the Middle Plaza office buildigs, ad reovatios at the Old Wiery (formerly the Staford Bar). The uiversity is the beeficiary of the icome from these ivestmets. Academic projects maaged by Real Estate are Staford Redwood City Phase 1, which broke groud i Jauary 2017, ad three ew housig developmets: Uiversity Terrace Faculty Homes i Palo Alto, Middle Plaza at 500 El Camio Real Residetial i Melo Park, ad the Cabrillo/Dolores Resideces i the faculty subdivisio. Uiversity Terrace will provide 180 uits for faculty purchase, with the first uits beig delivered by Jue The remaiig two housig projects are curretly i the plaig phase. Staford Health Care ad Lucile Packard Childre s Hospital Staford Medicie s Reewal Project icludes the developmet of approximately 1.3 millio sf of et ew hospital, cliic, ad medical office space o the mai medical campus ad the Hoover medical campus. The project received developmet etitlemets from the City of Palo Alto i 2011, ad

91 CAPITAL PLAN AND CAPITAL BUDGET 75 sigificat project milestoes have bee achieved sice that time. Major utility upgrades to serve the ew medical facilities have bee completed alog Welch ad Quarry Roads. All improvemets o the Hoover medical campus are complete, icludig the reovatio of the historic Hoover Pavilio, the costructio of a ew 1,070-car parkig structure, ad the costructio of a 92,000-sf Neurosciece Health Ceter, which opeed for patiet care i Jauary O the mai medical campus, costructio of both the ew SHC pavilios ad the LPCH expasio cotiues to progress, with iterior fiish work, buildig systems testig, ad site work curretly uderway. The SHC ad LPCH hospital projects are estimated to cost $2.0 billio ad $1.3 billio respectively, with aticipated completio i 2018/19 for SHC ad 2017/18 for LPCH. OVERALL SUMMARY A table summarizig the 2017/ /20 Capital Pla appears o the ext page. It icludes projects ad programs i the desig ad costructio ad forecasted stages, as well as ifrastructure ad other categories that are curretly active or are aticipated to commece i the ext three years. The expeditures ecessary to complete the three-year Capital Pla are aticipated to exted beyod 2019/20. To differetiate betwee the estimated costs of the pla ad the forecasted spedig to complete projects ad programs, a additioal table (Capital Pla Cash Flows) forecasts the Capital Pla expediture cash flow based o project ad program schedules. O&M ad debt service costs for each project will impact the uiversity s budget oce costructio is substatially complete. Although the Capital Pla Summary shows the full budget impacts of all completed projects, it is importat to ote that these impacts alig with the project completio schedule ad will therefore be absorbed by the uiversity budget over a period beyod the three-year pla. The Capital Pla Impact o Budget table forecasts these budget impacts by area of resposibility (e.g., geeral fuds, formula schools). The tables at the ed of this chapter provide a detailed list of the projects icluded i the Capital Pla. Capital Pla Fudig Sources As the pie chart shows below, Staford s Capital Pla relies o several fudig sources, icludig curret fuds, gifts, ad debt. Depedig upo fudraisig realities ad time frames, some projects will prove more difficult tha others to udertake. As a result, it is possible that projects i the Capital Pla will have to be cacelled, delayed, or scaled back i scope. For ay projects relyig o gifts to be raised, the Office of Developmet has determied that fudraisig plas are feasible, although the time frames for the receipt of gifts are THE CAPITAL PLAN 2017/ /20 $4.3 BILLION Academic Debt 19% Service Ceter/ Auxiliary Debt 29% Athletics/Studet Activities 1% Ifrastructure/Other 7% Academic Support 17% Sources of Fuds Resources to be Idetified 1% Other 3% Gifts to be Raised 7% Curret Fuds 29% Gifts i Had or Pledged 12% Uses of Fuds by Program Category Ifrastructure/Other 6% Reovatios 8% Academic/Research 28% Housig 47% Uses of Fuds by Project Type New Costructio 86% The followig sectios address Capital Pla fudig sources ad uses, alog with resource costraits.

92 76 CAPITAL PLAN AND CAPITAL BUDGET SUMMARY OF THREE-YEAR CAPITAL PLAN 2017/ /20 [IN MILLIONS OF DOLLARS] PROJECT FUNDING SOURCE GIFTS UNIVERSITY DEBT ANNUAL CONTINUING COSTS SERVICE ESTIMATED CAPITAL CENTER/ RESOURCES PROJECT BUDGET CURRENT IN HAND OR TO BE AUXILIARY ACADEMIC TO BE DEBT OPERATIONS & COST 2017/18 FUNDS 1 PLEDGED RAISED DEBT DEBT OTHER IDENTIFIED 2 SERVICE MAINTENANCE 3 Projects i Desig & Costructio 2, , Forecasted Projects Total Costructio Pla 3, , Ifrastructure Programs Total Three-Year Capital Pla 2017/ /20 4, , , , Icludes fuds from uiversity ad school reserves, ad the GUP ad SIP programs. 2 Aticipated fudig for this category is through a combiatio of school, departmet ad uiversity reserves, ad other sources. 3 Operatios & Maiteace icludes plaed ad reactive/prevetative maiteace, zoe maagemet, utilities, cotracts, grouds, ad outdoor lightig. CAPITAL PLAN CASH FLOWS [IN MILLIONS OF DOLLARS] 2016/17 & 2020/21 & PRIOR 2017/ / /20 THEREAFTER TOTAL Projects i Desig & Costructio , ,890.7 Forecasted Projects Total Costructio Pla , ,499.2 Ifrastructure Programs Total Three-Year Capital Pla 2017/ / , , ,278.9 CAPITAL PLAN IMPACT ON BUDGET [IN MILLIONS OF DOLLARS] 2020/21 & 2018/ /20 THEREAFTER TOTAL Debt Service Geeral Fuds Formula ad Other Schools Auxiliary Other Total Debt Service Operatios ad Maiteace Geeral Fuds Formula ad Other Schools Auxiliary Total Operatios ad Maiteace Primarily the hospitals alog with Forsythe facility, Faculty Staff Housig, ad outside etities.

93 CAPITAL PLAN AND CAPITAL BUDGET 77 subject to chage. Resources to be idetified are expected to come from a combiatio of school, departmet, ad uiversity reserves, as well as other sources. Uses of Fuds by Program Category ad Project Type The middle chart o page 75 divides Capital Pla activity ito program categories Academic/Research, Ifrastructure ad Other, Academic Support, Housig, ad Athletics/Studet Activities with the largest categories beig Housig, Academic/Research, ad Academic Support at 47%, 28%, ad 17% of the pla, respectively. The bottom chart breaks out the same activity ito project types, icludig New Costructio, Ifrastructure, ad Reovatios. CAPITAL PLAN CONSTRAINTS Affordability The icremetal iteral debt service expected at the completio of all projects commecig i the three-year pla period (completio dates rage from 2017/18 to 2024/25) totals $106.4 millio aually (excludig debt service for bridge fiacig the receipt of gifts ad operatig lease paymets). Of this amout, $46.4 millio will be serviced by geeral fuds, $23.1 millio by the formula schools (GSB ad SoM), ad $36.9 millio by auxiliary ad other operatios. Service ceter debt is fuded through rates paid by customers ad has bee allocated ad icluded i the totals for geeral fuds, formula schools, auxiliary operatios, ad other operatios. The additioal O&M costs expected at the completio of all projects commecig i the three-year period total $62.6 millio per year. Of this amout, $21.8 millio will be serviced by geeral fuds, $27.5 millio by the formula schools, ad $13.3 millio by auxiliary ad other operatios. O&M ad debt service o capital projects compete directly with other academic program iitiatives for fudig allocatios. Debt Capacity As of May 1, 2017, $1.1 billio of bod proceeds are available to fiace capital projects ad faculty mortgages, icludig $281 millio of uexpeded tax-exempt bod proceeds, ad $780 millio of uexpeded taxable bod proceeds. Iterim fiacig facilities totalig $500 millio of taxable commercial paper, $296 millio of tax-exempt commercial paper, ad $448 millio of udraw lies of credit are also available. I additio, through fiscal year-ed 2016/17 ad 2017/18, $97 millio i iteral amortizatio proceeds o debt-fuded projects will become available to led to projects, ad $301 millio i forecasted pledge ad other paymets will retire debt issued to bridge fiace the receipt of gifts ad cost of costructio. The three-year Capital Pla will require a total of $2.3 billio of debt for projects uder costructio or for projects to be approved i or before 2017/18: $1,510 millio to complete projects already approved or uder costructio; $337 millio for projects to be approved i 2017/18; ad $433 millio to bridge fiace the receipt of gift pledges for projects approved or uder costructio. Additioal debt may be required to fiace the Faculty Staff Housig program. As of May 1, 2017, the portfolio of debtsubsidized mortgages had icreased by $20.5 millio to $496 millio. Projects idetified i the three-year Capital Pla ad to be approved after 2017/18 will require a additioal $200 millio i debt. Debt for these projects has ot bee committed, ad allocatios will be evaluated i the cotext of debt capacity, affordability, viability of the fudig pla, ad GUP limitatios. Etitlemets The Staford campus ecompasses 8,180 acres i six jurisdictios. Of this total, 4,017 acres, icludig most of the cetral campus, are withi uicorporated Sata Clara Couty. I December 2000, Sata Clara Couty approved a GUP that allows Staford to costruct up to 2,035,000 additioal gross sf of academic-related buildigs o the core campus ad up to 3,018 ew housig uits. A additioal 1,450 housig uits were approved o March 24, 2016, pursuat to GUP Coditio F.7, raisig the housig allocatio to 4,468 housig uits. Coditios of approval icluded the followig: Creatio of a academic growth boudary to limit the buildable area to the core campus for a miimum of 25 years; Approval of a sustaiable developmet study (SDS) before ew costructio exceeds 1 millio gross sf (Sata Clara Couty approved the SDS i April 2009); ad

94 78 CAPITAL PLAN AND CAPITAL BUDGET Costructio of 605 uits of housig for each 500,000 gross sf of ew academic buildig. Give the striget requiremets imposed by the GUP ad the icreasigly difficult etitlemet eviromet, Staford carefully maages the allocatio of ew growth. Costructio through 2015/16 accouted for 1.4 millio GUP sf. The 2017/ /20 Capital Pla icludes 463,963 GUP sf curretly i desig ad costructio ad 30,032 GUP sf i forecasted projects, icludig the related demolitios. With the completio of plaed housig projects, Staford will have added 4,424 et ew housig uits sice approval of the GUP, exceedig the housig likage requiremet for the full academic build-out allowed by the GUP. As discussed o page 69, Staford has submitted a applicatio to Sata Clara Couty for a updated GUP. This permit is expected to be approved i THE CAPITAL BUDGET, 2017/18 At $1.2 billio, the 2017/18 Capital Budget reflects oly a portio of the costs of the projects i the Capital Pla, as most of them spa more tha oe year. The followig table highlights the major capital projects for which expeditures uder the 2017/18 Capital Budget will be sigificat, as well as the percetage of each project expected to be complete by the ed of 2017/18. The map o page 81 shows the locatios of these projects. I 2017/18, LBRE aticipates substatial completio of five major projects with total budgets of $404.6 millio ad estimated 2017/18 expeditures of $150.8 millio. Whe completed, Uiversity Terrace Faculty Homes will provide 180 uits to faculty for purchase (see Staford s Commitmet to Housig sectio); the Bass Biology Buildig will be the corerstoe of a future sciece quad i the Biology/ Chemistry/Computer Sciece Precict; improvemets to Frost Amphitheater will eable the facility to be used for a greater variety of evets; the Athletic Academic Advisig ad Rowig Buildig will cosolidate a umber of Departmet of Athletics, Physical Educatio, ad Recreatio programs ad allow optimizatio of vacated space; ad Durad Phase 4 will complete the reovatio of the buildig. MAJOR CAPITAL PROJECTS - PERCENT OF COMPLETION 2017/18 1 [IN MILLIONS OF DOLLARS] ESTIMATED CAPITAL ESTIMATED PERCENT BUDGET PROJECT COMPLETE BY 2017/18 COST 2017/18 Escodido Village (EV) Graduate Resideces , % Staford Redwood City Phase % Neuro/ChEM-H Research Complex % Ceter for Academic Medicie 1 (CAM 1) % BioMedical Iovatios Buildig 1 ad Tuel (BMI 1) % Uiversity Terrace Faculty Homes (180 uits) % Ae T. ad Robert M. Bass Biology Research Buildig % Frost Amphitheater Improvemets % Public Safety Buildig % Athletic Academic Advisig ad Rowig Buildig % Deig House % Durad Reovatio - Phase % Evirometal Health & Safety Facility Expasio % Total 1, , Icludes projects scheduled to be i costructio ad with forecasted expeditures greater tha $10 millio i 2017/18. SOURCES AND USES The Capital Budget is supported by multiple fudig sources: curret fuds (which iclude the Capital Facilities Fud [CFF], fuds from uiversity ad school reserves, ad GUP ad SIP fees), gifts, ad debt. The uiversity typically allocates CFF or debt fudig to projects i the absece of other available fudig. The timig of gift receipts, which may be bridge fiaced, will affect the mix of project fudig. The followig pie charts show the uses of fuds uder the $1.2 billio Capital Budget by project type ad program category. Aticipated expeditures of $439.8 millio (36%) for Academic/Research projects iclude the Neuro/ ChEM-H Research Complex, CAM 1, BMI 1, ad the Bass Biology Buildig. Academic Support projects are projected at

95 CAPITAL PLAN AND CAPITAL BUDGET 79 THE CAPITAL BUDGET 2017/18 $1.2 BILLION Uses of Fuds by Project Type Ifrastructure/Other 8% Reovatios 3% Ifrastructure/Other 8% Academic Support 33% Athletics/Studet Activities 1% Housig 22% New Costructio 89% Uses of Fuds by Program Category Academic/Research 36% $407.1 millio (33%), primarily for Staford Redwood City. Housig projects, forecasted at $269.4 millio (22%), iclude the EV Graduate Resideces, Uiversity Terrace Faculty Homes, ad the Housig Acquisitio Iitiative. Ifrastructure ad other program ivestmet of $95 millio (8%) icludes Ivestmet i Plat (Plaed Maiteace) ad CUP. Lastly, expeditures for Athletics/Studet Activities projects are forecasted at $20 millio (1%). CAPITAL FACILITIES FUND (CFF) Fudig Sources ad Committed Uses of Fudig [IN MILLIONS OF DOLLARS] 2016/ /18 Sources of Fudig Formula Uits School of Medicie Hoover Istitutio No-Formula Total Fudig Committed Uses of Fudig Ceter for Academic Medicie 1 (CAM 1) Neuro/ChEM-H Research Complex 2.7 Staford Oak Garde Childre s Ceter Porter Drive Teat Improvemets 2.9 LKSC Reovatio Phases 2 ad Other School of Medicie Projects 6.4 Hoover Istitutio Projects Formula Uits Project Subtotal Neuro/ChEM-H Research Complex 50.4 Staford Redwood City Phase Bioegieerig Equipmet 9.7 Emergecy Operatios Ceter Durad Reovatio Phase GUP Sapp Ceter for Sciece Teachig ad Learig 3.5 Public Safety Buildig Aderso Collectios at Staford Uiversity 2.1 Childre Ceter of Staford Commuity Searsville Dam ad Reservoir Laguita Diversio Dam Removal Ecia Complex Upgrades 10.0 Other No-Formula Uits Projects Total Commitmets Aual Fudig less Commitmets (81.0) 30.6 Balace at Begiig of Year Ucommitted Balace Aual trasfers to CFF are projected to be $49.9 millio i 2016/17 ad $113 millio i 2017/18 with correspodig commitmets of $130.9 millio ad $82.4 millio for these two years. The followig table lists projects aticipated to receive CFF fudig i 2016/17 ad 2017/18.

96 80 CAPITAL PLAN AND CAPITAL BUDGET CAPITAL BUDGET IMPACT ON 2017/18 OPERATIONS The 2017/18 Cosolidated Budget for Operatios icludes icremetal debt service ad O&M expeses for projects to be completed i either 2016/17 or 2017/18, but operatioal for less tha 12 moths i the year completed. Capital projects requirig debt are fuded from iteral loas that are amortized over the asset life i equal istallmets (pricipal ad iterest). The budgeted iterest rate (BIR) used to calculate the iteral debt service is a bleded rate of iterest expese o debt issued for capital projects, bod issuace, ad admiistrative costs. The BIR will remai at 4.25% for 2017/18. Cosolidated iteral debt service, icludig that bore by formula uits, auxiliaries, service ceters, Faculty Staff Housig, ad real estate ivestmet, is projected to icrease from $199.1 millio to $199.3 millio. Additioal debt service related to the Rosewood Hotel ad the Sad Hill Road Office Complex is ot icluded i the Cosolidated Budget for Operatios. I additio, aual lease paymets for retal properties, occupied by the SoM, are projected to be $32.9 millio i 2017/18. The projected iteral debt service fuded by urestricted fuds, icludig geeral fuds ad schools desigated fuds, will decrease by $400,000 i 2017/18. The et chage i debt service brigs the total aual iteral debt service bore by urestricted fuds to $83.7 millio. I 2017/18, the uiversity will icur about $1.0 millio of icremetal O&M costs related to a umber of ew academic ad admiistrative facilities. They iclude $360,000 for the Kigscote Reovatio ad $343,000 for the Cetral Loadig Dock. Additioal O&M costs for smaller capital projects ad ifrastructure programs accout for the balace of the icrease. CAPITAL PLAN PROJECT DETAIL I additio to a map idetifyig some key project locatios, the followig pages provide tables that list capital projects i three categories: projects i desig ad costructio, forecasted costructio projects, ad ifrastructure projects ad programs.

97 ,000 Evirometal Health & Safety Facility Expasio ± Neuro/ChEM-H Research Complex BioMedical Iovatios Buildig 1 2,000 Feet Staford Redwood City Phase 1 Deig House Durad Reovatio - Phase 4 Bass Biology Research Buildig Ceter for Academic Medicie 1 Frost Amphitheater Improvemets Athletic Academic Advisig ad Rowig Buildig Uiversity Terrace Faculty Homes Escodido Village Graduate Resideces Public Safety Buildig STAN UNIVE CAPITAL PLAN AND CAPITAL BUDGET 81