UNIVERSITY OF ILLINOIS URBANA-CHAMPAIGN CHICAGO SPRINGFIELD

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FINANCIAL INDICATORS UNIVERSITY OF ILLINOIS URBANA-CHAMPAIGN CHICAGO SPRINGFIELD BOARD OF TRUSTEES September 9, 2011

Fiscal Year 2011 University Financial Summary It was a year of performance Positive outcomes for hospital, medical service plan and auxiliaries Instruction/research operations had robust revenue generation (tuition/sponsored research grants) and all campuses demonstrated strong expense control ARR efforts generated administrative savings UI collected $250 million FY10 state appropriation receivable by 12/31/10 It was a year of challenges Ended FY11 with $313 million State receivable State has $7.4 billion in unpaid FY11 vouchers Pension and benefit issues continue to be a top concern 1

University of Illinois Appropriations & Benefits (Dollars in Millions) $1,500 $1,350 $1,200 $1,050 $900 $750 $600 $450 $300 $150 In Constant FY 2011 Dollars (CPI) Appropriations Benefits 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 FY02-12 Appropriations adjusted for Health Insurance and Rescissions; FY09 FY11 includes the transfer of the State Surveys, FY12 does not. Benefits includes the Health Insurance payment. FY04 benefits excludes one time pension bond proceeds. FY12 Benefits are estimated. 2

University of Illinois Appropriations & Tuition (Dollars in Millions) $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 In Constant FY 2011 Dollars (CPI) Appropriations Tuition 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 FY02-12 Appropriations adjusted for Health Insurance and Rescissions; FY09 FY11 include the transfer of the State Surveys, FY12 does not. 3

State Appropriation Revenue Unrestricted Funds Lapsed Period Billings and Collections through September 6, 2011 In Millions $750 $625 $500 $722 $722 $18.6 $743 $722 $722 $722 $722 $724 $724 $724 $50 $743.4 $45.5 $697.9 $743.4 $45.5 $697.9 $118.7 $624.7 $45.5 $697 $697 $697 $697 $313 $375 $674 $579.2 $250 $384 $125 2008 2009 2010 2011 Appropriation Billed Collected Rescission Stimulus FY09 appropriation includes $18.6 million rescission. FY08 - FY10 as of August 31 st. FY10 appropriation includes $45.5 million of federal stimulus funding. 4

In Millions $750 $722 State Appropriation Revenue Unrestricted Funds Billings and Collections through September 6, 2011 $18.6 $743 $743 $45.5 $697 $689 $625 $722 $724 $500 $697.5 $697 $689 $375 $250 $125 $104 $56 $48 $136 $136 $128 $128 $90 $90 2008 2009 2010 2011 2012 $1 $134 $133 Collected Billed Appropriation Rescission Stimulus FY09 appropriation includes $18.6 million rescission. FY08 - FY10 as of August 31 st. FY10 appropriation includes $45.5 million of federal stimulus funding. 5

Dollars in Millions UI Month End GRF Receivable Fiscal Year 2008 through Fiscal Year 2012 $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 June 07 Dec 07 June 08 Dec 08 June 09 Dec 09 June 10 Dec 10 July 11 The first five months of FY11 had receivables from FY10 outstanding at the end of the month. The receivable amount for each month in millions was as follows: July $193; August $119; September $33.1; October $10.9; November $10.9. Receivables from FY11 outstanding in FY12, in millions are as follows; July 2011 $313, Aug. 2011 $313. August 2011 is as of August 29, 2011. 6

FY 2010 State Capital Budget Major Projects as Signed by the Governor (Dollars in Thousands) Project Total University Wide Repair and Renovation $ 21,505.0 University Wide Repair and Renovation 1 10,700.0 Urbana Lincoln Hall Remodeling 1 57,304.0 Chicago College of Medicine Rockford 1 14,820.0 Urbana Petascale Facility 1 60,000.0 Chicago Dentistry Modernization/Code Compliance 3 20,800.0 Urbana Electrical and Computer Engineering Bldg. 2 44,520.0 Urbana Integrated Bioprocessing and Research Lab 20,034.0 Springfield Public Safety Building 4,000.0 1 Released 2 State match of non-state funds 3 $2.5M Planning funds released 7

Dollars in Millions $900 $800 $700 $600 $500 $400 $300 $200 $100 Income Fund (Tuition) Revenue Unrestricted Funds Fiscal Year 2007-2011 Collections and billed through June 30 of Fiscal Years 2010 & 2011 $540 $599 $648 $730 $768.2 $762.1 55.6 55.6 712.6 706.5 $834 $866.6 $860.9 58.8 58.8 807.8 802.1 2007 2008 2009 2010 2011 Budget Billed Collected MAP 8

Dollars in Millions $800 $700 Hospital Revenue/Expense/Net Income Fiscal Year 2010 versus Fiscal Year 2011 through June 30 $643.7 $710.5 $690.1 $650.8 $679.8 $668.9 $600 $500 $400 $300 $200 $100 $81* 2010 2011 Budget Revenue Expense Net Income plus Depreciation $32* * Depreciation included above was approximately $21.3 million for FY10 and approximately $21.1 million in FY11. 9

MSP Revenue/Expense/Net Income Fiscal Year 2010 versus Fiscal Year 2011 through June 30 Dollars in Millions $250 $200 $150 $158 $165 $152 $175 $199 $158 $100 $50 $41 $13 FY10 Budget Revenue Expense Net Income FY11 Depreciation for MSP was approximately $800K for FY11. This represents equipment only and is not included in the net income figures above. 10

Auxiliary/Departmental Activities Revenue/Expense/Net Income Fiscal Year 2010 versus Fiscal Year 2011 through June 30 Dollars in Millions $700 $600 $601 $597 $581 $599 $621 $601 $500 $400 $300 $200 $100 FY10 $16 $20 FY11 Budget Revenue Expense Net Income Auxiliary Facility System depreciation was approximately $29.9 million in FY11 and $28.7 million in FY10. These amounts are not included in the net income figures above. 11

Dollars in Millions $800 $700 $600 $500 $400 $300 $200 $100 Fiscal Year 2011 Budget Assessment Sponsored Projects Revenue Urbana Chicago Springfield University Admin UI Total Actual Budgeted Campus Actual Revenue Budgeted Revenue $ Variance % Variance Urbana 398.0 383.1 14.9 3.9% Chicago 318.0 308.1 9.9 3.2% Springfield 12.4 12.3 0.1 0.8% University Admin 6.5 5.9 0.6 10.2% Totals 734.9 709.4 25.5 3.6% 12

Operating Pool, Endowment and Debt Questions Could liquidity balances in the operating pool be invested more aggressively or used to pay down debt? Does the University endowment pool represent the entire University endowment? Should the University endowment pool be diversified further into non-traditional assets? 13

UI and UIF Individual and Combined Total Endowment Values are preliminary as of June 30, 2011 UI Endowment $405 Million BIT's 10% Farms 16% Separately Invested 1% UIF Endowment $1.2 Billion BIT's 2% Farms 2% Real Estate 0% Other Assets 1% Separately Invested 0% BIT's 4% Pool 74% Combined UI/UIF Endowment $1.6 Billion Farms 6% Real Estate 0% Other Assets 1% Pool 94% Separately Invested 1% Pool 88% 14

UI, UIF, and Combined Endowment Pool Targets as of Jan 2011 Farmland 7% Hedge Funds 10% Real Estate 7% UI Approved Target Hedge Funds 13% Real Estate 10% UIF Target Private Equity 8% Private Equity 10% Fixed Income 20% Equity 48% UI/UIF Average Fixed Income 17% Equity 50% Hedge Funds 12% Farmland 3% Real Estate 8% Private Equity 9% Equity 49% Fixed Income 19% 15

2010 NACUBO Commonfund Study of Endowments 6/30/2010 Energy/ Commodities/ Nat. Resources 0% UI/UIF Other (Farms) 9% Energy/ Commodities/ Nat. Resources 5% Big Ten *Other 3% Hedge Funds 11% Real Estate 7% Private Equity 8% Equity 46% Hedge Funds 18% Real Estate 4% Equity 39% Fixed Income 19% Energy/ Commodities/ Nat. Resources 14% *Other 11% Harvard Equity 33% *Other includes cash and other investments not categorized in the asset classes represented by responding institutions. Note: May not equal 100% due to rounding. Private Equity 12% Energy/ Commodities/ Nat. Resources 8% Ivy League Fixed Income 20% *Other 5% Equity 24% Hedge Funds 16% Hedge Funds 22% Fixed Income 11% Real Estate 0% Private Equity 13% Fixed Income 13% Real Estate 8% Private Equity 23% 16

Endowment pool investments: UI BOT recently approved (Jan 2011) revised asset allocation to improve diversification of UI endowment pool. Staff will implement these decisions as rapidly as possible. University debt: Summary The University is aggressively amortizing debt. Debt outstanding will drop from $1.626 billion to $1.035 billion in 10 years (even with current AFS issuance plans). Operating pool investments and liquidity: State of Illinois financial situation requires more liquidity than normal. The UI liquidity position has been a critical factor in maintaining the UI credit rating. Staff are prudently extending investment maturity within policy ranges. 17