Update on University Finances, Nov. 19, 2013
Dear Members of the Georgetown University Community,
Having just closed the books on the past financial year (July 2012-June 30, 2013), I am writing to share with you information about Georgetown’s performance for this period, as well as update you on the progress on our five-year financial plan.
The goal of Georgetown’s financial plan, approved this past February by the Board of Directors is to have revenues exceed operating expenses so that we can fund mission-related investments. Positioning Georgetown to be able to respond creatively to the challenging forces impacting the higher education landscape will allow us to take advantage of opportunities that the future will present.
I am pleased to report that in fiscal year 2013 - the first year of this plan - we have made excellent progress toward our goal. After a mid-year projected deficit of $19.4 million, we ended fiscal year 2013 with an operating surplus of $2.7 million, the first operating surplus the university has shown since 2002. This is a result of your help in controlling expenses, strong fundraising results, some one-time payments and continued efforts to develop new programs. On a budget that is more than $1 billion, having $1.121 billion in revenues and $1.118 billion in expenses can seem like only a small positive margin, but hitting this benchmark is an important step to meet our goal of revenues exceeding expenses.
The progress we have achieved is only possible because of the commitment, cooperation and sacrifice by each and every individual at the university to control expenses while we continue to grow revenues. I want to thank everyone for your cooperation in these financially challenging times. The sacrifices each of you are making has us on track to continue this progress.
You can find the Audited Financial Statements for fiscal year 2013 here.
Here are some additional details about our financial performance over the past fiscal year.
Financial Performance Across the University
The Main Campus had a $15.9 million surplus, slightly higher than the surplus in fiscal year 2012 of $12.7 million. Strong fundraising and revenue from summer school sessions (which were changed to match the payments with the services in the fiscal year the services are provided) helped account for this surplus. The Main Campus continues to invest in the academic mission. Fiscal year 2013’s operating performance includes the fully annualized cost of Regent’s Hall and start-up expenses for the School of Continuing Studies’ new home downtown.
The Georgetown University Law Center has continued efforts at expense control and has exhibited strong fundraising over the past year, resulting in a net operating surplus of $4.5 million, just above the approved budgeted level of $4.4 million. This is an impressive improvement, as the Law Center ended fiscal year 2012 with a small deficit of $0.04 million.
The difficult landscape for research funding has disproportionately impacted the Georgetown University Medical Center (GUMC), prompting cost reductions that were made even more difficult with the sequestration earlier this year. The Medical Center is working hard to increase revenue and reduce expenses. In fiscal year 2013, GUMC saw an increase in revenue of $21.0 million, ending fiscal year 2013 with a $24.9 million deficit, slightly smaller than the 2012 deficit. The deficit can be viewed as an investment by the university in the research of the faculty, supplementing and leveraging the $123.3 million in external research funding that GUMC received in fiscal year 2013.
During fiscal year 2013 tuition revenue was strong at GUMC, primarily due to enrollment increases in the School of Nursing & Health Studies’ online nursing masters programs. In addition, GUMC received a revenue sharing payment of $12.8 million from MedStar. While we can expect additional revenue-sharing payments in fiscal year 2014, the loss of funding from the effects of sequestration earlier this year is providing challenges for the current fiscal year, which are being addressed by an action plan to reduce costs.
The remaining university departments showed a combined surplus of $7.2 million in fiscal year 2013, compared to a deficit of $1.9 million in fiscal year 2012. This improvement is due to control of expenses, fundraising as well as strong athletic revenues.
Gifts from alumni and other Georgetown supporters continue to provide critical funding for the university’s ongoing operations and our strategic priorities and investments. Reflected in fiscal year 2013 financial performance is an increase in current-use gifts of 32.4% – from $50.4 million in fiscal year 2012 to $66.8 million in fiscal year 2013. The largest gift in Georgetown’s history - a $100 million donation from alumnus Frank McCourt to fund the McCourt School of Public Policy - was received after the close of fiscal year 2013 in June and will be reflected in this current fiscal year’s financial statements.
University Assets and Endowment
During fiscal year 2013, total assets of the university increased by $119 million, almost five percent, to $2.57 billion. This increase was driven by philanthropy and our endowment investment performance of 11.8 percent. For comparison, weak market conditions during fiscal year 2012 were reflected in an endowment return of just 0.9%. Our endowment, which totals $1.2 billion, is invested to provide a return that can fund long-term programmatic needs. During fiscal year 2013 the endowment generated a payout of $72 million.
We look forward to continued improvement toward meeting our financial goals. In 2014 we budgeted a deficit of $9 million. We are currently on track to meet our financial goals for this fiscal year and with the continued support of everyone, we will work to again reduce that projected deficit.
Again, thank you for your sacrifice and cooperation over the past 12 months, and for helping to implement the successful first year of our five-year financial plan.
With best wishes,
Vice President for Financial Affairs