2005 Financial Report SYRACUSE UNIVERSITY Photo by Susan Kahn Photography Cover Photo by Susan Kahn Photography Produced by Syracuse University’s Office of Publications TABLE OF CONTENTS 2 . .Message from the Chancellor 3 . .Financial Report 7 . .Statement of Responsibility 8 . .Report of Independent Auditors 9 . .Statements of Financial Position 10 . .Statements of Activities 12 . .Statements of Cash Flows 13 . .Notes to Financial Statements 20 . .2005-06 Board of Trustees 1 MESSAGE FROM THE CHANCELLOR As the 2005-2006 academic year begins, Syracuse University finds itself with one of the largest freshman classes on record and the most diverse freshman class ever. Both of these welcome surprises occurred with no lowering of admission standards and constitute abundant proof—if we needed any— that SU is a “hot” place to go! We are embarking on a program I call “Scholarship in Action,” which has already produced a proliferation of new programs that get our faculty, students, and staff engaged with expert practitioners, in the professions and other fields, with our outstanding alumni, with the larger communities of Syracuse and upstate New York, and with new programs in sites as disparate as Washington, D.C., and Beijing. We know that our graduates will face new kinds of lives in a multicultural world that knows no boundaries, in which they must be empathetic enough to collaborate with people not like them and confident enough to create new things and make discoveries in situations that may be far from comfort- able or stable. As I told our freshmen at Convocation this fall, now is the time for them to begin, not four years from now. As part of our effort to create a campus without boundaries, we have collaborated with the city of Syracuse and its business and arts organizations to get our students off our “hill” and into the city in a variety of ways. In January we will open our “Warehouse” downtown as the temporary home of the School of Architecture. It will also house our new program in arts journalism and two design programs from the College of Visual and Performing Arts. This fall, we have also announced an SU/SCSD Partnership for Better Education, an ongoing effort to work with the Syracuse City School District, starting at Nottingham High School, drawing on our strengths in the arts, literacy, inclusive education, science, and technology to institutionalize collaborative programs and implement new ones. We are extending our reach beyond Syracuse to New York City, where we have programs in educa- tion, business, theater, and journalism, to Washington, D.C., where the Maxwell and Newhouse schools and the College of Law are collaborating to take a path-breaking look at the independence of the judi- ciary, and to Los Angeles, where we hope to build on our expertise in television and film. Overseas, we have announced a new DIPA program in Beijing. We are broadening our inter-group dialogue programs on campus, providing ways for students and other members of the University community to comfortably talk about their similarities and differences. A University task force is evaluating a broad range of faculty scholarship, and we seek to enhance our profile of sponsored research. In almost every venue, I am asking faculty and students to consider undertaking cross-disciplinary, innovative work on critical issues of the day. We invite you to join us in a thrilling and rewarding year. Nancy Cantor Chancellor and President 2 FINANCIAL REPORT Fiscal year 2005 was a year of well-planned and controlled financial management and achievement of strengthened University financial position. The University’s net assets exceeded $1.4 billion at June 30, 2005, and the June 30 balance for each class of net assets for the five most recently completed fiscal years was as follows: NET ASSETS (In Millions of Dollars) $1,200 $1,145 $1,103 $1,000 $1,065 Louis G. Marcoccia $993 $997 Unrestricted Senior Vice President for Business, $800 Temporarily restricted Finance, and Administrative Services $600 Permanently restricted $400 $43 $42 $46 $200 $28 $30 $166 $177 $184 $199 $212 $ 0 2001 2002 2003 2004 2005 INVESTMENTS (In Millions of Dollars) $1,200 The fair value of long-term investments was in $1,000 excess of $1.0 billion at June 30, 2005, and the $1,013 $1,029 $947 $957 $800 $848 total fair value of investments at June 30 for $600 the five most recently completed fiscal years is $400 presented at left. $200 $ 0 2001 2002 2003 2004 2005 3 FINANCIAL REPORT The asset allocation of investments at fair REVENUES value at June 30, 2005 was 50.5% U.S. and Non- 100% Net tuition and fees U.S. equities, 12.1% private equities, 28.8% fixed Contributions 43.8% 43.9% 80% income, and 8.6% other. Grants and contracts In accordance with the University’s spending Investment 60% 5.8% 6.5% income 10.3% 10.0% policy, its pooled long-term investment distri- 2.8% 3.1% Realized gains 40% on investments 11.9% 11.0% bution per unit for Pool #1 decreased by 6.4% Auxiliaries 20% 23.6% 22.7% Other to $18.56 per unit, and its pooled long-term 1.8% 2.8% investment distribution per unit for Pool #2 0% 2004 2005 decreased by 5.0% to $19.31 per unit. Further, the distribution per unit for Pool #1 will decrease by approximately 3.3% for fiscal year 2006 to $17.95 EXPENSES per unit, and the distribution per unit for Pool #2 Instruction and departmental will increase by approximately .1% for fiscal year 100% 39.4% 40.1% research 2006 to $19.33 per unit. 80% Sponsored research and For fiscal years 2005 and 2004 the revenue other programs 60% 8.8% 8.6% amounts as percentages of total revenues, and Academic 11.8% 12.0% support 6.2% the expense amounts as percentages of total 40% 6.5% 10.3% 9.8% Student services Institutional expenses, were as presented at right: 20% 23.5% 23.0% support Auxiliaries 0% 2004 2005 4 FINANCIAL REPORT Tuition and fees totaled $426.4 million for budget is expected to increase by approximately fiscal year 2005. Financial aid as a percentage 5.9% to $790.8 million. Net tuition and fees of tuition and fees decreased by .1% to 34.0%, The commitment continues to maintain Contributions Grants and and current year net tuition and fees represented campus buildings, infrastructures, and grounds contracts Investment 43.9% of the University’s total revenues. at a high quality. Accordingly, for fiscal year income Realized gains Tuition and fees and related financial aid for 2005, land improvements, buildings, equip- on investments Auxiliaries the five most recently completed fiscal years are ment, and collections expenditures exceeded $50 Other shown below: million, and included spending for the Whitman School of Management building, Women’s Building, South Campus tennis courts, TUITION AND FEES (In Millions of Dollars) Hendricks Chapel, Newhouse School $450 of Public Communications buildings, $400 $263 $281 $350 $253 $235 Hawkins Warehouse, Regent Theater, Instruction and $223 $300 Net tuition and fees departmental $250 Carrier Dome, Crouse-Hinds Hall, research Financial aid $200 Total Total Total Total $426 $150 Total $400 Brewster Hall, Brockway Hall, Slocum Sponsored $334 $351 $378 research and $100 $137 $145 other programs $ 50 $111 $116 $125 Hall, Center of Excellence, Link Hall, $ 0 Academic 2001 2002 2003 2004 2005 Center for Science and Technology, support Life Sciences building, Adams Street Student services Institutional Parking Garage, Graham Dining Hall, support Auxiliaries The notable variance in the University’s state- Booth Parking Garage, Hinds Hall, Manley ments of activities for fiscal years 2005 and 2004 Field House, Commissary Warehouse, and The was that the unrealized change in fair value of Warehouse. University investments was approximately a nega- The University’s June 30, 2005 and 2004 finan- tive $13.7 million as compared to a positive of cial statements have been adjusted to reclassify approximately $51.7 million for fiscal year 2004. pending investment sales and purchases transac- For fiscal year 2006, the University’s operating tions from operating cash flows to investing cash 5 FINANCIAL REPORT flows in the June 30, 2005 and 2004 Statements of provided by the University’s Comptroller, Cash Flows. The reclassifications are set forth on William F. Patrick; Associate Comptrollers, page 14 at the end of Note 1. The reclassifications James M. Crimmer, Leonard M. Granozio, and are technical changes and have no impact on Robert F. Hartley; Treasurer, Barbara L. Wells; the University’s Statements of Financial Position, Budget and Planning Director, John B. Hogan; Statements of Activities, overall cash flows, or and their excellent staffs. changes in cash and cash equivalents. Outstanding financial planning and Louis G. Marcoccia management services continue to be an impor- Senior Vice President for Business, Finance, and Administrative Services tant contributor in support of the University’s mission and vision, and principally are Photo by emanphoto.com 6 STATEMENT OF RESPONSIBILITY Management is responsible for the integrity and objectivity of the consolidated financial statements of Syracuse University. The statements have been prepared in accordance with accounting principles generally accepted in the United States of America, and include certain estimates and judgments that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements. Management fulfills its responsibility primarily by establishing and maintaining an internal control structure that is designed to provide reasonable assurance that the University’s assets are safeguarded, transactions are executed in accordance with management’s authorization, and that the University’s financial records may be relied upon for the purpose of preparing financial statements and related disclosures.