Annual IU Financial Report 2019
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ANNUAL FINANCIAL REPORT INDIANA UNIVERSITY 2018– 2019 TABLE OF Indiana University Annual Financial Report 2018–2019 CONTENTS Message from the President . 3 Message from the Vice President and Chief Financial Officer . 6 Independent Auditor’s Report . 7 Management’s Discussion and Analysis . 10 Statement of Net Position . 22 IU Foundation Statement of Financial Position . 23 Statement of Revenues, Expenses, and Changes in Net Position . 24 IU Foundation Statement of Activities . 25 Statement of Cash Flows . 26 Notes to the Financial Statements . 28 Required Supplementary Information . 87 Trustees and Administrative Officers of Indiana University . 89 Additional Information . 91 MESSAGE The Honorable Eric J . Holcomb Governor, State of Indiana FROM THE State House, Room 206 PRESIDENT 200 West Washington Street Indianapolis, IN 46204 Michael A. McRobbie, President, Indiana Dear Governor Holcomb: University On behalf of the Trustees of Indiana University, I am pleased to present to you IU’s 2018–19 Financial Report . Indiana University is now in its bicentennial year . One of the first American public universities west of the Allegheny Mountains, IU is older than most universities in the United States and most universities in the world outside of Europe . This year will see a dazzling and reflective series of over 400 events, which will celebrate this truly unique milestone in the life of the state’s flagship university . Even as we celebrate Indiana University’s 200th anniversary, we continue to make major advancements—in education, research, innovation, philanthropy, and engagement in the life of our state—to prepare our university for a third century of excellence and to ensure that we continue to achieve our primary mission of educating outstanding students . We are acutely aware of the challenges that are coming in our third century . This awareness has driven much of the reform, restructuring, renovation, and rebuilding that has taken place across all of our campuses for over the last decade, and we believe we are well positioned to confront these challenges . ENSURING AFFORDABILITY, ACCESSIBILITY, AND STUDENT SUCCESS Vital to IU’s success in its third century is to ensure that the university remains completely accessible to able students from all over the state no matter what their backgrounds . I am proud to note that IU enters its third century highly affordable for a wide range of students . Our campuses have among the lowest tuition levels among their peers . Tuition increases have been below higher education inflation levels the last five years . It will be essential to ensure they remain low on all of our campuses, especially in a climate of increasing competition caused by demographic pressures . IU has given—and will continue to give—constant attention to ways of keeping a quality education affordable . For example, IU has adopted banded, or flat-rate, tuition for undergraduate students and many graduate and professional programs, on all of our campuses . Banded tuition locks in one price for students taking anywhere from 12 to 18 credit hours per semester . This enables students to take all of the credits they need for on-time graduation at the same, predictable cost . IUPUI and the regional campuses had a 24 percent increase in full-time undergraduates taking at least 15 credit hours between 2012 and 2017 . Generous philanthropic support for scholarships and fellowships will continue to be a vital component of affordability . Such support in recent years has allowed IU to dramatically increase the amount of financial aid it provides to students . IU financial assistance for resident undergraduate students has increased by a remarkable 227 percent since 2007 . More broadly, 63 percent of degree-seeking undergraduate students received gift aid in 2017–2018 from federal, state, institutional, or private sources, up from 57 percent five years prior . MESSAGE FROM THE PRESIDENT The impact of all of this has been to ensure that IU high level of services that students expect of us . Key to this Bloomington’s net cost of attendance is the second has been leveraging our scale to obtain prices for software, lowest in the Big Ten . This has also helped ensure that books, finance and accounting, and consumables across all an IU education remains popular . This year saw a record campuses that individual units could not possibly obtain . freshman class across all IU campuses of 16,162, including In areas like information technology, we have pursued this records at IU Bloomington and IUPUI . The total number strategy aggressively for decades . of students served by IU has remained stable at around 110,000 with around 90,000 degree-seeking students . IU ONLINE: DELIVERING AN AUTHENTICALLY Students are graduating in record numbers as well, IU EDUCATION SINCE 2012 and the last academic year saw a new record of 21,500 The last decade has seen a fraught and overwrought graduate from all IU campuses . debate about the merits and impact of online education . Some have argued in almost apocalyptic terms that it RECORD DIVERSITY would spell the end of the traditional model of education . It has been particularly gratifying this year to see yet At IU, we resisted this tsunami of extravagant claims, and another record set for minority student enrollment across instead argued that the history of previous approaches to all IU campuses underscoring IU’s accessibility as well . online education going back 40 years or so, the nature of For the third consecutive year, IU’s minority student body the changes in technology and the costs involved, would has exceeded 20,000, this year being a record 22,068 . IU instead see not a replacement of the traditional model, but Bloomington has seen record numbers of Hispanic/Latino, rather its merging with online education into a mixed or African American, and Asian American students, with a additive model . total now of over 9,000 minority students—the most of any IU campus, representing a doubling of this number since We established a program in this area in 2012 called 2007 . The minority composition of domestic IU students IU Online, based on our prediction as to what the now closely approximates that of the state . In this and successful model of online education would be . It has many other ways, we are truly the people’s university . been enormously successful and this year a record 31,254 students are doing at least one IU Online course— A NATIONAL LEADER IN REDUCING STUDENT DEBT representing more than a third of this year’s student body . This is more than a four percent increase from fall At the same time, we must keep focusing constantly semester 2018 . We also saw an increase in the number on student debt . IU’s path-breaking work in this area of IU students who are taking only online courses . This has already made it a national leader . For example, our number grew to 8,768 students, who now make up nearly “student loan letter”—in which students are clearly a tenth of IU’s total enrollment and provide a tenth of our informed each year of the value and full consequences of tuition revenue . Through IU Online, the university has their borrowing—has reduced student indebtedness by 19 firmly cemented itself as the state’s online education percent since 2011–2012 . Annual student loan borrowing powerhouse for four-year and graduate online education . dropped by $126 4. million (19 percent) over the past six Our online platform now includes 135 IU degree and years . Indiana resident undergraduate annual loan volume certificate programs and over 2,500 IU courses on our is down $101 .3 million (31 percent) for the same period . seven campuses, all taught and developed by IU faculty . As you are aware, in 2015, the State of Indiana adopted legislation to require all public universities to issue “debt These figures are especially noteworthy and important as letters” to all students who have loan debt . Since then, they demonstrate IU’s strong contribution to the state’s another 13 states have also mandated such letters . ongoing efforts to help more Hoosiers earn their college degrees and ensure that more students graduate on time . CONTROLLING COSTS IU Online offers opportunities for those Hoosiers who Controlling costs will remain absolutely essential in the may have started their college education but not finished coming years to keeping tuition low . IU has sought to because they now have jobs or families . Similarly, it reduce costs, but without sacrificing quality or reducing the provides a solution for more traditional students who want 4 Financial Report 2018–2019 Indiana University to earn their degrees more quickly or have more convenient • new and renovated facilities; access to courses given their class or work schedules . • new equipment, research infrastructure, and technology, such as supercomputing systems; At IU, we have emphasized that our programs should and provide a quality “authentically IU experience ”. The result • new programs and services that support has been an online experience that is a true extension of research that are the product of an extensive IU’s faculty and curriculum, and that builds on the best of restructuring of research administration . traditional classroom instruction . And, of course, it also shows the growing impact of the CATALYZING RESEARCH AT THE BICENTENNIAL university’s investment of nearly $300 million in its three As IU begins a new century, its research enterprise major multidisciplinary Grand Challenge projects focused is strong and well-placed to meet the challenges this on: century will bring . Fundamental to this strength are faculty • medical treatments precisely targeted to an of excellence and outstanding ability whose research individual’s genetic makeup; and scholarship blaze new paths of knowledge for the • developing programs and policies aimed on enlightenment and betterment of humankind .