updated buffalo financial analysis bunsis february 2020...college of arts & sciences that limits...
TRANSCRIPT
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Analysis of the Financial Situation of the University at Buffalo Howard Bunsis, Professor of Accounting, Eastern Michigan University
February 2020 This analysis is organized as follows:
1. Preamble and data transparency issues at UB 2. UB revenue distribution from different sources; state appropriation and tuition revenue 3. Brief analysis of the financial situation of the SUNY System 4. Analysis of the financial situation of the University of Buffalo 5. Detailed Expense and Priority Analysis of the UB administration 6. Number of Faculty, Graduate teaching faculty, and faculty and administrative salaries 7. Analysis of the investment performance of the UB Foundation 8. Other Issues: Degrees Conferred, Graduation and Pell Rates 9. Athletics – amount of support for athletics from the core academic mission
Executive Summary The administration at the University at Buffalo seems to believe that the institution is in some sort of financial trouble, based on the September 20, 2019 message sent by an administrator in the College of Arts & Sciences that limits the funding and recruiting of new doctoral students. This report attempts to analyze the financial situation of UB, as well as the priorities of the administration. Due to the lack of data availability and transparency, an overall assessment of the financial situation of UB is very difficult to make. However, the SUNY System is definitely in solid financial condition, and for UB, the two main revenue sources, the state appropriation and tuition revenue, have done well in recent years and are likely to continue to increase in 2019 and 2020. This is due to solid enrollment and recent increases in the appropriation from New York state. For priorities, UB spends a larger share of salaries on upper-level administration than every other peer institution. In fact, if UB just spent the average share of total salaries on upper-level administrators (as opposed to the high level UB spends), there would be $23.5 million LESS spent on administration. In addition, the UB administration has reduced the hiring rate of tenure/tenure-track faculty, but increased the hiring of non-tenure track faculty, even as enrollment is increasing. Athletics is a significant drain of resources on the core academic mission of the university, as there are hardly any athletic revenues that support the expenses for athletics. UB is one of the largest subsidizers (academics subsidizing athletics) of athletics in the country. Lastly, some good news; the number of conferred degrees and graduation rates are increasing, indicating academic success for numerous students and their families over the last several years.
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1. Preamble and data transparency issues at UB The goal of this report is to provide as much information as possible about the financial condition and situation of the University of Buffalo. The manner in which this goal is achieved is not through an analysis of the budget, but through an analysis of the actual financial results. Why not budgets?
Bottom line: Trying to rely on budgets to assess the financial health of an institution is not the best way to make the assessment. We can use budgets in certain ways, but not for the ultimate assessment. In addition, if there was a 2019-20 budget for UB that was publicly available, I would analyze it. However, it is not publicly available, and neither are prior budgets. The financial overview for 2017-18 was only made publicly available in late 2019 (months after it was created), and this happened only after public pressure on the administration. The lack of publicly available financial information for UB is unlike any of the roughly 100 public universities I have examined. This lack of transparency is alarming. In fact, the 2019 financial overview should be reported – the 2019 SUNY financial statements have been publicly available for several months.
Budgets Actual Results
What is included in the financial informationOnly current funds or whatever
funds the admin chooses All the fundWho reviews the information Only the administration Outside external auditors
What counts as a revenueOnly "current" or "operating" or
"core" fundsAll revenues generated by the
university
What counts as an expense?Only "current" or "operating" or
"core" fundsAll costs incurred by the
university
How are revenues determined?
Usually on a worst-case scenario, predicting them to be as low as
possible What actually happens
How are expenses determined?
Usually on a worst-case scenario, predicting them to be as high as
possible What actually happens
How are personnel costs determined?Based on all positions, even
unfilled positionsOnly actual spending on personnel
costs
Results of revenues vs. expenses They always balanceRevenues and expenses are never
the sameFinal results presented to the university community
There is a budget "hole" or "deficit" or "shortfall"
Usually a cash-based and accrual-based surplus
Effects of RCM or responsibility centered management
Create financial responsibilty: ETOB (Every tub on its own
bottom)
Real goals of RCM are to cut liberal arts program and not hire
more faculty
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Problems with UB financial reporting and transparency The big problem with using the actual financial information for UB is that the UB administration does not report the actual data in any consistent or reliable manner. Below is a summary of the revenue reporting for 2017 and 2018 by the UB administration
What is going on here?
• For 2017, the financial overview reported total revenue in four different places, and there were three different answers for what total revenues were in 2017
• In 2018, only the graph (first row) was consistent with the reporting from 2017; the 2nd, 3rd, and 4th rows above were financial statements that did NOT exist in the 2018 financial overview
• The statements with “core operations” is a statement/construct made up by the UB administration, and not part of any formal statement that other public universities typically report (or report at all)
• In the 2018 overview, there is a Statement of Activities, and that statement was not reported in the 2017 and earlier statements. Note that a Statement of Activities is the name of the income statement used by private universities; note that UB is a public university
• For total revenues, none of the results for total revenues matches what is in IPEDS (Integrated Postsecondary Education Data System of the U.S. Dept. of Education). IPEDS data is submitted by the UB administration to the federal government, and is likely the most comprehensive and reliable source of data
• The Stony Brook financial reports are created using standard accounting guidelines, and more importantly, the manner in which items are reported are consistent over the years; this is not the case for UB Financial Overviews
SourceFinancial Statement Name or Heading Financial Construct 2017 2018
UB Financial Overview Core Operating Activities Graph Total Operating Revenues 743,000,000 752,000,000
UB Financial Overview Statement of Revenues and Expenses Core Operating Activities Total Operating Revenues 743,054,000 Not Reported
UB Financial Overview Statement of Revenues, Expenses and Changes in Net Assets Total Operating Revenues 726,341,274 Not Reported
UB Financial Overview Revenue and Expenses by Entity Total Revenues 1,337,114,991 Not Reported
UB Financial Overview Statement of Activities
Operating And Non-Operating Revenues separately - # is total, including Research Foundation Not Reported 1,035,334,520
IPEDS Revenues by SourceTotal All Revenues and Other Additions 1,107,678,587 1,133,630,328
March 2019 Budget Presentation Core Operating Activities Graph Total Operating Revenues N/A 753,000,000March 2019 Budget Presentation Graph in Presentations Total Operating Budget N/A 754,000,000
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Examples of transparency issues:
• The only budget financial information (there is some useless process stuff about the members of the Budget Advisory Committee at http://www.buffalo.edu/pss/comm/budget_over.html. The scant financial information is at http://www.buffalo.edu/home/ub_at_a_glance.html, which is the generic website for UB at a glance. No detail on revenues or expenditures for any year past 2017-18 is reported.
o For Rutgers, the 2019-2020 budget is at: https://budget.rutgers.edu/fiscal-year-budget o At the University of Arizona, we see budgets through 2020, and the 2020-2021 budget
request, at https://budget.arizona.edu/content/budget-reports o We see 20 years of budgets at Stony Brook, up to 2019, at:
(https://www.stonybrook.edu/commcms/budgetoffice/about/operating o At UB, very tiny amounts of financial information from 2017-18 are all that we see online.
This is not appropriate. Below is all we see: o Operating revenues: $752 million (FY 2017-18) o Financial statement revenues: $1.1 billion (FY 2017-18) o UB and affiliated entities revenues: $1.3 billion (FY 2017-18)
• The main financial website is http://www.buffalo.edu/administrative-services/managing-money/financial-
reporting.html, which contains a link for the 2017-18 financial overview. This was not available until a month or two ago, despite the fact that fiscal 2018 ended 20 months ago. Incredibly, no prior financial overviews are available on this site; if you have a Buffalo email, it is possible that these can be obtained. This situation is simply inappropriate and unprecedented for any public university I have examined.
o Note that for Stony Brook, the last 10 years of actual financial statements (not the impossible to follow/interpret financial overview of UB) is publicly available at https://www.stonybrook.edu/accounting/financial-report.php. The 2018 report was dated for April of 2019; in April of 2020, we will see their 2019 full report. For UB, there is no way of knowing when or what we will see in terms of a 2019 financial report
o For Arizona, the 2019 financial statements, along with the prior 10 years, are at https://www.fso.arizona.edu/financial-management/annual-reports
• There are only two reports from the Provost web site
o 2016-2017 Faculty Salary Equity Study) (March 2018) o Final Report and Recommendations of the General Education Steering Committee )(October
2014)
• The common data set initiative has four links to the 2019-2020 common data set, which has information on enrollment, graduation rate, class size, number of part time and full time faculty. All four links are empty of data. In addition, the past common data sets (prior to 2018) are not publicly available, in contrast to every public university I have examined. Note that the 2019-2020 common data set (along with 7 prior year common data sets) for Stony Brook is publicly available at https://www.stonybrook.edu/commcms/irpe/fact_book/common_data_set/
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2. UB revenue distribution from different sources; state appropriation and tuition revenue 2018 UB revenue distribution per IPEDS
• The state appropriation is the main operating appropriation, and we will examine this over time, compare it to the state appropriation to all of SUNY, and examine if it has kept up with inflation. We will also compare it to what is in the UB Financial Overviews
• Tuition and fees are net of financial aid discounts, and later we will examine the discount rate over time, as well as trends in enrollment
• Grants and contracts include federal, state, local, and private operating grants, and are distinct from the financial aid (Pell and state)
• Auxiliary includes housing, dining, student union, bookstore, parking, athletics • Other revenues are not broken down in any manner; $37.5 million is a lot of “other” • Gifts do not include any gifts made separately to the UB Foundation; these gifts were made
directly to UB, and the investment income is also unrelated to the UB Foundation • The graph below demonstrates that there are diverse sources of revenue
2018 Amount % of TotalState Appropriation 455,340,234 40.2%Tuition and Fees 292,050,739 25.8%Grants and Contracts 190,023,842 16.8%Auxiliary 62,158,344 5.48%Other Revenues 37,503,649 3.3%Federal Pell Grants 37,451,908 3.3%State financial aid grants 29,401,701 2.6%Gifts 20,111,317 1.8%Investment income 4,919,753 0.4%Hospital 4,668,841 0.4%Total Revenues 1,133,630,328 100.0%
40%
26%
17%
5%
3% 9%State AppropriationTuition and FeesGrants and ContractsAuxiliaryOther RevenuesRemaining Items
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Analysis of the State Appropriation to UB First, we report the state appropriation reported in the UB Financial Overview versus the appropriation reported in IPEDS; this clearly demonstrates the unreliability of the numbers reported in the UB Financial Overviews
The reasons for these differences are suggested in the 2017 UB Overview: The Overview reports that the appropriation comes from two sources:
• From state tax dollars; The state tax dollar support is categorized as support for the base budget, salary increases and utilities. This analysis excludes appropriation provided by the state for employee fringe benefit costs, which are funded and paid directly by the state.
• Certain revenues collected by UB are required to be transmitted to the state in return for state appropriation. These revenues include our tuition revenue and other campus revenues
Going forward, we will therefore focus on the IPEDS numbers
300,000
350,000
400,000
450,000
500,000
550,000
600,000
650,000
2009 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
UB per Overview UB per IPEDS
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Below is the state appropriation to UB from the State, per IPEDS
State appropriation graphically:
Annual Percentage Changes in State Appropriation to UB and the rest of SUNY
• We do not know the state appropriation to UB for 2019 (it is not publicly available, and the UB
financial review for 2019 is not reported yet) • In general, the rest of SUNY seems to do better than UB, as the long-term data below reveals
YearUB per IPEDS in
thousandsAnnual % Change
2008 476,4272009 431,676 -9.4%2010 400,019 -7.3%2011 421,046 5.3%2012 415,705 -1.3%2013 395,518 -4.9%2014 422,043 6.7%2015 413,095 -2.1%2016 429,608 4.0%2017 438,402 2.0%2018 455,340 3.9%2019 Not reported yet
300,000320,000340,000360,000380,000400,000420,000440,000460,000480,000500,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Appropriatio to UB per IPEDS
-12%-9%-6%-3%0%3%6%9%
12%
2008to
2009
2009to
2010
2010to
2011
2011to
2012
2012to
2013
2013to
2014
2014to
2015
2015to
2016
2016to
2017
2017to
2018
2018to
2019
UB Rest of SUNY
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Long-term percentage changes in the state appropriation to UB and for the rest of SUNY:
• The rest of SUNY = Appropriation to all of SUNY – appropriation to UB • In all three time periods, UB has done worse than the rest of SUNY • The most important fact for assessing the financial health of UB Is that the appropriation is
increasing in the most recent period (2013 to 2018) • For 2018 to 2019, the appropriation to all of SUNY went up 4% per the audited financial
statements of SUNY; this bodes well for the 2019 results for UB • It is not clear what happened to the appropriation to UB and all of SUNY for 2020, though it
appears as if it will increase slightly over the 2019 level • What matters is that the largest source of revenue for UB Is increasing • We will now examine the 2nd largest revenue source, tuition and fees
-17%
15%
-4%-2%
28% 25%
-20%
-10%
0%
10%
20%
30%
2008 to 2013 2013 to 2018 2008 to 2018
UB Rest of SUNY
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Analysis of UB Tuition Revenue We will examine:
• Enrollment • Tuition price • Discount rate • Tuition revenue per IPEDS
Enrollment Source for enrollment data: http://www.buffalo.edu/provost/oia/facts-publications/factbook/student/enrollment.html Basic enrollment data, using total headcount
• 2008 = Fall 2007 • 2020 = Fall 2019 • Therefore, we have the most current data, and the enrollment data appears positive
Undergrad and grad enrollment graphically:
In general, enrollment seems to be rising at the undergrad, graduate, and total levels. The graphs below support this conclusion:
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Total Enrollment 28,054 28,192 28,881 29,048 28,860 28,952 29,850 29,944 29,806 30,183 30,648 31,503 31,923
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Undergrad 18,779 19,022 19,368 19,396 19,334 19,516 19,831 19,829 19,951 20,411 21,020 21,607 21,921Grad 9,275 9,170 9,513 9,652 9,526 9,436 10,019 10,115 9,855 9,772 9,628 9,896 10,002Total Enrollment 28,054 28,192 28,881 29,048 28,860 28,952 29,850 29,944 29,806 30,183 30,648 31,503 31,923
5,000
10,000
15,000
20,000
25,000
30,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Undergrad Grad
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Annual Percentage change in total headcount enrollment:
Long-term percentage changes in undergraduate, graduate, and total enrollment
• Overall, the enrollment situation is very positive, with significant increases for most components in all time periods above
• Grad enrollment has been flat from 2014 to 2020, but very positive over the 2008 to 2020 period
0.5%
2.4%
0.6%
-0.6%
0.3%
3.1%
0.3%
-0.5%
1.3% 1.5%
2.8%
1.3%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
2008to
2009
2009to
2010
2010to
2011
2011to
2012
2012to
2013
2013to
2014
2014to
2015
2015to
2016
2016to
2017
2017to
2018
2018to
2019
2019to
2020
Annual Percentage Change in Total Enrollment
6%
11%
17%
8%
0%
8%6% 7%
14%
-2%0%2%4%6%8%
10%12%14%16%18%
2008 to 2014 2014 to 2020 2008 to 2020
Undergrad Grad Total
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To confirm the conclusion on strong enrollment growth, we also examine the percentage change in enrollment from Fall 2015 to Fall 2018 (2016 to 2019) for UB vs. peer institutions. The peer institutions are those chosen by the UB administration, and are the peers submitted to IPEDS. The 12 peers institutions are below, and all are members of AAU, and all 12 are public universities (AAU has 36 public universities and 27 private universities):
• Rutgers University-New Brunswick (New Brunswick, NJ) • Stony Brook University (Stony Brook, NY) • University of Arizona (Tucson, AZ) • University of California-Irvine (Irvine, CA) • University of California-Los Angeles (Los Angeles, CA) • University of California-San Diego (La Jolla, CA) • University of Iowa (Iowa City, IA) • University of Michigan-Ann Arbor (Ann Arbor, MI) • University of North Carolina at Chapel Hill (Chapel Hill, NC) • University of Pittsburgh-Pittsburgh Campus (Pittsburgh, PA) • University of Washington-Seattle Campus (Seattle, WA) • University of Wisconsin-Madison (Madison, WI)
Headcount Enrollment per IPEDS
• UB is the 10th largest of this peer group in terms of total headcount enrollment • UB enrollment is growing faster than the average/median of this peer group
2016 2019 % Change
UC Irvine 30,836 36,032 16.9%
UCSD 32,906 37,887 15.1%
UM 43,651 46,716 7.0%
UCLA 41,908 44,537 6.3%
Buffalo 29,806 31,503 5.7%
UW 45,408 47,400 4.4%
Stony Brook 25,272 26,256 3.9%
Arizona 42,595 44,097 3.5%
UNC 29,084 30,011 3.2%
Iowa 30,844 31,656 2.6%
Wisconsin 42,716 43,463 1.7%
Rutgers 49,428 50,254 1.7%
Pitt 28,649 28,673 0.1%
Peer Mean 36,941 38,915 5.5%
Peer Median 37,407 40,675 3.7%
UB Rank (of 13) 10 10 5
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Undergraduate Tuition Price
Graduate Tuition Price
• The ratio of out-of-state to in-state is higher for undergrad than grad • The number of undergraduate and graduates who are New York residents is not reported in the
enrollment website of UB; The only data by residency in the UB enrollment site from the Provost is: o % of International students (grad and undergrad) 2008 16% o % of International students (grad and undergrad) 2020 18%
• Per IPEDS, o The % of first time undergraduates from New York State is 87% o The % of first time undergraduates from a state other than New York is 2%
Undergrad and Grad, in and out of state, graphically
Undergrad Tuition 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020In-State $4,350 $4,660 $4,970 $4,970 $5,270 $5,570 $5,870 $6,170 $6,470 $6,470 $6,670 $6,870 $6,870Out-of-State $10,610 $11,740 $12,870 $13,380 $14,720 $15,190 $17,810 $19,590 $21,550 $23,710 $24,180 $24,540 $24,564Ratio 2.44 2.52 2.59 2.69 2.79 2.73 3.03 3.18 3.33 3.66 3.63 3.57 3.58
Undergrad Fees Only 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020In-State $1,867 $1,950 $2,043 $2,166 $2,249 $2,419 $2,628 $2,700 $2,911 $3,104 $3,158 $3,229 $3,310Out-of-State $1,867 $1,950 $2,043 $2,166 $2,249 $3,419 $2,628 $2,700 $2,911 $3,104 $3,158 $3,229 $3,310Ratio 1.00 1.00 1.00 1.00 1.00 1.41 1.00 1.00 1.00 1.00 1.00 1.00 1.00
UG Tuition and Fees 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020In-State $6,217 $6,610 $7,013 $7,136 $7,519 $7,989 $8,498 $8,870 $9,381 $9,574 $9,828 $10,099 $10,180Out-of-State $12,477 $13,690 $14,913 $15,546 $16,969 $18,609 $20,438 $22,290 $24,461 $26,814 $27,338 $27,769 $27,874Ratio 2.01 2.07 2.13 2.18 2.26 2.33 2.41 2.51 2.61 2.80 2.78 2.75 2.74
Graduate Tuition 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020In-State $8,766 $8,945 $9,910 $9,822 $10,171 $10,568 $10,960 $11,181 $10,870 $11,269 $11,269 $11,090 $11,310Out-of-State $13,873 $14,629 $15,688 $16,171 $17,384 $18,813 $20,377 $21,770 $22,210 $23,025 $23,025 $22,650 $23,100Ratio 1.58 1.64 1.58 1.65 1.71 1.78 1.86 1.95 2.04 2.04 2.04 2.04 2.04
Graduate Fees Only 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020In-State $1,389 $1,441 $1,513 $1,608 $1,666 $1,862 $1,832 $2,022 $2,295 $2,477 $2,514 $2,615 $2,822Out-of-State $1,389 $1,441 $1,513 $1,608 $1,666 $1,862 $1,832 $2,022 $2,295 $2,477 $2,514 $2,615 $2,822Ratio 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Grad Tuition and Fees 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020In-State $10,155 $10,386 $11,423 $11,430 $11,837 $12,430 $12,792 $13,203 $13,165 $13,746 $13,783 $13,705 $14,132Out-of-State $15,262 $16,070 $17,201 $17,779 $19,050 $20,675 $22,209 $23,792 $24,505 $25,502 $25,539 $25,265 $25,922Ratio 1.50 1.55 1.51 1.56 1.61 1.66 1.74 1.80 1.86 1.86 1.85 1.84 1.83
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
UG In State Grad In State Grad Out of State UG Out of State
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Annual Percentage Changes in Undergraduate Tuition and Fees
Long-term Changes in Undergraduate Tuition and Fees
• Inflation is per the Bureau of Labor Statistics, CPI-U Northeast • Tuition and fees clearly out-paces inflation over these time period
Undergrad Tuition2008 to
20092009 to
20102010 to
20112011 to
20122012 to
20132013 to
20142014 to
20152015 to
20162016 to
20172017 to
20182018 to
20192019 to
2020In-State 7.1% 6.7% 0.0% 6.0% 5.7% 5.4% 5.1% 4.9% 0.0% 3.1% 3.0% 0.0%Out-of-State 10.7% 9.6% 4.0% 10.0% 3.2% 17.2% 10.0% 10.0% 10.0% 2.0% 1.5% 0.1%Fees Only 4.4% 4.8% 6.0% 3.8% 7.6% 8.6% 2.7% 7.8% 6.6% 1.7% 2.2% 2.5%
Tuition and Fees2008 to
20092009 to
20102010 to
20112011 to
20122012 to
20132013 to
20142014 to
20152015 to
20162016 to
20172017 to
20182018 to
20192019 to
2020In-State 6.3% 6.1% 1.8% 5.4% 6.3% 6.4% 4.4% 5.8% 2.1% 2.7% 2.8% 0.8%Out-of-State 9.7% 8.9% 4.2% 9.2% 9.7% 9.8% 9.1% 9.7% 9.6% 2.0% 1.6% 0.4%
37%20%
64%64%
36%
123%
11% 6%18%
0%
20%
40%
60%
80%
100%
120%
140%
2008 to 2014 2014 to 2020 2008 to 2020
In-State Out-of-State Inflation
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Annual % Change in Graduate Tuition and Fees
Long-term Changes in tuition and fees for GRADUATE students
• Below, we will investigate the discount rate, which takes into account the relief off of the sticker price offered to students
• We will not be able to separate this out for undergrad and graduate students (true for all institutions, so this is not a UB data issue)
Gradaute Tuition2008 to
20092009 to
20102010 to
20112011 to
20122012 to
20132013 to
20142014 to
20152015 to
20162016 to
20172017 to
20182018 to
20192019 to
2020In-State 2.0% 10.8% -0.9% 3.6% 3.9% 3.7% 2.0% -2.8% 3.7% 0.0% -1.6% 2.0%Out-of-State 5.4% 7.2% 3.1% 7.5% 8.2% 8.3% 6.8% 2.0% 3.7% 0.0% -1.6% 2.0%Grad Fees Only 3.7% 5.0% 6.3% 3.6% 11.8% -1.6% 10.4% 13.5% 7.9% 1.5% 4.0% 7.9%
Grad Tuition plus Fees2008 to
20092009 to
20102010 to
20112011 to
20122012 to
20132013 to
20142014 to
20152015 to
20162016 to
20172017 to
20182018 to
20192019 to
2020In-State 2.3% 10.0% 0.1% 3.6% 5.0% 2.9% 3.2% -0.3% 4.4% 0.3% -0.6% 3.1%Out-of-State 5.3% 7.0% 3.4% 7.1% 8.5% 7.4% 7.1% 3.0% 4.1% 0.1% -1.1% 2.6%
26%
10%
39%46%
17%
70%
11%6%
18%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2008 to 2014 2014 to 2020 2008 to 2020
In-State Out-of-State Inflation
Total UG Sticker price 2019-20 In-State OutTuition $6,870 $24,564Fees $3,310 $3,310Tuition and Fees $10,180 $27,874Room and Board $14,134 $14,134Grand Total $24,314 $42,008
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The other factor to consider is the discount rate, or the percentage off of the “sticker price” that the university grants to all students. This is not the discount rate for new students, which the administration will likely cite; it is the discount rate for all tuition-paying undergraduate and graduate students, which is what matters in terms of the tuition dollars received. The data is below, and comes from IPEDS (this is another item reported by Stony Brook in their financial report but not reported reliably in the financial overviews for UB)
• The discount rate is defined as: o Discounts and allowances in the numerator o Tuition and Fees, Gross in the denominator
• Tuition and fees net = Tuition and Fees, Gross – Discounts and Allowances • The discount rate has declined over time, though there was a slight increase for 2018
Discount rate for SUNY in 2018 and 2019, per the SUNY audited financial statements
• The discount rate for all of SUNY is much higher than for UB • It is positive that net tuition revenue for the SUNY System increased from 2018 to 2019;
note we do not have tuition revenue data for UB for 2019 at this time (February 2020)
YearTuition and Fees,
Gross (Sticker)Discounts and
AllowancesTuition and Fees,
Net Discount Rate2008 181,832,311 38,452,410 143,379,901 21.1%2009 195,766,071 39,247,087 156,518,984 20.0%2010 218,126,352 43,716,795 174,409,557 20.0%2011 227,379,545 42,668,407 184,711,138 18.8%2012 238,925,323 43,404,114 195,521,209 18.2%2013 265,530,346 49,716,497 215,813,849 18.7%2014 297,273,273 49,392,255 247,881,018 16.6%2015 312,982,156 61,058,710 251,923,446 19.5%2016 341,472,874 60,394,587 281,078,287 17.7%2017 356,123,371 62,416,286 293,707,085 17.5%2018 362,050,329 69,999,590 292,050,739 19.3%
Tuition and Fees, Gross (Sticker)
Discounts and Allowances
Tuition and Fees, Net Discount Rate
2018 2,352,266 688,728 1,663,538 29.3%2019 2,435,560 723,238 1,712,322 29.7%
16
2018 Discount rate for peer institutions, per IPEDS
• The discount rate for UB is among the lowest of the peer group but tuition is also on the lower side
• The correlation of 0.433 is positive; higher the tuition, higher the discount rate
2018 Discount Rate
2019 UG In-State Tuition and Fees
Arizona 24.7% $12,467Pitt 24.4% $19,080UM 24.2% $15,262Stony Brook 22.6% $9,625UCLA 22.6% $13,226UNC 21.3% $8,987UCSD 21.2% $14,167Rutgers 21.0% $14,974Iowa 20.8% $9,267UC Irvine 19.8% $13,700Buffalo 19.3% $10,099Wisconsin 15.3% $10,555UW 13.5% $11,207
Peer Mean 20.9% $12,710Peer Median 21.3% $12,847UB Rank (of 13) 11 10
Correlation 0.433
17
Tuition and fees revenue at UB over time – the net amount earned by UB and reported to IPEDS
• Up until 2018, tuition revenue went up (we do not have tuition revenue data for 2019 or 2020)
• Tuition revenue is like a stew – various factors affect it: o Enrollment o Tuition price o Tuition discounting o Mix of in-state and out-of-state o Mix of undergrad and grad
• Above, we have analyzed the first three factors, and can be seen in the graph below:
YearTuition and Fee Revenue, Net
Annual Percentage Changes
2008 143,379,9012009 156,518,984 9.2%2010 174,409,557 11.4%2011 184,711,138 5.9%2012 195,521,209 5.9%2013 215,813,849 10.4%2014 247,881,018 14.9%2015 251,923,446 1.6%2016 281,078,287 11.6%2017 293,707,085 4.5%2018 292,050,739 -0.6%
-2.0%0.0%2.0%4.0%6.0%8.0%
10.0%12.0%14.0%16.0%
2008to
2009
2009to
2010
2010to
2011
2011to
2012
2012to
2013
2013to
2014
2014to
2015
2015to
2016
2016to
2017
2017to
2018
2018to
2019
2019to
2020
Enrollment In-State UG Tuition & Fees Tuition Revenue
18
Tuition revenue and state appropriation at UB over time
Tuition Plus the State Appropriation Over Time
• These two graphs tell somewhat different stories; the top graph reveals that the state
appropriation has been flat over time. Adjusted for inflation (inflation per the CPI-U Northeast of the Bureau of Labor Statistics), is declining. At the same time, more is being asked of students and their families, as tuition revenue increases
• The bottom graph reveals that in general, the combined total of tuition and the state appropriation are increasing over time. We will see what is going on with expenses later.
• Note that the State appropriation for all of SUNY increased by 4% from 2018 to 2019; if UB had a 4% increase in its state appropriation for 2018 to 2019, that would yield an additional $18.2 million
• For 2019, we know that: o Overall enrollment increased by 2.8% o Undergrad in-state tuition and fees increased by 2.8%
• The enrollment and price news are also positive for 2020 • Bottom line: For both 2019 and 2020, the two main revenue sources should be increasing
50,000,000100,000,000150,000,000200,000,000250,000,000300,000,000350,000,000400,000,000450,000,000500,000,000550,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Tuition Revenue State Appropriation State Adj for Inflation
0
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
800,000,000
900,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Tuition Revenue State Appropriation
19
3. Brief analysis of the financial situation of the SUNY System
Using the audited financial statements, , below is the summary of the balance sheet (called the Statement of Net Position) from 2013 to 2019. The liabilities and net assets have been adjusted for pensions and OPEB, or other postemployment benefits, which is mostly retiree healthcare. See the technical note about these adjustments.
• This data does not include anything from the Research Foundation or the UB Foundation • Assets = Liabilities + Net Assets • Blue = Red + Green • In general, we cannot make strong inferences from these general categories, though:
o It is positive for assets and net assets to grow o The growth in assets and reserves is because for the last few years, SUNY has
generated positive cash flows • We will next break down the net assets (green line) to see how much of the $4 billion of
net assets are true reserves There are four components of net assets:
• Invested in capital assets: this is the value of the buildings, and this component of net assets does not tell us anything about the financial freedom or flexibility of UB. This component is not part of reserves
• Restricted non-expendable net assets: These are net assets that have restrictions that do not allow for the principle of donated funds to be spent; this is mostly related to funds that have been donated to the university. This component is not part of reserves Restricted expendable: These are net assets that are set aside for a specific purpose, and the reserves can only be spent for that purpose. This component IS included in the calculation of reserves (this is done by Moody’s and others). the bond rating agencies include restricted net assets in the computation of reserves, and for good reason. Let’s say you have a mortgage on your house, and you have a fund with the following rule: the money in the fund can only be used to pay the principle and interest on your
02,000,0004,000,0006,000,0008,000,000
10,000,00012,000,00014,000,00016,000,00018,000,00020,000,00022,000,00024,000,000
2013 2014 2015 2016 2017 2018 2019
Total Assets Total Liabilities Total Net Assets
20
mortgage. Even if your child is sick, or if there are unexpected expenses, you cannot use the money in the fund for any other purpose.
• Question: Are you better off having this fund, despite its restrictions? Absolutely! That is because you have a definitive funding source for an important need. The same logic applies to universities. Note that for SUNY, this item is very small at $435 million in 2019
• Unrestricted Net Assets: This component does count towards reserves, and unrestricted means unrestricted. The administration may claim that unrestricted net assets are already spoken for. However, the external auditors put it in the unrestricted category. If the reserves were truly spoken for and contractually committed, the amounts would not be in the unrestricted category.
Below is the breakdown of net assets over time
Below is a graph of the two reserve-related components of net assets:
The growth in unrestricted reserves is positive and is indicative of financial freedom and flexibility for the administration. This does not mean that there is a pot of cash sitting in the chancellor’s office; it does mean that there are sufficient reserves to deal with any temporary declines in revenues or increases in expenses; in addition, there are resources available for new initiatives. The next issue is: How large is $2.2 billion of reserves? What about debt? What about revenues and expenses? What about cash flows?
2013 2014 2015 2016 2017 2018 2019Invested in Capital Assets 940,031 1,090,418 1,088,762 1,144,763 1,126,096 1,013,312 1,162,357Restricted Nonexpendable 331,906 357,733 407,723 439,759 466,739 498,348 524,574Restricted Expendable 276,950 347,716 358,723 366,478 388,883 433,512 435,421Unrestricted 1,199,349 1,187,306 806,145 1,074,569 1,415,266 1,774,248 1,890,364Total Net Assets 2,748,236 2,983,173 2,661,353 3,025,569 3,396,984 3,719,420 4,012,716
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2013 2014 2015 2016 2017 2018 2019
Unrestricted Restricted Expendable
21
Moody’s has tried to answer these questions with a set of ratios, and below we will report the full Moody’s ratio analysis for the SUNY System. Starting in 2018, Moody’s implemented a more comprehensive ratio framework for the entire nationwide higher education sector. Moody’s continues to report the Ohio Senate Bill 6 ratios, but the new ratio framework has several improvements over the 3-ratios used, and we will see that the full set of these 10 ratios reports why the bond rating is so strong for UC. Specifically, the new framework:
• Has 10 variables for the new framework • Cash flow ratio was added, and is very prominent • Primary reserve ratio measures the size of reserves • Size and growth of revenues matter • Liquidity issues in terms of cash matter
Two of the more prominent ratios are the primary reserve ratio and the cash flow ratio. Primary Reserve Ratio
• Definition: The primary reserve ratio = Reserves / Total Operating Expenses • The primary reserve ratio tells us how many months of expenses the institution has in
reserves: 50% means there are 6 months of expenses in reserves Cash Flow Ratio
• Definition of the cash flow ratio: • Cash flows from operations / Total revenues • Cash flows from operations equals:
o All cash in from tuition, auxiliaries and other sources, less o All cash out from paying employees, vendors, and supplies
• What the ratio tells us: Is the institution generating excess cash flows? Below are these two ratios for the SUNY System for 2013 to 2019
• A primary reserve ratio of 20.0% reveals that the SUNY system has 20% * 12 months or 2.4 months of expenses in reserves. We will see that this is a solid if not excellent level. Note that the ratio is generally increasing, with 2019 being the best year of the last seven years
• For cash flows, the 7.3% ratio tells us that the SUNY System generates 7% of total revenues as excess cash flows every year. Note that the ratio is generally increasing, and that 2019 was the best year in the last seven years
2013 2014 2015 2016 2017 2018 2019Total Reserves 1,476,299 1,535,022 1,164,868 1,441,047 1,804,149 2,207,760 2,325,785Operating Expenses 9,687,640 9,936,282 10,219,436 10,613,807 10,657,806 11,132,115 11,614,887Primary Reserve Ratio 15.2% 15.4% 11.4% 13.6% 16.9% 19.8% 20.0%
2013 2014 2015 2016 2017 2018 2019Operating Cash Flows 135,879 383,908 419,848 726,337 686,113 762,321 891,370Total Revenues 9,645,330 10,104,403 10,219,175 10,535,404 10,356,249 11,567,718 12,146,632Cash Flow Ratio 1.4% 3.8% 4.1% 6.9% 6.6% 6.6% 7.3%
22
Below are the factors in the Moody’s , with where the SUNY System sits for each ratio in 2019 shaded in pink. The overall bond rating for SUNY is Aa3, the 4th highest rating
• Strengths: Size, strategic positioning (non-empirical, mentioned in the rating below), amount of cash and investments
• Not as strong: Cash flows, reserves, debt
Aaa Aa A Baa Ba B Caa Ca
Factor 1: Market Profile
(30%) Sub-Weight Exceptional Excellent Very Good Good Fair Poor Very Poor Very Poor
Operating Revenues ($000) 15%
Greater than
2.7 Billion
400M to 2.7
Billion
75 Million to 400
Million
40 Million to 75
Million
30 Millino to 40
Million
20 Million to 30
Million
8 Million to 20
Million
Less than 8
Million
Annual Change in
Operating Revenue (%) 5% > 8% 6% to 8% 4% to 6% 2% to 4% 0% to 2% -6% to 0% -6% to -11% < -11%
Strategic Positioning 10%
Factor 2; Operating
Performance (25%)
Operating Cash Flow
Margin (%) 10% > 20% 11% to 20% 4.5% to 11% 1% to 4.5% -2% to 1% -3.5% to -2% -5% to -3.5% <-5%
Revenue diversity (max single
contribution %) 15% < 35% 35% to 50% 50% to 69% 69% to 79% 79% to 87% 87% to 93% 93% to 97% > 97%
Factor 3: Wealth and
Liquidity (25%)
Total Cash and Investments
($000) 10% > 2.5 billion
100 million to
2.5 billion
25 million to 100
million
10 million to 25
million
2.3 million to 10
million
900k to 2.3
million 350k to 900k < 350k
Reserves to Operating
Expenses (%) 10% > 100% 50% to 100% 15% to 50% 5% to 15% 4.4% to 5% 3.8% to 4.4% 3.2% to 3.8% < 3.2%
Monthly Days Cash on
Hand 5% > 260 140 to 260 50 to 140 25 to 50 14 to 25 8 to 14 6 to 8 < 6
Factor 4: Leverage (20%)
Reserves to Debt (%) (high
is better) 10% > 300% 75% to 300% 20% to 75% 12% to 20% 6% to 12% 3.5% to 6% 2.1% to 3.5% <2.1%
Debt-to-Cash Flow (x) (low
is better) 10% < 4 4 to 10 10 to 16 16 to 22 22 to 34 34 to 46 46 to 58 > 52> 58
Factor 1: Score Rating Factor 3: Score RatingOperating Revenues 12,146,632 Aaa Cash and Investments 4,118,564 AaaChange in Operating Revenue 2.0% AStrategic Reporting Very good Aa Reserves 2,325,785
Operating Expenses 11,614,887Factor 2: Score Rating Primary Reserve Ratio 20.0% AOperating Cash Flows 891,370Total Revenues 12,146,632 Cash * 365 956,438,335Cash Flow Margin 7.3% A Total Expenses 11,614,887
Monthly Days Cash on Hand 82 AState Appropriation 3,708,124Total Revenue 12,146,632 Factor 4:Revenue Diversity 31% Aaa Reserves 2,325,785
Debt 11,076,645Viability Ratio 21% A
Debt 11,076,645Cash Flows 891,370Debt-to-Cash Flow 12.4 A
23
Step 1: Each ratio is given a letter grade based on its value Step 2: Each letter grade corresponds to a number (see table below; lower is better) Step 3: The number is multiplied by the weight of each factor Step 4: The results are added and then compared to Moody’s scores for each rating level
Final scores and bond rating for SUNY:
The overall score of 3.70 is solid; However, the two debt ratios are almost scoring 9 (higher is worse), which is noted in the rating below as a challenge. Below is how the above scores total and map into a bond rating; Below is the overall bond rating framework that Moody’s uses:
U.S. PUBLIC FINANCE
4 DECEMBER 21, 2017
RATING METHODOLOGY: HIGHER EDUCATION
Aaa Aa A Baa Ba B Caa Ca
1 3 6 9 12 15 18 20
The alphanumeric score for each sub-factor is multiplied by its relative importance, or weight, with the results then summed to produce an aggregate weighted factor score. The aggregate weighted factor score is then mapped back to an alphanumeric score based on the ranges in the table below (Exhibit 2).
EXHIBIT 2 Scorecard Outcome
Scorecard Outcome Aggregate Weighted Factor Score
Aaa x ! 1.5
Aa1 1.5 < x ! 2.5
Aa2 2.5 < x ! 3.5
Aa3 3.5 < x ! 4.5
A1 4.5 < x ! 5.5
A2 5.5 < x ! 6.5
A3 6.5 < x ! 7.5
Baa1 7.5 < x ! 8.5
Baa2 8.5 < x ! 9.5
Baa3 9.5 < x ! 10.5
Ba1 10.5 < x ! 11.5
Ba2 11.5 < x ! 12.5
Ba3 12.5 < x ! 13.5
B1 13.5 < x ! 14.5
B2 14.5 < x ! 15.5
B3 15.5 < x ! 16.5
Caa1 16.5 < x ! 17.5
Caa2 17.5 < x ! 18.5
Caa3 18.5 < x ! 19.5
Ca x > 19.5
4. Assumptions and Limitations and Rating Considerations Not Included in the Scorecard
The scorecard in this rating methodology represents a decision to favor simplicity that enhances transparency over greater complexity that would enable the scorecard outcome to map more closely to actual ratings. The scorecard-indicated output will not match the actual rating in every case for a number of reasons, including the following:
» Our ratings incorporate expectations of future performance while the mapping for the scorecard is based on historical financial statements.
» The scorecard is not an exhaustive list of every rating consideration.
» In some circumstances, the importance of one factor may exceed its prescribed weight in this methodology.
Variance between the scorecard and actual ratings reflects the importance of forecasts of financial performance and our analysis of qualitative rating factors. These elements are of particular importance for
Score Weight ResultOperating Revenues 1 15% 0.15Change in Revenues 6 5% 0.30Strategic Positioning 3 10% 0.30Cash Flow Margin 6 10% 0.60Revenue Diversity 1 15% 0.15Cash and Investments 1 10% 0.10Primary Reserve 6 10% 0.60Cash on Hand 6 5% 0.30Viability 6 10% 0.60Debt-to-Cash Flow 6 10% 0.60TOTAL 3.70
Aaa Less than 1.5 Ba1 10.5 to 11.5Aa1 1.5 to 2.5 Ba2 11.5 to 12.5Aa2 2.5 to 3.5 Ba3 12.5 to 13.5Aa3 3.5 to 4.5 B1 13.5 to 14.5A1 4.5 to 5.5 B2 14.5 to 15.5A2 5.5 to 6.5 B3 15.5 to 16.5A3 6.5 to 7.5 Caa1 16.5 to 17.5Baa1 7.5 to 8.5 Caa2 17.5 to 18.5Baa2 8.5 to 9.5 Caa3 18.5 to 19.5Baa3 9.5 to 10.5 Ca More than 19.5
24
SUNY has a score of 3.70 for 2019, which corresponds to an Aa3 bond rating. Aa3 is exactly the bond rating for the SUNY System: The latest bond rating for the SUNY System issued by Moody’s was in November of 2019 Moody’s bond rating Strengths:
• Very large scale • Significant research activity • Excellent strategic positioning as the dominant provider of higher education in New York • Strong state support • Favorable tuition pricing
Challenges:
• Exposure to patient care revenue through four academic medical centers • Ongoing expense pressures from negotiated benefits and considerable capital needs • Financial leverage (debt) is substantial, though the state pays 75% of debt service
Bottom line: The bond rating for SUNY is solid, and the detailed ratio analysis supports this conclusion. Overall, we see
• Solid Size and position in the market • Strong Cash flows • Solid Reserves • High level of debt
Comparing the revenue distribution for all of SUNY to UB (using 2018)
• The System has a larger reliance on hospitals, which distorts the comparison • UB gets more from the state and tuition
40.2%
25.8%
16.8%
5.5%3.3%
5.9%
1.8%0.4% 0.4%
30.8%
14.4%11.1%
6.2%
1.4%
5.8%
1.4% 0.8%
28.1%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
StateAppropriation
Tuition andFees
Grants andContracts
Auxiliary OtherRevenues
Pell Gifts Investmentincome
Hospital
UB SUNY System
25
Technical Notes on Liabilities, Pensions, Retiree Healthcare and Reserves First, below is the difference between what is reported on the face of the balance sheet, and the adjustments that have been made since 2013:
What is going on here?
• There was no pension liability on balance sheets until 2015 (first four rows of the adjustments section have zeroes in them for 2013 and 2014)
• Note that there are four different pension systems within SUNY (ERS; PFRS; TRS, Upstate); this information is provided in the Stony Brook financials, but not in the UB financial overviews
Balance Sheet As reported 2013 2014 2015 2016 2017 2018 2019
Total Assets 15,032,594 15,972,078 17,155,465 18,815,832 19,153,656 20,901,503 21,443,632Total Liabilities 15,835,777 17,006,838 19,040,241 21,237,307 29,935,573 31,758,153 32,285,793Total Net Net Assets (803,183) (1,034,760) (1,884,776) (2,421,475) (10,781,917) (10,856,650) (10,842,161)
Breakdown of Net Assets as reported
Invested in Capital Assets 940,031 1,090,418 1,088,762 1,144,763 1,126,096 1,013,312 1,162,357
Restricted Nonexpendable 331,906 357,733 407,723 439,759 466,739 498,348 524,574
Restricted Expendable 276,950 347,716 358,723 366,478 388,883 433,512 435,421
Unrestricted (2,352,070) (2,830,627) (3,739,984) (4,372,475) (12,763,635) (12,801,822) (12,964,513)Total Net Assets (803,183) (1,034,760) (1,884,776) (2,421,475) (10,781,917) (10,856,650) (10,842,161)
Adjustments 2013 2014 2015 2016 2017 2018 2019
ERS Pension 0 0 179,800 859,300 510,400 175,800 395,300
PFRS Pension 0 0 0 0 21,800 11,200 19,700
TRS Pension 0 0 79,600 (77,200) 8,700 (6,100) (14,700)
Upstate Pension 0 0 0 14,400 10,495 1,454 13,290
OPEB 3,551,419 4,017,933 4,680,385 5,319,305 12,993,892 12,504,717 12,781,000
Deferred In 0 0 72,097 167,468 1,200,905 2,373,562 2,280,300
Deferred out 0 0 465,753 836,229 567,291 484,563 620,013
Total Adjustment 3,551,419 4,017,933 4,546,129 5,447,044 14,178,901 14,576,070 14,854,877
Balance Sheet Adjusted 2013 2014 2015 2016 2017 2018 2019Total Assets 15,032,594 15,972,078 17,155,465 18,815,832 19,153,656 20,901,503 21,443,632
Total Liabilities 12,284,358 12,988,905 14,494,112 15,790,263 15,756,672 17,182,083 17,430,916
Total Net Assets 2,748,236 2,983,173 2,661,353 3,025,569 3,396,984 3,719,420 4,012,716
Net Assets Adjusted 2013 2014 2015 2016 2017 2018 2019Invested in Capital Assets 940,031 1,090,418 1,088,762 1,144,763 1,126,096 1,013,312 1,162,357
Restricted Nonexpendable 331,906 357,733 407,723 439,759 466,739 498,348 524,574
Restricted Expendable 276,950 347,716 358,723 366,478 388,883 433,512 435,421
Unrestricted 1,199,349 1,187,306 806,145 1,074,569 1,415,266 1,774,248 1,890,364
Total Net Assets 2,748,236 2,983,173 2,661,353 3,025,569 3,396,984 3,719,420 4,012,716
26
• There was an OPEB (Other postretirement employee benefits, or retiree healthcare) liability on balance sheets from 2013 until the present, but the accounting for this changed and made the liability much bigger starting in 2017
• To make the adjustment ,we do the following math: o we add the first six items, o subtract out the last item, deferred outflows
Besides liabilities, what else gets adjusted (double-entry accounting)? The unrestricted net assets get adjusted; So the adjustment made by Moody’s other analysts are:
• Decrease liabilities by the amount of pension-related and retiree-health related liabilities • Increase unrestricted net assets by the same amount
In the table above for 2019:
• Unrestricted net assets were reported as -12,964,513 • The adjustment was 14,854,877 • Unrestricted net assets (main part of reserves) as adjusted were
1,890,364 = -12,964,513 + 14,854,877 Why do we make these adjustments?
• In 2014, the government accounting standards board (GASB) added GASB 68, which put the liabilities for defined benefit pension plans of public universities on the balance sheet.
• In 2017, GASB added the OPEB liability to public university balance sheets, via GASB 75 • Neither of these liabilities are real liabilities of SUNY nor of any public university; that is because the
real backstop is the State of New York. These are state obligations. In fact, these liabilities are also properly on the balance sheet of the State of New York
• Most importantly, the bond rating agencies take out these liabilities in calculating the relevant ratios to assess the financial health of colleges and universities. In Ohio, the Senate Bill 6 ratios are reported without these liabilities on the State’s campus accountability website: https://www.ohiohighered.org/campus-accountability
• Lastly, these liabilities are very soft; these liabilities are the present value of payments that will mostly be made far in the future (though of course there are some current payments). A 1% change in the discount rate can lead to a 15-20% change in the value of the liability
• It is the cash paid each year that matters most, not the liability There are also adjustments made to total operating expenses for pensions and retiree healthcare, though these adjustments are smaller. Again, these adjustments are exactly the ones made by Moody’s for the items above What we are doing here is getting the proper amount for operating expenses and the change in net assets:
• The adjusted total expenses is the denominator in the primary reserve ratio • The change in net assets is the numerator in the net income ratio
27
4. Analysis of the financial situation of the University of Buffalo Unfortunately, due to the data limitations that are discussed in the first section of this report, we do not have the necessary data to perform a separate financial analysis on the ratios of UB. We were able to do this with Stony Brook, and we have been able to do this with every public university we have ever examined. However, it cannot be done for UB. Below is a list of the nine empirical variables used in the Moody’s rating system for public institutions in higher education. There are only 3 of 9 variables available for UB:
We cannot do a significant analysis of the overall financial condition of UB, but the revenue analysis done in the sections 2 and 3, and the expense and priority analysis in the sections that follow will still allow us to make some assessments about the financial condition and priorities of the UB administration.
Moody's VariableDo We have the
info for UB? Notes
Factor 1:Operating Revenues Yes Per IPEDS
Change in Operating Revenue Yes Per IPEDS
Factor 2:
Cash Flow Margin NoNo true cash flow statement in UB overviews; IPEDS does not report cash flows
Revenue Diversity (% contribution of largest revenue source) Yes Per IPEDS
Factor 3:
Cash and Investments No Neither UB overview or IPEDS has this
Primary Reserve Ratio No
Neither UB Overviews or IPEDS has info to make the pension adjustments to get to reserves; Stony Brook statements do have this information
Monthly Days Cash on Hand NoNeither UB Overviews or IPEDS has the detail on cash that a true financial statement has
Factor 4:
Viability Ratio No
Neither UB Overviews or IPEDS has info to make the pension adjustments to get to reserves; Stony Brook statements do have this information
Debt-to-Cash Flow NoNeither UB Overviews or IPEDS has the cash flow information needed
28
UB ONLY DATA BELOW Below are the few variables for UB that we do have data for, per IPEDS:
• In general, total revenues have been increasing in recent years • In the next section, we will examine the expense side
Year Total RevenuesChange in Total
RevenuesState
Appropriation Total Revenues
State Appropriation as % of total
revenues2008 915,302,533 476,426,851 915,302,533 52.1%2009 891,569,616 -2.6% 431,675,977 891,569,616 48.4%2010 882,748,590 -1.0% 400,018,589 882,748,590 45.3%2011 928,413,436 5.2% 421,046,072 928,413,436 45.4%2012 942,772,568 1.5% 415,705,211 942,772,568 44.1%2013 932,167,775 -1.1% 395,517,807 932,167,775 42.4%2014 999,742,973 7.2% 422,042,546 999,742,973 42.2%2015 1,004,776,566 0.5% 413,094,614 1,004,776,566 41.1%2016 1,062,086,160 5.7% 429,607,940 1,062,086,160 40.4%2017 1,107,678,587 4.3% 438,401,537 1,107,678,587 39.6%2018 1,104,228,627 -0.3% 455,340,234 1,104,228,627 41.2%2019 1,211,285,132 9.7% 503,671,329 1,211,285,132 41.6%
500,000,000
600,000,000
700,000,000
800,000,000
900,000,000
1,000,000,000
1,100,000,000
1,200,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Total Revenues
29
UB ONLY DATA
• Total revenues went down in three of five years from 2009 to 2013 • The increases the last few years are due mostly to an increase in the state appropriation to UB UB-Only Top Revenue Sources as a Percent of Total Revenues per IPEDS
• Over time, the State has been a smaller percentage of total revenues, though the level for
2018 reports that the state appropriation is still the largest source. This is very unusual in the Northeast part of the country, with the State appropriation being about 10% in Vermont and New Hampshire. For Rutgers, the state is about 20% of total revenues, and tuition is the largest revenue source
• Other revenues (grants, contracts, auxiliaries, etc.) have remained stable over time, at slightly less than 1/3rd of total revenues
-4%
-2%
0%
2%
4%
6%
8%
2008to
2009
2009to
2010
2010to
2011
2011to
2012
2012to
2013
2013to
2014
2014to
2015
2015to
2016
2016to
2017
2017to
2018
Annual % Change in Total Revenues
0%
10%
20%
30%
40%
50%
60%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Appropriation Tuition All Other Revenues
30
5. Detailed Expense and Priority Analysis of the UB administration (UB only) When analyzing expenses in IPEDS, there are significant differences in the manner in which expenses are reported to IPEDS over the last several years. Below is the breakdown of instruction expense from 2008 to 2018 (the same constructs are reported for every expense category):
What is going on with IPEDS?
• In 2008 and 2009, there were 3 components of the individual expenses: salaries, fringes, and other
• From 2010 to 2015, there were 6 components of the individual expenses: salaries, fringes, plant, depreciation, interest, and other
• From 2016 to 2018 (and still in place for 2019), there are just 2 components of the individual expenses: salaries and all other
• Therefore, comparing the total of the individual expenses over time does not make sense • In addition, look at the last row and the benefit rate. A benefit rate is defined as:
o Fringes in the numerator o Salaries in the denominator
• Benefit rates in the 65% range do not make much sense; the fringe element includes pension and OPEB (retiree health) estimates that UB is not actually paying in cash. Therefore, though of course benefits matter, as we try to assess the priorities of the administration, the only item that makes sense to report and analyze is the salary-only component of the individual expenses. Salaries are what is paid in cash for each employee; this cannot be manipulated or estimated, and we have this item consistently over the entire time period.
• Note that the UB benefit rate reported by the UB administration to the AAUP compensation survey in 2019 is 32.3%; this further illustrates how a 65% benefit rate is unrealistically high
Instruction 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Salaries 191,157,533 192,209,933 195,355,167 201,801,979 194,060,047 206,072,472 213,773,263 225,802,099 232,542,003 231,400,426 241,321,913
All Other Not reported Not reported Not reported Not reported Not reported Not reported Not reported Not reported 275,731,459 290,147,695 239,165,073Fringes 112,022,284 105,271,770 103,346,277 125,454,822 114,851,611 119,500,460 133,665,061 147,733,564 Not reported Not reported Not reported
Plant Not reported Not reported 35,783,607 35,739,687 34,568,178 39,526,219 43,071,418 43,267,478 Not reported Not reported Not reported
Depreciation Not reported Not reported 18,277,805 19,559,725 17,910,478 20,404,339 23,990,039 27,146,344 Not reported Not reported Not reported
Interest Not reported Not reported 17,012,753 18,648,707 14,772,126 17,345,196 18,570,019 19,110,413 Not reported Not reported Not reported
Other 26,289,863 20,918,723 20,843,134 15,013,797 13,979,829 20,017,574 21,059,135 21,798,482 Not reported Not reported Not reported
Total 329,469,680 318,400,426 390,618,743 416,218,717 390,142,269 422,866,260 454,128,935 484,858,380 508,273,462 521,548,121 480,486,986
Benefit Rate 58.6% 54.8% 52.9% 62.2% 59.2% 58.0% 62.5% 65.4% Not reported Not reported Not reported
31
The 2018 expense distribution of the salary-only component of the different operating expenses per IPEDS is as follows:
• The reason why this is reported with and without the hospital is that when we compare this to peer institutions, some of the peers have HUGE hospitals that distorts the results; therefore, we will take the hospital out of the peer results
• Category Definitions - IPEDS has a glossary at https://surveys.nces.ed.gov/ipeds/VisGlossaryAll.aspx o Instruction is only those who are teaching, but includes everyone teaching (full time
faculty, part time faculty, graduate teaching faculty) o Institutional support is pure upper-level administration o Academic support includes academic advisors, deans, librarians, and academic
advisors, so it is a mix o Public service is the PR arm of the university o Student services includes the non-academic support for students o Auxiliaries includes housing, dining, student union, bookstore, parking, and athletics
• In our comparisons to other institutions, we will focus on instruction, research, and
institutional support. This is because instruction and research represent the core missions, and institutional support is pure, upper-level administration
Dollars Percent of Total Dollars Percent of Total
Instruction 241,321,913 51.9% 241,321,913 52.2%Research 52,430,499 11.3% 52,430,499 11.3%Public Svc 4,873,388 1.0% 4,873,388 1.1%Acad Support 56,382,716 12.1% 56,382,716 12.2%Student Svc 17,608,054 3.8% 17,608,054 3.8%Institutional Support 60,783,400 13.1% 60,783,400 13.2%Auxiliary 28,737,175 6.2% 28,737,175 6.2%Hospital 2,583,484 0.6% 0 0.0%Total Salaries 464,720,629 100.0% 462,137,145 100.0%
Without Hospital
32
Below is the distribution of the salary-only component of the expenses per IPEDS from 2008 to 2018:
• The distribution for the 3 categories highlighted are fairly stable over time, with slight declines of the percentages devoted to instruction and research from their high points.
• It will help to get the 2019 IPEDS data, which is submitted to the federal government in April of 2020. That data will not be publicly available until late 2020 or early 2021; however, in the spirit of transparency, the UB administration should make this data available as soon as it is submitted. This is the practice followed by the CUNY System, which publicly reports the IPEDS data at: https://www.cuny.edu/about/administration/offices/oira/institutional/reports/integrated/includes/ipeds-reports-archive/
Percent of total salaries going to instruction, institutional support, and all other categories: UB only per IPEDS
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Instruction 191,157,533 192,209,933 195,355,167 201,801,979 194,060,047 206,072,472 213,773,263 225,802,099 232,542,003 231,400,426 241,321,913Research 45,303,582 53,159,888 51,663,390 50,003,808 56,907,065 48,206,059 50,051,511 44,938,323 46,039,591 49,318,645 52,430,499Public Svc 4,500,375 4,326,018 3,947,816 5,405,568 5,042,708 4,713,593 4,295,613 4,435,846 4,714,377 4,243,492 4,873,388Acad Support 39,019,177 46,867,426 47,764,815 48,966,294 49,180,729 50,991,508 52,331,259 51,070,668 53,255,441 54,311,602 56,382,716Student Svc 11,657,171 12,138,791 9,901,205 11,064,137 11,125,110 11,759,659 14,317,096 16,521,702 16,779,381 17,272,966 17,608,054Institutional Support 50,746,099 52,911,309 57,967,262 54,822,160 56,426,461 53,009,590 53,843,669 55,551,803 59,556,533 60,058,731 60,783,400Auxiliary 21,343,752 22,916,387 23,198,603 23,941,159 23,862,993 24,643,891 25,680,449 25,874,749 27,719,111 27,544,440 28,737,175Hospital 3,125,569 3,194,726 2,930,222 2,277,918 2,586,990 2,179,142 2,710,271 2,800,714 2,679,294 2,403,074 2,583,484Total Salaries 366,853,258 387,724,478 392,728,480 398,283,023 399,192,103 401,575,914 417,003,131 426,995,904 443,285,731 446,553,376 464,720,629
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Instruction 52.1% 49.6% 49.7% 50.7% 48.6% 51.3% 51.3% 52.9% 52.5% 51.8% 51.9%Research 12.3% 13.7% 13.2% 12.6% 14.3% 12.0% 12.0% 10.5% 10.4% 11.0% 11.3%Public Svc 1.2% 1.1% 1.0% 1.4% 1.3% 1.2% 1.0% 1.0% 1.1% 1.0% 1.0%Acad Support 10.6% 12.1% 12.2% 12.3% 12.3% 12.7% 12.5% 12.0% 12.0% 12.2% 12.1%Student Svc 3.2% 3.1% 2.5% 2.8% 2.8% 2.9% 3.4% 3.9% 3.8% 3.9% 3.8%Institutional Support 13.8% 13.6% 14.8% 13.8% 14.1% 13.2% 12.9% 13.0% 13.4% 13.4% 13.1%Auxiliary 5.8% 5.9% 5.9% 6.0% 6.0% 6.1% 6.2% 6.1% 6.3% 6.2% 6.2%Hospital 0.9% 0.8% 0.7% 0.6% 0.6% 0.5% 0.6% 0.7% 0.6% 0.5% 0.6%Total Salaries 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
52% 50% 50% 51% 49% 51% 51% 53% 52% 52% 52%
12% 14% 13% 13% 14% 12% 12% 11% 10% 11% 11%
14% 14% 15% 14% 14% 13% 13% 13% 13% 13% 13%
22% 23% 22% 23% 23% 23% 24% 24% 24% 24% 24%
0%
20%
40%
60%
80%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Instruction Research Institutional Support All Other
33
We will now compare the percentage of total salaries going to instruction, research, and institutional support to peer institutions for 2018, per IPEDS: The total salaries above take out hospital salaries, as places such as UM, Iowa, and Wisconsin have hospital salaries that larger than all other categories combined.
• Though UB spends the highest percentage of total salaries on instruction, it spends the least on research; when combined, UB is 8th
• The big result here is the administrative spending; UB spends a higher percentage of total salaries on administrative spending than any peer institution.
• If UB had spent the average amount on the salaries of upper-level administrators as peer institutions, there would have been $23,541,858 less spent on these high level administrative salaries. Therefore, UB could save over $23 billion if their administrative spending was just at the mean level of peer institutions.
• Note that the guidelines for what counts in institutional support (upper-level administration) are clear and open for every institution. Also note that IPEDS data is submitted BY THE UB ADMINISTRATION to the federal government
Institution
Instruction Salaries /
Total Salaries
Research Salaries / Total
Salaries
Instruction + Reseearch Salaries /
Total Salaries
Institutional Support
Salaries / Total Salaries
Buffalo 52.2% 11.3% 63.6% 13.2%Stony Brook 51.0% 12.9% 64.0% 12.9%UCSD 44.5% 23.4% 67.9% 10.1%UC Irvine 50.0% 14.6% 64.6% 8.3%Arizona 32.7% 24.2% 56.9% 8.2%Pitt 35.8% 32.8% 68.6% 7.9%Rutgers 39.1% 19.6% 58.7% 7.9%UW 45.2% 20.4% 65.6% 7.6%UM 36.2% 23.2% 59.4% 7.1%UCLA 51.2% 15.1% 66.4% 6.9%UNC 36.5% 20.4% 56.9% 6.8%Iowa 35.5% 26.5% 61.9% 6.5%Wisconsin 31.4% 38.3% 69.7% 6.5%
Peer Mean 40.8% 22.6% 63.4% 8.1%Peer Median 37.8% 21.8% 64.3% 7.7%Buffalo rank (of 13) 1 13 8 1
34
Below are two graphs that report the allocation of salaries of UB vs. peer institutions: Instruction plus research salaries as a percent of total salaries
Institutional Support (upper-level administration) salaries as a percent of total salaries
69.7% 68.6% 67.9% 66.4% 65.6% 64.6% 64.0%63.6%61.9% 59.4% 58.7% 56.9% 56.9%
0%10%20%30%40%50%60%70%80%
Wisconsin Pitt
UCSDUCLA UW
UC Irvine
Stony Brook
Buffalo
IowaUM
RutgersUNC
Arizona
Instruction + Reseearch Salaries / Total Salaries
13.2%12.9%
10.1%
8.3% 8.2% 7.9% 7.9% 7.6% 7.1% 6.9% 6.8% 6.5% 6.5%
0%
2%4%
6%
8%10%
12%14%
Buffalo
Stony Bro
okUCSD
UC Irvine
Arizona
Pitt
Rutgers UW UMUCLA
UNCIowa
Wisc
onsin
Institutional Support Salaries as a Percent of Total Salaries
35
6. Number of Faculty, Graduate teaching faculty, and faculty and administrative salaries Number of faculty from 2008 to 2020 (fall 2019), using data reported by UB: http://www.buffalo.edu/provost/oia/facts-publications/factbook/faculty-and-staff/faculty-and-staff.html
• The category names are exactly the ones reported on the UB website noted above • The years reported are all the years reported on the UB website • It appears as if the number of tenure-track (TT, which includes tenured and tenure-track) faculty is
declining, versus an increase in the number of NTT (non-tenure track) • The key issue is the decline in the number of assistant professors; if UB wants to maintain its role as
a major research university, it must continue to hire new assistant professors. This decline is very revealing in terms of the administration’s commitment to the research mission of the university.
Long-term Percentage Changes in Number of Faculty and Enrollment
As enrollment has increased, the UB administration has responded by hiring fewer tenure and tenure-track faculty, and more non-tenure/track and adjuncts over these time periods
TT 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
# Change 2009 to
2020
% Change 2009 to
2020Full 521 501 504 509 494 500 504 494 484 491 490 491 (30) -6%Assoc 371 377 369 379 382 393 388 392 390 372 377 391 20 5%Asst 317 272 267 241 232 257 283 295 272 277 266 248 (69) -22%Instructor 7 5 3 6 3 4 3 3 3 3 4 5 (2) -29%Librarian 62 64 59 56 53 55 53 50 50 50 49 53 (9) -15%Total TT 1,278 1,219 1,202 1,191 1,164 1,209 1,231 1,234 1,199 1,193 1,186 1,188 (90) -7%
NTT 623 571 579 570 598 622 636 653 661 687 704 704 81 13%Visiting 41 47 44 39 37 38 37 35 39 37 29 26 (15) -37%Total NTT 664 618 623 609 635 660 673 688 700 724 733 730 66 10%
Adjunct 513 519 490 502 560 556 544 571 539 509 510 529 16 3%
Grand Total Faculty 2,455 2,356 2,315 2,302 2,359 2,425 2,448 2,493 2,438 2,426 2,429 2,447 (8) -0.3%
-4%
1%
6% 6%
-3%
8%
-3%
7%
-7%
10%
3%
14%
-10%
-5%
0%
5%
10%
15%
Total TT Total NTT Total Adjunct Enrollment
2009 to 2015 2015 to 2020 2009 to 2020
36
In terms of non-instructional staff, the UB website does not break down this employee group in any significant manner. Therefore, we will use IPEDS to report on the number of non-instructional employees. IPEDS began the new Human Resources (HR) reporting structure in 2013, so we have data from 2013 (fall 2012) until 2019 (fall 2018). The 2020 (fall 2019) HR data will be submitted by the UB administration to IPEDS in April of 2020; this data should be shared as soon as it is submitted.
• The number of management employees has been flat/down from 2013 to 2019 • The big increases in the number of business and financial operations employees is very striking • There is a large decline in the number of office and administrative support Below is the number of graduate teaching and research assistants at UB, as reported to IPEDS
• The increase in the number of graduate teaching assistants is in contrast with the decline of
tenure and tenure-track faculty • This trend supports the trend reported for non-tenure track faculty as well – the
administration has met the increase in enrollment with more hiring of Non-tenure track and graduate assistants over tenure and tenure-track faculty
2013 2014 2015 2016 2017 2018 2019 # Change % ChangeManagement 363 359 350 355 356 358 355 (8) -2%Business/Financial Ops 243 282 330 373 411 451 461 218 90%Computer Eng, Svc 271 271 266 265 265 268 249 (22) -8%Legal Arts Sport, Media 191 192 178 171 184 196 193 2 1%Healthcare Practioners and Technical 231 237 235 239 250 263 260 29 13%Service 447 454 466 441 442 473 477 30 7%Office/Admin Support 533 511 490 459 421 421 395 (138) -26%Maintenance 186 178 187 190 190 189 187 1 1%Transportation 47 46 45 49 53 43 41 (6) -13%Total 2,512 2,530 2,547 2,542 2,572 2,662 2,618 106 4%
2013 to 2019
2013 2014 2015 2016 2017 2018 2019 # Change % ChangeGrad Teaching 1,155 1,181 1,184 1,207 1,232 1,220 1,236 81 7%Grad Research 101 101 123 117 124 116 133 32 32%Grad Assistants, Total 1,256 1,282 1,307 1,324 1,356 1,336 1,369 113 9%
2013 to 2019
37
Salaries of faculty and non-faculty employees at UB Faculty salaries are reported in IPEDS and in the AAUP Compensation Survey. The administration of each university submits the data to both surveys, and theoretically, the data should match. However, we do not see that, and below is a discussion of the different submissions of salary data for UB and peer institutions in 2018-19.
• The number of faculty is very similar between IPEDS and the AAUP surveys • The 9-month equated salary is quite a bit lower than the AAUP amount, and very different than the
average with the 2nd IPEDS number; for each rank, the total dollars paid for each rank is divided by the total number of faculty at each rank; it is this amount that is closest to the AAUP average salary
• The 2nd IPEDS number and the AAUP salaries are closer Below is a comparison of 2019 full professor salaries of peer institutions and UB per IPEDS and the AAUP compensation survey
• The institutions with the highest salaries actually report lower numbers per the AAUP • 9 of the 13 have higher numbers per the AAUP; UB has the 4th highest difference in dollar terms, 3rd
highest in percentage terms • Going forward, we will use the AAUP compensation survey to compare to peer institutions, though this
makes UB look better (10th instead of 12th)
RankIPEDS: Avg Equated
9-month salaryIPEDS: Avg = $$ divided by # Fac
AAUP Average
# per IPEDS
# per AAUP
Full Professor $130,017 $148,711 $143,900 376 376Associate Professor $88,765 $101,664 $98,120 358 361Assistant Professor $76,163 $87,986 $83,676 388 393Instructor $53,116 $68,385 $58,166 14 14Lecturer $64,431 $75,047 $70,882 66 67Total 1202 1211
Full Professor 2019 IPEDS equated AAUP $$ difference % differenceUCLA $216,977 $214,049 ($2,928) -1%UCSD $187,109 $178,924 ($8,185) -4%UC Irvine $181,122 $178,115 ($3,007) -2%UM $174,125 $174,968 $843 0%Rutgers $149,892 $167,605 $17,713 12%Stony Brook $148,014 $163,725 $15,711 11%UNC $160,643 $163,278 $2,635 2%Pitt $151,956 $156,654 $4,698 3%UW $149,268 $151,427 $2,159 1%Buffalo $130,017 $143,900 $13,883 11%Wisconsin $132,916 $142,571 $9,655 7%Iowa $127,932 $141,899 $13,967 11%Arizona $134,893 $140,973 $6,080 5%
Peer Average $159,571 $164,516 $4,945 3.7%UB vs Average ($29,554) ($20,615) $8,938 7.0%UB rank (of 13) 12 10 4 3
38
UB Faculty Salaries by rank per the AAUP compensation survey:
Annual Percentage changes in faculty salaries by rank:
With salaries, longer-term changes are often more relevant, as there can be quirks in year-to-year changes. Below are the long-term changes in faculty salaries over the last 7 years:
• Over the 2013 to 2019 period, only lecturers beat inflation • The large swings for instructors in the two sub-periods balance out in the longer 2013 to 2019
period
AAUP 2013 2014 2015 2016 2017 2018 2019Professor $133,727 $133,448 $133,295 $137,716 $136,340 $136,200 $143,900Associate $91,797 $91,753 $93,262 $94,634 $94,182 $92,900 $98,120Assistant $78,502 $77,918 $80,565 $82,250 $82,331 $81,300 $83,676Instructor $55,199 $57,498 $59,032 $61,770 $57,350 $59,400 $58,166Lecturer $64,355 $63,421 $62,756 $64,206 $66,039 $67,600 $70,882
2013 to 2014
2014 to 2015
2015 to 2016
2016 to 2017
2017 to 2018
2018 to 2019
Professor -0.2% -0.1% 3.3% -1.0% -0.1% 5.7%Associate 0.0% 1.6% 1.5% -0.5% -1.4% 5.6%Assistant -0.7% 3.4% 2.1% 0.1% -1.3% 2.9%Instructor 4.2% 2.7% 4.6% -7.2% 3.6% -2.1%Lecturer -1.5% -1.0% 2.3% 2.9% 2.4% 4.9%
3%4%
8%
3% 4%
7%5%
2%
7%
12%
-6%
5%
0%
10% 10%
2%
6%8%
-6%-4%-2%0%2%4%6%8%
10%12%
2013 to 2016 2016 to 2019 2013 to 2019
ProfessorAssociateAssistantInstructorLecturerInflation
39
IPEDS reports the salaries of non-faculty employees, using the categories below; this framework began in 2013:
• Management employees got the largest dollar and percentage raises over this time period • If a management employee gets a 3% raise, this is much more money than other employees
getting a 3% raise Dollar changes in average salaries, 2013 to 2019, management vs. faculty:
Management employees have received larger dollar and percentage changes than faculty for the last several years
2013 2019 $$ Change % ChangeAverage Annual
% ChangeManagement $99,688 $114,478 $14,790 14.8% 3.0%Business/Financial Ops $63,229 $66,657 $3,428 5.4% 1.1%Computer Eng, Svc $79,116 $86,360 $7,244 9.2% 1.8%Legal Arts Sport, Media $63,280 $70,732 $7,452 11.8% 2.4%Healthcare and Tech $62,299 $65,207 $2,909 4.7% 0.9%Service $37,874 $40,567 $2,693 7.1% 1.4%Office/Admin Support $40,730 $45,414 $4,683 11.5% 2.3%Maintenance $43,916 $47,496 $3,580 8.2% 1.6%Transportation $34,645 $39,065 $4,421 12.8% 2.6%
2013 to 2019
$2,967
$5,174
$6,324
$6,527
$10,173
$14,790
$0 $5,000 $10,000 $15,000 $20,000
InstructorAssistantAssociate
LecturerProfessor
Management
$$ Change 2013 to 2019
$$ Change % ChangeAverage Annual
% ChangeInstructor $2,967 5.4% 1.1%Assistant $5,174 6.6% 1.3%Associate $6,324 6.9% 1.4%Lecturer $6,527 10.1% 2.0%Professor $10,173 7.6% 1.5%Management $14,790 14.8% 3.0%
40
Faculty Salaries vs. Peer Institutions per AAUP Compensation Survey
UB vs. Peers: Change from 2013 to 2019
Bottom line: • UB faculty salaries are well below most peers in 2019 • UB faculty salaries have lost significant ground vs. peers from 2013 to 2019; for example, associate
professors were $2,981 below the peer average in 2017, but are now $13,771 below the peer average in 2019, a loss of $10,790
2018-19 Full Associate Assistant Instructor Lecturer
UCLA $214,049 $142,023 $108,601 $88,360
UCSD $178,924 $123,528 $106,256 $87,215
UC Irvine $178,115 $119,763 $101,120 $91,168
UM $174,968 $115,815 $98,533 $71,527
Rutgers $167,605 $109,378 $86,155 $63,261 $70,507
Stony Brook $163,725 $109,488 $92,908 $79,582 $67,652
UNC $163,278 $106,338 $101,930 $118,974 $57,448
Pitt $156,654 $103,244 $86,974 $57,889 $54,690
UW $151,427 $114,565 $102,550 $58,629 $83,908
Buffalo $143,900 $98,120 $83,676 $58,166 $70,882
Wisconsin $142,571 $106,281 $92,907 $68,219 $69,161
Iowa $141,899 $94,324 $87,115 $62,981 $56,813
Arizona $140,973 $97,951 $84,252 $43,023 $64,199
Peer Average $164,516 $111,891 $95,775 $69,070 $71,887
UB vs. Average in $$ ($20,615) ($13,771) ($12,099) ($10,904) ($1,005)
UB vs. Average in % -12.5% -12.3% -12.6% -15.8% -1.4%
UB Rank (of 13) 10 11 13 7 of 9 6
2012-13 Full Associate Assistant Instructor LecturerPeer Average $139,106 $94,778 $81,861 $54,288 $62,360UB vs. Average in $$ ($5,378) ($2,981) ($3,359) $910 $1,995UB vs. Average in % -3.9% -3.1% -4.1% 1.7% 3.2%UB Rank (of 13) 9 9 9 5 of 9 6
Full Associate Assistant Instructor LecturerChange in $ vs. Peer Average ($15,237) ($10,790) ($8,740) ($11,814) ($2,999)Change in % vs. Peer Average -8.7% -9.2% -8.5% -17.5% -4.6%Change in Rank -1 -2 -4 -2 0
($15,237)
($10,790)
($8,740)
($11,814)
($2,999)
($16,000)
($14,000)
($12,000)
($10,000)
($8,000)
($6,000)
($4,000)
($2,000)
$0
Full Associate Assistant Instructor LecturerChange in UB Faculty Salaries vs. Peer Average, 2013 to 2019
41
7. Analysis of the investment performance of the UB Foundation Unlike the financial information for the university, the Foundation has publicly available financial statements (the last three years), and also has the 2019 financial statements. They are at: https://ub-foundation.org/financial-information/investment-performance/ The chart below reports the value of the investments from 2013 to 2019; the endowment is reported separately due to the restrictions on many of the donations.
At the end of 2019, the Foundation had over $1 billion of investment assets. We will do the following: • Break down what the composition of the investment portfolio – how much is invested in “alternative”
investments, and how much in less riskier securities • Examine the annual changes to the endowment • Compare the return on this investment portfolio to the S&P 500
0
200,000,000
400,000,000
600,000,000
800,000,000
1,000,000,000
1,200,000,000
2013 2014 2015 2016 2017 2018 2019
Endowment Other Investments
42
Investment Portfolio:
The descriptions in the Foundation’s audited statement below about alternative investments definitively reveals that these investments have great risk: • Real assets are those invested in commingled funds, limited partnerships and limited liability companies • Private equity partnerships are generally made through limited partnerships. Under the terms of such
agreements, the Foundation may be required to provide additional funding when capital or liquidity calls are made by fund managers. These partnerships have a limited existence, and they may provide for annual extensions for the purpose of disposing portfolio positions and returning capital to investors.
• Investments in hedge funds have numerous provisions which may restrict the redemptive nature of the investment. Certain of the hedge funds are subject to initial “lock-up” provisions, ranging up to three years. Subject to the expiration of the “lock-up” period, the investor has the ability to liquidate its investments periodically from monthly to tri-annually, accompanied by notice periods ranging from thirty to one hundred eighty days at June 30, 2019 and 2018, according to the provisions of the respective investment fund agreements. A portion or all of the hedge funds investment may be held as “side-pocket” investments, as determined by such investment fund’s investment manager. The investor’s ability to redeem its interest in the side-pocket investments is restricted until the occurrence of a realization event with respect to the underlying investment positions in such side-pockets per the terms of the respective investment fund’s agreement.
The Foundation has close to ½ of its portfolio in risky securities, and we will see how it performed.
Total Investments: 2013 2014 2015 2016 2017 2018 2019Cash 29,080,210 22,522,127 13,045,665 12,922,783 8,396,200 16,768,004 12,126,103
Fixed Income 118,421,423 131,447,256 104,791,343 106,771,542 107,508,180 133,607,136 130,421,709
Equity securities 321,646,255 373,478,167 394,713,527 348,392,062 427,874,872 435,132,653 441,453,706
Alternatives: Real Assets 66,492,002 83,116,288 82,139,974 88,009,703 95,943,191 99,338,407 108,901,382
Private equity 79,821,641 91,296,583 105,970,730 102,223,502 124,810,481 155,039,221 181,435,901
Hedge funds 141,662,316 159,200,719 166,384,685 166,684,438 173,890,249 185,728,031 191,239,120
Total Alternatives 287,975,959 333,613,590 354,495,389 356,917,643 394,643,921 440,105,659 481,576,403
Other 4,358,673 3,299,980 690,881 17,539,192 1,944,904 464,426 607,698
Total Investments: 761,482,520 864,361,120 867,736,805 842,543,222 940,368,077 1,026,077,878 1,066,185,619
Percent Distribution 2013 2014 2015 2016 2017 2018 2019
Cash 4% 3% 2% 2% 1% 2% 1%Fixed Income 16% 15% 12% 13% 11% 13% 12%Equity Securities 42% 43% 45% 41% 46% 42% 41%Total Alternatives 38% 39% 41% 42% 42% 43% 45%Other 1% 0% 0% 2% 0% 0% 0%Total 100% 100% 100% 100% 100% 100% 100%
43
Analysis of the Endowment
• The investment return includes dividend income, interest income, realized gains on selling securities,
and unrealized gains and losses. Unrealized gains and losses are the increases and decreases in the value of securities that were not sold by the end of the year; the realized gains and losses relate to securities that were sold during the year
• The appropriation for expenditure is the support the endowment provides for UB core’s operations o Over the last 7 years, between 4.3% and 4.9% of the endowment’s principle is spent o In 2018, the $30.3 million that the endowment provided represented 2.7% of the total
expenses of UB; we do not yet have the 2019 IPEDS expense data • Fundraising expenses were $7.6 million in 2013, and rose to $9.5 million in 2019
o From 2018 to 2019, fundraising expenses increased by 10% o Note that the $9.5 million in 2019 fundraising expenses were greater than the $9.3 million in
contributions raised by the endowment; fundraising expense were higher than endowment contributions in 2013 and 2015 as well
Investment returns
• In each year for 2013 to 2019, the S&P 500 return was higher than the return for the investment
portfolio of the UB Foundation • All of the investing in risky securities seems to be inferior to simply investing in a plain vanilla fund • The returns for the endowment were almost identical to the returns for the entire portfolio, which
makes sense, given the endowment is the majority of the portfolio
2013 2014 2015 2016 2017 2018 2019
Endowment, Start 511,019,818 554,392,383 624,790,675 619,295,674 600,960,825 659,156,156 724,999,677
Investment return 59,576,329 84,962,452 14,979,075 (962,044) 77,369,084 62,925,345 40,190,707
Contributions 5,932,278 10,339,308 5,416,683 10,335,720 9,819,513 21,133,297 9,325,852
Appropriation for Expenditure (23,929,981) (25,700,051) (26,927,592) (27,990,936) (29,563,430) (30,300,555) (31,746,883)
Other 1,793,939 796,583 1,036,833 282,411 570,164 12,085,434 55,125,336
Endowment, End 554,392,383 624,790,675 619,295,674 600,960,825 659,156,156 724,999,677 797,894,689
Total UB Expenses per IPEDS 986,465,898 996,805,637 1,040,215,629 1,107,485,634 1,142,949,441 1,141,013,332 ??
% of beginning endowment spent to support operations 4.7% 4.6% 4.3% 4.5% 4.9% 4.6% 4.4%% of main UB Expenses covered by endowment 2.4% 2.6% 2.6% 2.5% 2.6% 2.7% ??
Fundraising expenses 7,603,768 7,600,643 7,681,245 8,007,685 8,218,611 8,661,484 9,510,073
10%13.7%
2%
-0.3%
12%9%
5%
22%
14.5%
9%
3%
14% 14%
6%
-2%
3%
8%
13%
18%
23%
2013 2014 2015 2016 2017 2018 2019
Total UBF Investment Return S&P 500 Return
It is possible that a simpler investment strategy should be considered
44
8. Other Issues: Degrees Conferred, Graduation and Pell Rates Degrees conferred: Source: http://www.buffalo.edu/provost/oia/facts-publications/factbook/student/degrees.html
• From 2008 to 2019, grand total degrees increased by 20% • Bachelor’s degrees increased by 23%, and master’s degrees increased by 18% • Every category of degree has increased from 2008 to 2019 http://www.buffalo.edu/provost/oia/facts-publications/factbook/student/graduation-rate.html Graduation Rates – these are very impressive increases
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Bachelors 4,276 4,343 4,436 4,747 4,840 4,854 5,029 5,017 5,379 5,231 5,068 5,273Masters 1,966 2,078 2,032 2,148 2,342 2,127 2,238 2,600 2,471 2,275 2,382 2,315Professional 623 668 662 647 626 668 604 686 641 607 620 647Doctorate 329 309 273 302 297 330 350 342 343 344 337 391Certificates 14 10 13 14 10 18 20 18 33 45 54 46Advanced Certifications 153 149 192 124 159 151 173 122 170 162 186 186Grand Total 7,361 7,557 7,608 7,982 8,274 8,148 8,414 8,785 9,037 8,664 8,647 8,858
35%
40%
45%
50%
55%
60%
65%
70%
75%
80%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
4-Year Rate 5-Year Rate 6-Year Rate
Graduatio Rates 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20184-Year Rate 40.2% 42.0% 43.4% 49.0% 50.9% 51.6% 52.6% 55.4% 58.1% 56.7% 60.4%5-Year Rate 58.3% 59.5% 60.8% 67.2% 67.3% 68.2% 69.1% 70.4% 71.9% 72.1% 72.9%6-Year Rate 62.0% 63.2% 66.6% 71.6% 70.8% 72.0% 71.9% 73.7% 74.4% 75.3% 75.5%
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2018 Graduation and Pell Rates of Buffalo and Peers, per IPEDS
• The higher the Pell rate, the lower the graduation rate • UB has the 10th highest graduate rate at 76%, versus a peer mean of 82% • But UB has the 5th highest Pell rate, at 32%, versus a peer mean of 26% The other rate often examined is the one-year retention rate, which is reported by UB at http://www.buffalo.edu/provost/oia/facts-publications/factbook/student/retention.html, and is also reported on IPEDS. The peer mean for 2017-18 is 92.5%, above the UB rate at 86.8%
0%5%10%15%20%25%30%35%40%45%
50%55%60%65%70%75%80%85%90%95%
UCLA UMUNC
UC Irvin
eUCSD
Wisc
onsin UW Pitt
Rutgers
Buffalo
Stony B
rook
Iow
a
Arizona
Grad Rate Pell Rate
88.5%88.2%
87.6%87.1%
87.5%88.1%88.1%
86.1%87.1%
86.8%
70% 72% 74% 76% 78% 80% 82% 84% 86% 88% 90%
Fall 08 back Fall 09Fall 09 back Fall 10Fall 10 back Fall 11Fall 11 back Fall 12Fall 12 back Fall 13Fall 13 back Fall 14Fall 14 back Fall 15Fall 15 back Fall 16Fall 16 back Fall 17Fall 17 back Fall 18
One-Year Retention Rate
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9. Athletics – Amount of support for athletics from the core academic mission (Go Bulls)
Add 2019 Add peers admin wants to add – MAC not the right peers per admin Public universities report athletic revenues and expenses through the NCAA Management Report, filed in January of each year. USA Today compiles the data each year, and the most recent year for which we have data is 2018. The 2019 data should be available in March of 2020. The data for 2018 is at: https://sports.usatoday.com/2019/08/12/methodology-for-2018-ncaa-athletic-department-revenue-database/ Overview (number of participants per the EADA or Equity in Athletics Data Analytics of Title IX reporting from the federal government) Percent change in expenses – athletics expenses are increasing much faster than total expenses
Breakdown of athletic expenses:
• Scholarships are not necessarily cash costs, but they are important costs; if athletes were not
receiving this aid, other students could certainly be receiving it
22%28%
55%
10% 10%
21%
0%
10%
20%
30%
40%
50%
60%
2011 to 2015 2015 to 2018 2011 to 2018
Athletics Total Expenses
YEARCOACHING /
STAFF SCHOLARSHIPSFACILITIES / OVERHEAD OTHER TOTAL EXPENSES
2011 $8,408,939 $6,371,627 $51,840 $11,389,285 $26,221,6912012 $8,345,368 $6,354,309 $55,322 $12,723,170 $27,478,1692013 $8,569,134 $7,277,504 $54,404 $13,059,085 $28,960,1272014 $9,142,338 $7,635,181 $1,321,888 $13,034,742 $31,134,1492015 $9,299,146 $8,364,393 $1,575,002 $12,670,999 $31,909,5402016 $9,810,809 $9,239,541 $2,950,686 $12,218,683 $34,219,7192017 $9,539,328 $9,418,613 $2,892,722 $14,033,221 $35,883,8842018 $15,033,182 $8,727,511 $2,820,831 $14,181,547 $40,763,071
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• It is unclear why there was such an increase in coaching salaries from 2017 to 2018 • Other is a very large amount in every year. This is what is reported as comprising other:
Severance payments to past coaches and staff; recruiting; team travel; equipment and uniforms; game day and camp expenses; fundraising and marketing costs; spirit group support; medical expense/insurance; conference dues; the value of university-provided support such as administrative services, facilities and grounds maintenance, security, risk management, utilities, depreciation and debt service that is not charged to the athletics department.
The big issue with UB, and many other similar institutions, is that there is very little direct athletic revenue to cover these expenses.
• The problem is that ticket sales, contributions directly to athletics, and rights/licensing and other revenues are just too small to cover the athletic expenses – therefore, the core academic side of the university must subsidize athletics
• The 75.6% in 2018 tells us: athletics can only cover about ¼ of their own costs with their own revenue; they have to come to the academic side of the university to pay for the athletic expenses
• In terms of the subsidies, student fees come directly from the students’ pockets. A percentage of the student fee goes to support athletics, and the student does not have any choice in this. In 2018, the student fee was $9.2 million – that is direct student money going to support athletics, because athletics is not able to cover their own costs
This is a graph of the 2018 situation, and it is clear what is happening – the athletic revenues are miniscule when compared to the costs
Year TICKET SALES CONTRIBUTIONS
RIGHTS / LICENSING OTHER
Total Direct Athletic
RevenuesSTUDENT
FEESSCHOOL FUNDS
Total Subsidies
2011 $994,216 $384,436 $2,581,968 $1,443,932 5,404,552 $7,874,073 $12,949,405 20,823,4782012 $1,059,966 $1,320,953 $2,749,027 $2,230,719 7,360,665 $7,819,038 $12,300,508 20,119,5462013 $944,768 $392,815 $3,366,315 $2,169,707 6,873,605 $7,952,787 $14,137,658 22,090,4452014 $1,285,778 $600,252 $3,397,218 $2,015,671 7,298,919 $8,168,727 $15,810,334 23,979,0612015 $1,101,014 $1,058,460 $3,894,030 $1,774,870 7,828,374 $8,433,752 $15,919,426 24,353,1782016 $1,107,153 $1,913,487 $4,300,804 $2,134,903 9,456,347 $8,744,820 $16,066,399 24,811,2192017 $1,065,783 $1,953,470 $5,163,103 $2,081,443 10,263,799 $8,981,926 $16,646,496 25,628,4222018 $1,036,460 $1,924,828 $4,628,492 $2,431,716 10,021,496 $9,233,325 $21,579,827 30,813,152
YearTotal Athletic
ExpensesTotal
Subsidies
Percent of Expenses
Subsidized2011 26,221,691 20,823,478 79%2012 27,478,169 20,119,546 73%2013 28,960,127 22,090,445 76%2014 31,134,149 23,979,061 77%2015 31,909,540 24,353,178 76%2016 34,219,719 24,811,219 73%2017 35,883,884 25,628,422 71%2018 40,763,071 30,813,152 76%
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Below we will compare how much UB subsidizes athletics with peer institutions, as well as other institutions in the Mid-American Conference Peer Institutions:
$1,036,460 $1,924,828 $4,628,492
$2,431,716
$40,763,071
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000$30,000,000
$35,000,000
$40,000,000
$45,000,000
TICKET SALES CONTRIBUTIONS RIGHTS /LICENSING
OTHER Athleticexpenses
2018 Athletic Revenues and Expenses
2018 Athletic Expenses
Dollar Subsidy
Percent Subsidy
Buffalo $40,763,071 $30,813,152 76%Rutgers $102,518,486 $29,980,791 29%Stony Brook $32,446,694 $26,120,485 81%Arizona $126,782,387 $20,611,739 16%UC Irvine $21,373,646 $16,157,708 76%UNC $102,430,558 $9,346,241 9%UW $126,133,008 $3,834,746 3%Wisconsin $149,798,158 $2,967,000 2%UCLA $130,960,560 $2,608,165 2%Iowa $130,117,820 $650,000 0.5%UM $183,414,032 $0 0%
Peer Mean $110,597,535 $11,227,688 22%Peer Median $126,457,698 $6,590,494 21%UB vs. Peer mean ($69,834,464) $19,585,465 14%UB rank (of 11) 9 1 3
UCSD and Pittsburg are not reported in the USA Today Database
Direct revenues only cover $20,4 million of the $40.7 Million of athletic expenses; the rest comes from students and the academic side of the university
49
Mid-American Conference (MAC)
0%10%20%30%40%50%60%70%80%90%
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
Buffalo
Rutgers
Stony B
rook
Arizona
UC Irvine
UNCUW
Wisc
onsinUCLA
Iowa
UM
Dollar Subsidy Percent Subsidy
2018 Athletic Expenses
Dollar Subsidy
Percent Subsidy
Buffalo $40,763,071 $30,813,152 76%Central Michigan $32,540,008 $30,378,594 93%Miami (Ohio) $37,127,174 $25,485,813 69%Western Michigan $37,925,540 $24,594,105 65%Akron $34,873,226 $24,289,339 70%Eastern Michigan $30,681,035 $21,908,663 71%Toledo $33,776,969 $20,883,227 62%Ball State $28,443,728 $20,760,621 73%Kent State $29,993,310 $20,308,261 68%Ohio $35,869,324 $19,832,417 55%Northern Illinois $25,821,426 $15,641,830 61%Bowling Green $24,393,090 $14,020,182 57%
Peer Mean 31,949,530 21,645,732 68%UB vs. Peer mean 8,813,541 9,167,420 8%UB rank (of 11) 1 1 2
50
• None of the Mid-American Conference institutions generate close to enough athletic revenues to cover athletic expenses
• However, Buffalo is the largest dollar subsidizer in the conference, and is the 2nd largest on a percentage basis
• What is very revealing is that Buffalo is number 1 in the conference on spending: o Buffalo spends the most of any MAC school o Buffalo has to rely on students and the academic side of the university to subsidize
athletics more than any MAC school