The university announces a strong financial position for 2023

Zoe Berg, Senior Photographer

In a year of market volatility and endowment recessionThe university has maintained a strong financial position, but it is not without challenges.

Shortly before the winter break, the university released a 2022-23 Budget Update. IIn the fiscal year ending June 30, 2022, the university generated an operating surplus of $166 million on revenues of $4.876 billion. Over the same period, the endowment returned 0.8 percent, but then Accounting for spending distributionsThe value of the endowment decreased by about one billion dollars. Since it’s difficult to estimate returns on the illiquid assets that make up the majority of Yale’s portfolio, it probably is Returns may be lower than reported.

“We are pleased to have an operating surplus in fiscal ’22 that reflects our community’s close stewardship of university resources,” the budget update read. “As a result of Yale’s decentralized financial structure, these surpluses are distributed across hundreds of individual school, department, program, and faculty accounts.”

While the budget report argues that “minimal endowment yield is not a cause for concern,” it also acknowledges that higher interest rates and a prolonged recession – which many experts are currently predicting – They may become challenges in the near future.

The report also highlights several other challenges, including the university’s over-reliance on medical school revenue, persistent operating deficits at Yale-New Haven Hospital and market inflation.

“Nothing surprised me,” accounting professor Rick Antle told the newspaper. “The university is financially strong and I expect it to continue to move forward. I think the president rightly points out the challenges that Yale Medical School’s large position presents in the university’s financial position and the risk of inflation.”

Antle told the news that maintaining an operating surplus is a healthy financial practice.

From 2018 to 2022, the university reported surpluses of $91, $87, $125, $276, and $167 million, respectively.

“[This year’s surplus] About 3.4 percent of revenue, which doesn’t seem excessive to me,” Antle wrote in an email to News. “Yale is a large, complex institution, and we can’t expect it to go to zero every year. As a matter of management, I would expect an institution like Yale to pursue a small, positive operating surplus and try to avoid an operating deficit.”

Operating deficits can be detrimental to the university’s financial future, Intel added, while surpluses are relatively benign and carried over for future use.

78 percent of this year’s surplus is in endowments and restricted gifts that must be spent for specific purposes. The university’s unrestricted source of funding, which could be used however the President and Dean saw fit, also recovered from the large deficit Detailed in last year’s budget update.

“The surplus largely remains within the specific unit that generated it,” senior vice president of operations Jack Callahan wrote in an email to The News. “For example, for revenue related to the endowment, it remains on the balance of the trust for that unit to be consistent with the giver’s intent for the original gift agreement.”

This financial structure, Callahan says, ensures that the university meets its fiduciary obligations to manage these funds appropriately.

The report also discussed the financial challenges presented by Yale New Haven Hospital, which has It has had an operating deficit for the past two years and, according to university leadership, is likely to report a deficit again in the current fiscal year.

Although the hospital is an independent, non-profit organization, it works in “close partnership” with the medical school to provide care to patients. More than a third of YSM Clinical’s revenue comes from YNHH. Because The medical school accounts for half of the university’s revenue, which is a legitimate cause for concern.

“the [School of Medicine’s] Callahan told the newspaper that the largest source of income comes from clinical activities — patients pay for the professional services of Yale physicians and money from YNHHS to support joint clinical investments and hospital-related activities such as new clinical programs.

Yale New Haven Hospital was founded as the Connecticut General Hospital Association in 1826.

Ivan Gorelik

Evan Gorelick Hall covers Woodbridge with a focus on Yale Corporation, endowments, and finance and development. He is the production and design editor, faculty, and academics previously covered in the news. Originally from Woodbridge, Connecticut, he is a sophomore at Timothy Dwight College, double majoring in English and Economics.

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