The challenges of operating during the COVID-19 pandemic tested the University of Michigan over the past year, but the university rose to meet the challenges “at every turn.”
That is according to the university’s annual report for the 2020-21 fiscal year that shows U-M’s financial position remains strong. The report was made available Dec. 16 in a digital format.
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“I’m pleased to report that nearly 21 months after the first cases of COVID-19 occurred in our region, the University of Michigan continues to thrive, with a renewed commitment to outstanding education and betterment of the public good,” President Mark Schlissel wrote in a message included in the report.
“Across our three campuses, more than 65,000 students are pursuing their academic goals and earning their degrees in a wide breadth of disciplines,” Schlissel wrote. “Our health care professionals at Michigan Medicine, who facilitated more than 2.6 million clinic visits with patients last year, remain on the front lines of combatting COVID-19 in our region.
“And University of Michigan researchers logged $1.58 billion in research volume during the past fiscal year, leading to advancements in areas ranging from firearm injury prevention to clean water that benefit our state, our nation and the world.”
In addition to messages from university leaders, the report includes highlights from the year, awards and honors, major projects and financial statements, as well as a special section of stories on the university’s response to the ongoing pandemic. The report covers the previous fiscal year, which ran from July 1, 2020, to June 30, 2021.
Some of the many individual items in the report include:
- U-M extended the Go Blue Guarantee — the university’s landmark promise of four years of free tuition for qualifying Michigan residents — to the Dearborn and Flint campuses.
- Schlissel announced that U-M will achieve carbon neutrality universitywide, committing to a series of actions that will eliminate greenhouse gas emissions from direct, on-campus sources, reduce emissions from purchased electricity to net zero, and establish innovative goals for emissions from indirect sources.
- UM-Dearborn launched a new artificial intelligence master’s degree program, the first in the state of Michigan.
- UM-Flint received a $300,000 U.S. Department of Commerce Economic Development Administration grant to support regional economic development strategies in response to the coronavirus pandemic. The money will help UM-Flint jumpstart new in-demand services, including implementing community workforce development programs.
- After being paused during the early days of the pandemic, construction resumed on Michigan Medicine’s new state-of-the-art hospital last spring. Its name — The Pavilion at University of Michigan Health — also was announced.
In his message, Thomas Baird, vice president for development, shared his gratitude for the continued support of the “extended University of Michigan community,” whose generosity added up to $432 million in pledge payments and cash gifts over the past fiscal year. That amount includes $127 million in student-support gifts — up 35 percent over from the previous year.
Notable efforts driven by philanthropic support included the Kohn Collaborative for Social Policy, a new resource hub to support social equity and inclusion work at the Gerald R. Ford School of Public Policy, launched by a $10 million gift from the Kohn Charitable Trust.
Another instance of noteworthy support came in the newly renamed Frances and Kenneth Eisenberg and Family Depression Center, in recognition of the Eisenberg family’s $30 million in giving for depression research and scholarship.
“Even in a year of continued uncertainty, I’m amazed by what we can do when we band together to support the mission of the university and its schools, colleges and units,” Baird wrote. “Together, we will help ensure that U-M has the resources needed to keep earning our place as Leaders and Best.”
Geoffrey Chatas, who stepped into his role as executive vice president and chief financial officer in October, wrote in a message that he has been extremely impressed by the university’s people and their focus on enhancing U-M’s mission “while providing excellent stewardship of its financial resources.”
He pointed to many of the university’s financial stabilization measures implemented when the pandemic began, such as a hiring freeze and suspending nonessential spending, as key factors in the university’s strong financial position at the end of the fiscal year.
“These measures, along with increased patient care revenues, stable tuition and research revenues as well as federal economic relief funds, helped contribute to an improved operating performance,” Chatas wrote.
U-M’s net position, which represents the residual interest in the university’s assets and deferred outflows, after liabilities and deferred inflows are deducted, increased $5 billion in fiscal year 2021 to $19.5 billion, primarily due to substantial investment returns.
Additional financial highlights in the report include:
- The university reported nearly $1.6 billion in research expenditures, with more than half sponsored by the federal government. The research helped to generate 502 new inventions and launch 23 startup companies.
- The value of the university’s endowment totaled $17 billion on June 30, 2021. The endowment provided distributions of $404 million to support university operations.
The consolidated financial statements of the university are audited by the independent accounting firm of PwC.
Roger Williams
Tremendous work on all counts. While it is great to see such a huge increase in the endowment (a once every 30 years event), one wonders: 1) Whether the overall composition of the portfolio has become too illiquid (especially given multi-billion dollar forward commitments to various illiquid funds)?; 2) Whether a simple 70/30 or 80/20 blend with volatility rebalancing would get to the same ending point but without the manager fees and without the illiquidity?
For students who have questioned the usage of the endowment, several things are worth noting: 1) the prior 2 capital campaigns raised over $2,000,000,000 for student support and this 40% plus increase should have increased that total dramatically; 2) as a rough rule of thumb, each $1,000,000,000 increase in the endowment increases spendable income for students by $1,000/per student/per year (when spread over 50,000 students at a 5% spend rate).