Strong support from donors, diverse revenue streams and a consistently disciplined approach to budgeting have again helped to put the University of Michigan in a strong financial position at the end of the 2015 fiscal year.

This assessment comes from Kevin Hegarty, executive vice president and chief financial officer, in his letter that appears in the university’s 2015 Annual Report. The report was distributed Thursday during a meeting of the Board of Regents on the Ann Arbor campus.

Hegarty says the university increased its net position by $238 million to $13.3 billion for the fiscal year that ended June 30. He notes that gifts for the university’s endowment and capital construction contributed $142 million, and returns from endowment investments, net of distributions, added $35 million. Positive results from the university’s many cost-containment efforts also were key drivers of this growth.

Endowment funds, which are invested principally in the university’s long-term investment portfolio, increased $221 million in FY ’15, growing to nearly $10 billion. Distributions from approximately 9,200 separate endowments provide ongoing support for specific academic and health-related needs across the university’s many disciplines, including student scholarships, educational programs, professorships, clinical operations and research.

“A disciplined budget approach balances the university’s need to be competitive for the best students and talent with a challenging economic environment where improving financial efficiency is an imperative,” Hegarty says.

“I have found that the university’s 45,000 faculty and staff have a relentless can-do attitude focused on enhancing the university’s core commitment to education, research and patient care, while providing excellent stewardship of its financial resources.”

In his letter for the annual report, President Mark Schlissel notes that the university is in a strong financial position, “thanks to the tremendous work by so many people at U-M.”

The president says the university has maintained its $1.3 billion volume of research, increased financial aid for students, continued to achieve operational efficiencies and received significant support from donors in the past year.

“It takes a combination of all those elements — cost control, increasing financial aid, tuition restraint, philanthropy — along with what we hope will be a continuation of reinvestment by the state in higher education, to keep a U-M education affordable,” Schlissel writes.

Financial highlights in the report include these:

• For the second consecutive year, donors gave more than $400 million in gifts of cash and pledge payments.

• The annualized investment rate of return over the past decade for U-M’s Long Term Portfolio, which includes the endowment, stands at 8.4 percent, placing the university in the top quartile of performance for large endowment portfolios.

• The total number of research awards to the university rose by 9 percent over the previous year and the total amount of these awards rose by 7 percent.

• The U-M Health System achieved an operating margin of 3.5 percent on operating revenues of $2.7 billion, driven by improved patient access that was created in part by increased clinical capacity.

• The university continues to maintain the highest credit ratings possible from both Standard & Poor’s (AAA) and Moody’s Investor Services (Aaa), one of only four public universities nationwide to maintain both ratings.

The consolidated financial statements for the university are audited by the independent accounting firm of PricewaterhouseCoopers LLP.

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