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The University's operating budget is expected to break the half-billion-dollar mark during the next academic year.
Revenues received in 2001-02 are budgeted to reach $533 million, according to the operating budget which the Board of Trustees adopted May 12.
The trustees also approved a $70 million capital budget for 2001-02. This budget covers new construction, renovations, and debt repayment.
In mapping out the 2001-02 operating budget, planners began to "more closely link objectives and the budget," said Laura Tanski, director of budgets and financial planning. The process began under Interim President James Wagner, while he was serving as provost, and Robert Knight, who was interim budget director until Tanski joined CWRU in early February.
"We're trying to make the budget a helpful tool for reaching the vision that our schools have," Wagner said.
This approach involved asking deans and senior University administrators to provide an overview of their budgeting process, including how budget figures and planning related to programs and priorities.
"During the planning process, each management center prepared a narrative describing how resources were added, shifted, or reduced in response to the specific objectives of the school," Wagner wrote in his introduction to the budget booklet.
"We learned a lot from that process, and we'll be expanding on that next year," Tanski said.
This year's capital budget offers more detail than ever before on pending or planned construction, renovation, or equipment projects across campus. Instead of focusing just on the current fiscal year, the new capital budget cites anticipated income and expenses for each project over several years.
"We want to create essentially a five-year capital budget," Tanski said. "That will allow us to better plan budgeting and staffing needs" that will be required to support these projects, she added.
The operating budget projects an 8.7 percent increase in revenues over the current forecast. This increase reflects "a continued strong research environment, especially in the School of Medicine, where research activity is expected to increase by 10.7 percent over the current forecast," the budget booklet states.
Sponsored research activity is anticipated to reach $225 million next year, providing 42 percent of budget revenues.
"The vast majority of our research funding comes from the National Institutes of Health," Tanski said. Due to expected increases in federal support for medical research, "we are well-positioned to take advantage of national growth in health-related research funding," Tanski added.
Tuition and fees are budgeted to bring in $166.7 million in income, or 31 percent of next year's revenues.
"Projected growth in revenue from research income (9.4 percent over forecast), graduate tuition income (11.7 percent over forecast), and total endowment income (12.8 percent over forecast) strongly supports the overall budget," Wagner wrote in the budget booklet.
Revenues from endowment are "the fastest-growing component of the budget," Tanski said. "This has created an incredible amount of new resources for the schools."
The endowment payout rate has increased 4.5 percent from $1.835 to $1.917 per unit. This means that more income from endowment earnings will be available to support expenditures during the coming fiscal year. Many endowment funds have restricted purposes, such as supporting scholarships or faculty chairs.
The amount of revenues in the operating budget which come from endowment income has nearly doubled in the past five years, Tanski noted. This income has increased from $33 million in 1995-96 to $67.5 million in 2001-02. Endowment earnings will provide 12.7 percent of total income next year.
Income from auxiliary activities will increase to nearly $22 million during the coming fiscal year, "based primarily on the beginning of a program to move housing and board rates and services to more competitive levels," the budget booklet notes.
On the expenditure side of the 2001-02 budget, student aid will rise 6 percent to $70 million, due in part to the President's, Provost's, and Trustees' Scholarship program entering its fourth year. Thus, next year will be the first time that these merit-based scholarships will be available to students in all four undergraduate class years.
University General budgets will increase by 4 percent next year. Total expenditures for 2001-02 are budgeted at $521 million, with a total of $11.7 million in reserves and transfers throughout the University.
Among pressures in operating expenses will be maintaining the former Mt. Sinai Medical Center property which the University recently purchased, Tanski said, as well as meeting utility costs that could increase 30 percent or more next year.
The Medical Center Company, which provides utility services to CWRU and several other University Circle institutions, has been under contract to receive electrical service from Cleveland Public Power (CPP) since September 1996. The agreement expires this fall, and the new electrical service contract could carry much higher costs.
The capital budget for 2001-02 is expected to reach $70 million. "The principal uses for the capital budget are $34.4 million for new construction, $27.1 million for building renovations, and $8.5 million for major equipment purchases, much of it for the Peter B. Lewis Building," the budget booklet states.
The largest project in the capital budget is continued construction of the Peter B. Lewis Building for the Weatherhead School of Management. During the next fiscal year, $23.4 million is budgeted to be spent on this construction project, which has an estimated total project cost of $61.7 million and which is slated for completion in spring 2002.
The capital budget also anticipates nearly $3.6 million in expenditures next year for completion of work on the Agnar Pytte Center for Science Education and Research. The project blends the renovated Millis Science Center and Biology Building with the addition of Clapp Hall.
Debt repayment is not included in the formal capital budget this year, but rather in a related budget. During the next fiscal year, debt-service obligations will total $13.1 million.