Annual Report - DFA Home - Cornell University

a $20 million increase in supplemental compensation for
physicians; and a $9.4 million increase based on classifying
the current portion of the pension and post-retirement
medical benefit costs as an operating expense rather than a
non-operating expense.
The $9 million reduction in purchased services correlates
to reductions in consulting fees at both the Weill and Ithaca
campuses. The $57 million increase in supplies and general
consists of many factors: the Ithaca campus experienced
a $12.5 million increase related to subcontracts for international
program initiatives, additional expenses for the
synchrotron, and the energy and sustainability project; and
there were additional expenses at the Weill Cornell Medical
College of $27 million for the expansion of programs in the
Physician Organization, increased expenditures associated
with support from the Qatar Foundation awards, expenditures
associated with research consortium agreements, and
an increase in information technology costs.
Interest expense for the fiscal year-ended June 30, 2011 was
$70.1 million compared to $59.8 million for the prior year.
The increase is directly related to the University’s taxable
“Cornell’s balance sheet continues to be strong.
At June 30, 2011, net assets were $7.5 billion
compared to $6.7 billion for the prior fiscal year,
or a 12.2 percent increase.”
and tax-exempt debt. In the prior year, certain debt was not
outstanding for the full year. The total amount of interest
paid, disclosed at the bottom of the cash flow statement, was
$93.9 million for the current fiscal year compared to $67.6
million for the prior year. These amounts differ from the
interest expense reported on the income statement primarily
because of the requirement to capitalize interest as part of
the cost of constructed assets that were financed with debt
(i.e., buildings). The interest becomes a cost of the asset and
is expensed over the life of the asset as depreciation.
Depreciation expense increased by $35.6 million, of which
$12.5 million correlates to increased depreciation associated
with projects recently capitalized. Approximately $23.1
million results from additional “catch up” depreciation for a
change in useful lives as well as “componentization” (i.e., using
shorter useful lives for certain components of buildings).
Non-Operating Revenues and Expenses
The University receives New York State appropriations for
capital projects that support the contract colleges. Unlike
state support for operations, state funding for capital projects
has been increasing. Current-year revenue is recognized
only to the extent that expenditures have been incurred,
which is the same recognition principle used for grant and
contract revenue. Funding not yet expended is reported as
deferred revenue on the balance sheet. Total state appropriations
for capital projects for fiscal year 2011 were $120
million; $44.5 million was recognized in the non-operating
section of the income statement and $75.5 million was
recognized as deferred revenue on the balance sheet. For
the prior fiscal year, total state appropriations were $64.5
million, of which $25.8 million was recorded on the income
statement as non-operating revenue and $38.7 million was
recorded on the balance sheet as deferred revenue. The
significant increase in funding relates to the many capital
projects under way for the contract colleges: Stocking Hall,
Barton Hall, Martha Van Rensselaer Hall, and activity at the
Geneva Experiment Station.
The University’s donors continue to give generously for both
the endowment and capital projects—total non-operating
contributions were $109.3 million. This is a decline from the
prior year’s contributions of $253.5 million. The decline in
the non-operating donations for endowment and capital is
generally affected by the timing of major gifts and whether
donors are supporting capital projects, true endowment, or
current operations in any particular year.
The increased revenues for investment return net of amount
distributed, split interest agreements, and the adjustment
for pension and post-retirement revenue relate primarily
to the increase in the fair market value of investments associated
with these line items. The “income adjustment”
for pension and post-retirement benefits is based primarily
on the significant increase in fair market value of the plan
assets as disclosed in the table in Note 6C. Although all of
the benefit plans remain unfunded, there was a significant
decrease in the “unfunded” portion for fiscal year 2011 and,
therefore, the adjustment reflects $40.2 million in income.
Non-operating “other” income for fiscal year 2011 is $15.7
million compared to negative $50.5 million for the prior
fiscal year. The major component of the change is the fair
market value adjustments on bond swaps.
Statement of Financial Position
Cornell’s balance sheet continues to be strong. At June 30,
2011, net assets were $7.5 billion compared to $6.7 billion
for the prior fiscal year, or a 12.2 percent increase. The most
significant factor contributing to this increase is the fair
market value of investments.
Assets
Cash and cash equivalents at June 30, 2011 and June 30,
2010 were $146.1 million and $100.1 million, respectively,
or an increase of $46.0 million from last year to this year.
This increase relates to a $19.9 million increase in cash
equivalents (i.e., securities that, when purchased, have a
maturity date of ninety days or less) and cash balances in
central bank accounts due to timing.
In fiscal year 2009, the University decided to reduce and
eventually eliminate the securities lending program, a goal
fully achieved by June 30, 2011: both the assets and liabilities
related to this program were zero at fiscal year-end.
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