UR Finances 101
A primer for faculty

WORK IN PROGRESS

This website is intended to give interested faculty an introduction to finances at the University of Rochester. The goal is to provide an overview of where the UR’s money comes from and how it is spent. The content here is intended to be a snapshot of the University as a whole and will not provide specifics on how finances are handled in individual schools and departments. It is not intended to address time specific questions having to do with the economic events of late 2008. (See President Seligman’s letter of November 24.) We hope that wider awareness of the overall structure and the considerations involved in financial decision-making will enable faculty to ask relevant questions in their own units.

This site will be revised periodically as new information becomes available. Faculty feedback is welcome. Please send comments to the Faculty Budget Committee in care of Jenni Oliver.

• Where does UR get its money and how does it spend it?
  The short answer to the first question is that the university, excluding the medical center, has three major sources of revenue:

· Tuition

· Externally sponsored research grants and state and federal support for major building projects such as the Clinical Translational Sciences Building

· Gifts and endowment income

The Medical Center, which includes the School of Medicine and Dentistry, the School of Nursing, the Eastman Dental Center and Strong Memorial Hospital, has a fourth source, namely patients and hospital care. Here are more details.

• What is the endowment, how is it used and how can we get more of it?
  The endowment is a collection of financial assets, currently valued at roughly $1.6 billion, which the university has accumulated over time through gifts and return on investments. Here are more details.

• What is advancement?
  Advancement is another word for fund raising. The university’s efforts in this area have improved considerably in recent years. Annual giving exceeded $100 million for the first time in FY2008. Here are more details.

• What is decentralization?
  Each of the six schools is financially autonomous. Each is responsible for generating its own revenue and setting its own budget. This includes setting the salaries of its faculty.
  For a discussion of the rationale and recent history of decentralization at UR, see President Jackson’s report to the Faculty Senate of September 17, 2002. This report is outlined here.

• How are budgets for schools and departments determined?
  The budgeting process for each school begins in the office that school’s dean. It is then reviewed by the CFO, Provost, and President and then ultimately their recommendation is taken to the Board for approval. Here are more details.

• What does the central administration do and where does it get its money?
• How are administrators' salaries determined?
  Deans' salaries are set by the Provost and President, the Provost's is set by the President, and ultimately all those recommendations and the President's salary are reviewed by the Compensation and Compliance Committee of the Board of Trustees, based on data about comparable salaries at peer institutions and other factors.

• What is the financial role of the Board of Trustees?
  The Board of Trustees is a group of 40 to 50 individuals who have the ultimate fiduciary responsibility for the future welfare of the university. Most of them are alumni, most are financially successful and a small number are academics. They serve voluntarily without compensation from the university. Here are more details.

• How are faculty salaries determined?
  In general, individual faculty member’s salaries raises are determined within schools or departments. With rare exceptions, they are not set by the central administration (i.e. the President’s or Provost’s offices). Here are more details.
• How are benefits (e.g. health insurance and retirement contributions) determined? How do ours compare with those at other universities?
  Benefits are determined by the central administration, not by individual schools or departments. The program is re-evaluated every few years. For example, new health care plans went into effect at the start of 2007.
  In 2008 a consulting firm was hired to compare our benefits program with those of peer universities. We expect a report on this topic in the coming months. Watch this space for more details.
• Why is undergraduate tuition growing faster than inflation?
  This phenomenon is not limited to UR. For some national perspective, see this recent article in the Chronicle of Higher Education.
  “During a debate among the Democratic presidential candidates at Saint Anselm College in January, Charles Gibson, the moderator, used what he thought was a realistic example of a two-career academic couple at the small college in New Hampshire. Between them, he ventured during a discussion about tax policies, they would earn about $200,000 a year.
  The audience met Mr. Gibson's statement with laughter and guffaws. Even some of the candidates told him he was off base — and they were right. On average, tenured associate professors at Saint Anselm earned around $65,000 last year. For young assistant professors, the pay was closer to $50,000.”
• What is strategic planning?
  Since President Seligman took office in 2005, the university has been setting new goals and priorities for itself for the coming years. Here are some links related to this planning.

· Envisioning the future: a framework for strategic planning by Joel Seligman, October 11, 2006
“During the past 156 years, faculty, students, alumni, administrators, and staff have built a magnificent University…. We are a small research university that has achieved exceptional results because we have insisted upon high standards and systematically pursued them.
In recent months, there has been an acceleration of our progress.”

· The Future Of Our University by Joel Seligman, January 22, 2008
“This is the year of strategic planning…. I envision a University of Rochester that within 10 years is unequivocally one of the 20 most outstanding research universities in the United States, with a best or near best evaluation in the Eastman School of Music; national leadership in several research areas or approaches in health sciences including neuroscience, clinical and translational research, orthopaedics, nursing, dentistry, and in specific areas in vaccine biology, cancer, and cardiovascular science.”

· Medical Center Strategic Plan Page
“The core of the Strategic Plan are nine high-priority clinical and research programs. They are signature programs in which – with strategic investments in people and facilities – URMC can stake its reputation for innovation and excellence.”

· School of Nursing Strategic Plan Executive Summary
“The overarching aim of the University of Rochester School of Nursing (URSON) is to continue to advance its leadership in the integration of nursing education, practice, and research.”

· College Strategic Plan Page
“Over the past two and a half years, Arts, Sciences and Engineering has been developing a plan to shape our future during the coming decade.”

This website was created by the Faculty Budget Committee in 2008

· Doug Ravenel (Chair), Mathematics, College

· Nicholas Bigelow, Physics & Astronomy, College

· Brian Brent, Warner School

· David Bushinsky, Medicine/Nephrology Unit, School of Medicine and Dentistry

· Roger Gans, Mechanical Engineering, College

· Margaret Kearney, School of Nursing

· John Marcellus, Woodwind, Brass & Percussion, Eastman School of Music

· Jerold Zimmerman, Simon School

with help from

· Joel Seligman, President

· Ralph Kuncl, Provost

· Paul Burgett, Vice President & General Secretary

· Ron Paprocki, Senior Vice President and Chief Financial Officer

· Doug Phillips, Senior Vice President, Institutional Resources

· Jim Thompson, Senior Vice President & Chief Advancement Officer

· Holly Crawford, Associate Vice President, Budgets & Planning & Deputy to Senior VP & CFO

· Jonathan Schwartz, Associate Vice President, Advancement and Director of University Campaigns

· Jenni Oliver, Administrative Assistant, Provost’s Office

· Maggie Cassie, Senior Information Analyst, President’s Office

Faculty feedback is welcome. Please send comments to the Faculty Budget Committee in care of Jenni Oliver.

Last revised December 15, 2008.