Paul Streeter, vice president for budget and planning, described Cornell as being in a “financially stable spot” at present during an Employee Assembly meeting as he explained the income sources supporting the University’s operating budget.
“We’ve had some financial difficulties coming out of the recession … but I would say where we’re at right now, we’re stable,” Streeter said.
Streeter first described the fiscal year 2019 operating budget. The total budget for the 2019 fiscal year across all Cornell campuses is $4.53 billion, supported primarily by incomes generated by Weill Cornell Medical College.
“Our single largest revenue source is the medical college’s physician plan,” Streeter said, pointing to how it accounts for 30.3 percent of all revenues. However, he noted that the revenue “largely goes back out as compensation.”
Tuition and fees account for the second largest source of revenue, standing at 25.9 percent of the entire budget; however, these statistics look very different when just looking at the budget of the Ithaca campus.
The Ithaca campus budget is $2.42 billion, with tuition and fees accounting for 46 percent of the budget.
“The pie looks a lot different — take that physicians piece out of that and now we’re really dependent on tuition,” Streeter said.“One of the challenges facing us as an institution is that we’re becoming more and more dependent on tuition.”
Streeter did note that this was the gross number — the net revenue, with financial aid expenditures subtracted, brings the number down to about 33 percent. “The reality is we don’t take in that much cash because we have generous financial aid programs,” he said.
The University expenditure for the Ithaca campus for financial aid is about $433 million, accounting for 18.6 percent of the Ithaca campus expenditure. Salaries, wages and benefits comprise of 55.1 percent of the budget.
He also highlighted Cornell’s investment revenues, or returns on the endowment, which currently stand at 10.1 percent of the budget. According to Streeter, this is significantly lower than peer institutions such as Princeton, whose “[revenue from] investment income is well over 50 percent”. This allows Princeton to ease pressure on tuition and pursue more “aggressive” financial aid programs.
State funding accounts for 6.1 percent of the budget. Although it has increased to correspond with increasing benefit costs, according to Streeter, state funding has “been flat since 2012.”
“We don’t think it’s going to change over the next probably four to five years,” he said. “Assuming Cuomo gets re-elected, just philosophically we don’t think that’s going to change.”
Streeter also attempted to bring some clarity to endowments. Cornell’s endowment this year posted the second-worst returns so far compared to other Ivy League institutions, The Sun previously reported.
“We have over $6 billion of endowment … but that money can’t be touched,” he said. “It has to sit here and be invested, and we get the interest earned off of it.”
Streeter also pointed to the fluctuations in returns; last year it was over 10 percent while two years ago it was -3 percent. To tackle these fluctuations, “our target is to spend about 5 percent in total of monies coming off of the endowment,” Streeter said.
Bruce Roebal, a College of Arts and Sciences representative, voiced his worry about fluctuating endowment revenue as it has a significant impact on his program.
“I have a staff of 12,” he said. “We have an endowment account … 85 percent of all the money in that account goes towards salaries.”
Streeter replied by indicating that endowment revenue should be increasing within the coming years. “Our modeling says that it should start coming back up … it’s probably going to come up at a rate between 2.5 and 3 percent, if things are steady,” he said.