Despite a 6.5 percent increase in tuition revenue, Cornell has once again lived up to its “Big Red” nickname for the third year in a row: According to its annual financial report released days ago, the University posted an operating loss of $104 million for the fiscal year ending June 2019.
When non-distributed endowment returns, reductions to anticipated pension liabilities and grants for capital acquisitions — all of which are classified as not directly related to the University’s “core, day-to-day activities” — are included to find total change in net assets, that figure rises to a surplus of $129 million, although Cornell still reported negative total cash flows of $6.6 million.
While total operating revenues grew by 4.8 percent in fiscal year 2019, expenses edged up by an even greater 5.3 percent to put Cornell in the red.
“This report describes a healthy university, despite its operating loss,” wrote Cornell’s Chief Financial Officer Joanne DeStefano, who, in the report, partially attributed the uptick in expenses to the hiring of 248 additional employees at Weill Cornell Medical College.
Case in point, by far the largest expense remains wages, pensions and benefits for Cornell’s nearly 18,000 employees, amounting to $2.9 billion and 64.8 percent of its budget.
Although Cornell’s position as a non-profit anchored by an over $7 billion endowment means that it does not face the same pressures to run a surplus as companies of a similar size — the deficit still prompted the University’s top accountant to call for finding new avenues of growth and cost-cutting.
“To improve operational results in the future, the University must take advantage of opportunities to increase revenues and/or reduce expenses, while continuing to deliver its mission to discover, preserve, and disseminate knowledge,” wrote William Silbert, associate vice president and University controller, in the report.
Despite a 3.5 percent tuition hike and 3 percent enrollment expansion that raised an additional $44 million, over the last year, the University received only 17 percent of its revenues from tuition, a relatively small number similar to the revenue coming from patients and corporate contracts.
Amidst rising healthcare demand, Weill Cornell’s Medical Physician Organization, which DeStefano called Cornell’s “largest growth area,” generated over $1.1 billion to comprise 26 percent of University revenues, up from only 23 percent in 2014.
According to the report, the Physician Organization acts as the management structure for Weill Cornell’s clinical services, receiving revenue from patients treated at its facilities. Last year, Weill Cornell — which operates 40 locations in New York under affiliations with NewYork-Presbyterian Hospital, Hospital for Special Surgery and Memorial Sloan-Kettering — employed over 1,320 physicians and saw 1.7 million annual patient visits.
Income from grants and contracts — which the report defines as “revenue generated from external entities, such as governmental agencies, corporations, or non-profit organizations” — lagged behind Weill at nearly $900 million and makes up 20 percent of Cornell’s revenues.
Among the corporate contracts, Cornell’s affiliation with foreign actors have landed the University in hot water in recent months: Last March, a Sun investigation into a multi-million dollar contract with Chinese telecommunications giant Huawei, which has been the target of several federal investigations, left the University on the defensive.
According to government records, Cornell accepted foreign gifts and contracts totalling almost $200 million in the past fiscal year — the vast majority of which came from Qatar, where Cornell operates a branch of its medical college. None were reported from mainland China over that period.
Of the Ivy League schools that have released audited financial statements for the 2019 fiscal year, Cornell’s total $104 million operating deficit so far leads the pack. The University of Pennsylvania, Harvard and Columbia, on the other hand, all delivered surpluses of over $100 million.
Even so, the University remained confident about fiscal year 2019’s results — highlighting, in particular, its operations beyond Ithaca as an area of strength looking forward.
“In summary, the results of fiscal year 2019 are in line with the university’s operating plan, benefiting primarily from the continued growth in the clinical practice and the planned growth of Cornell Tech,” DeStefano wrote.
Correction: A previous version of this story incorrectly stated that Cornell’s endowment for the 2019 fiscal year is over $10 billion. In fact, it is over $7 billion. In addition, this story previously reported that Cornell had negative cash flows of $109 million; the correct figure is negative $6.6 million. Language regarding tuition revenue has also been updated.