nothin Yale Posts $203M Surplus; City Projects $13M… | New Haven Independent

Yale Posts $203M Surplus; City Projects $13M Deficit

Wikimedia Commons

Yale’s Harkness Tower and New Haven City Hall.

Thomas Breen Photo

Elicker: Will Yale now “accept its responsibility?”

Yale University has posted a $203 million operating surplus for its most recent fiscal year.

Meanwhile, the city is staring down a $13 million projected deficit — with dozens of job cuts in the rearview, and plenty of pandemic-induced uncertainty ahead.

Those glimpses into the current state of town-gown financial discord were offered in two separate documents, both published in recent weeks.

Yale’s show of good fiscal health came in its annual financial report for the fiscal year ending June 30.

That report shows that the university generated a nearly $203 million operating surplus, even as the Covid-19 pandemic disrupted just about every aspect of university operations.

Yale’s financial report points to the university’s $31.1 billion endowment, medical services income, and grant and contract income as the key drivers of the past fiscal year’s surplus.

Even though the pandemic’s total effect on our finances is unknown,” the university’s senior vice president for operations and its vice president for finance co-wrote in the report, the university is entering the current fiscal year in a solid position to manage successfully through the time ahead. We remain committed to responsible and conservative financial management to ensure the university’s ability to weather unforeseen financial shocks.”

City of New Haven

The projected $13.2 million city deficit, meanwhile, first reared its head in the September monthly financial report for the current fiscal year, which runs from July 1 through June 30, 2021.

That report was discussed at length by city staff and committee alders during Monday night’s virtual meeting of the Board of Alders Finance Committee, and was alluded to by Mayor Justin Elicker during a Monday morning press conference calling for more federal Covid relief.

It points to multi-million-dollar expected overages in police and fire overtime and debt service, as well as to significant drops in parking meter and ticket revenue, as the key drivers of the anticipated shortfall.

City Budget Director Michael Gormany cautioned Monday night that the September monthly report represents only a snapshot in time. We have a long way to go in the fiscal year.”

He reminded the alders that the city was able to erase a projected $14 million deficit when Covid hit last fiscal year through expenditure controls, hiring freezes, and better-than-anticipated revenue collection. I’d rather project the worst-cast scenario” and work up from there, he said.

During a Tuesday morning phone interview, Elicker stressed that the city’s projected deficit and Yale’s reported surplus highlight the need for the university to step up its financial support of the city it calls home.

As time goes on and Yale continues to do better, New Haven will struggle more and more unless the university decides to accept its responsibility to the residents of the city,” he said. He compared the university’s current contributions to that of a billionaire who donates $100,000 to a soup kitchen but doesn’t pay $100 million in taxes.

I think the university and the university community need to think deeply about their ethical responsibility, especially in this time of crisis, in this time when we’re all talking about undoing racism and how we’re going to redefine ourselves as a nation.”

Elicker insisted the city’s overall financial picture is anything but rosy.

He noted that:

• The city both raised taxes and eliminated dozens of vacant positions in this fiscal year’s budget.

• Upwards of 60 percent of the city’s real estate value is off the tax rolls, with a vast majority of that tax-exempt property is owned by Yale University and Yale New Haven Hospital.

• The twin public health and economic crises of the Covid-19 pandemic will likely exacerbate the city’s need to provide more social services with less reliable revenue.

Now is the time for Yale to significantly impact the economic future of the city,” he said. When people are struggling the most, when there’s deep conversations about racial and economic injustice, the fact that Yale is making such a significant profit yet not willing to contribute more to the city that it calls home, it’s unethical.”

The university currently contributes $13 million a year and YNHH contributes $2.8 million a year to the city in the form of annual voluntary payments.

Elicker pushed during his mayoral campaign last year for Yale to increase that annual voluntary contribution to $50 million.

Yale’s local pink-collar and blue-collar unions along with the local labor advocacy group New Haven Rising have been calling for Yale and YNHH to bump up their direct payments to the city to over $146 million a year.

In an email statement sent to the Independent Tuesday morning, university spokesperson Karen Peart said that Covid-19 has cost the university $250 million in lost revenue and Covid-related expenses so far due to reduced enrollment, conferences, and events as well as increased costs for COVID-related issues, including the public health infrastructure for testing, contact tracing, and isolation.”

She also said that the university’s current surplus is earmarked for school- or department-specific uses and is not available to invest at the discretion of the president and provost,” including 89 percent of the operating surplus set aside in reserve balances in individual schools, departments, programs, or faculty accounts.”

That is the nature of Yale’s decentralized financial structure,” Peart continued, and the money will be used to invest in the university’s mission of teaching, research, and practice. The positive results have allowed many schools and units at Yale to build up reserves to cushion against negative outcomes in the uncertain future.”

Click here for previous responses from Yale and YNHH about their respective financial contributions to the city, and here and here for Yale’s comprehensive overview of its work to help the city over the course of the pandemic.

Yale: $203M Surplus Came Amidst Covid Hit

Yale University

Yale’s annual financial report includes a two-page letter written by Yale Senior VP Jack Callahan, Jr. and VP for Finance Stephen Murphy in which the top university financial staffers describe two parallel fiscal phenomena: a university hard hit by the demands of Covid-19, and a university that continues to thrive even amidst such a worldwide cataclysm.

They wrote that Yale’s operating revenues increased by 3.4 percent to $4.2 billion for the year. This result was well behind pre-pandemic
expectations and was less than half the rate of revenue growth seen in the prior year.”

Spending from the endowment hit $1.4 billion, they wrote, while medical services income grew to just over $1 billion.

[T]his growth was considerably lower than it would have been absent COVID-19,” they cautioned, as many patients cancelled or deferred surgeries, doctor visits, and other medical care during the initial months of the pandemic in Connecticut. These revenues have rebounded as the 2021 fiscal year began although there are risks from another wave of the virus.”

Operating, endowment, and facilities gifts, meanwhile, grew in comparison to the prior year as sponsors and donors provided high levels of support for the university before and after the onset of the pandemic.” And net tuition, room and board fell as the university refunded a portion of room and board when undergraduates left campus in the spring.

On the expenses side, the top financial staffers wrote, salaries and wages grew by 7.7 percent, which was driven primarily by growth in faculty and staff in the School of Medicine related to the expansion of clinical and sponsored research activities.” Employee benefits grew by 10.9 percent due to higher salaries, wages, health care inflation, and increased pension fund contributions. And the university made multi-million dollar investments in the public health infrastructure for the campus, including personal protective equipment, enhanced cleaning, COVID-19 testing, isolation living quarters, a field hospital, and other pandemic-related expenses. These pandemic related expenses have stepped up considerably in 2021.”

The nearly $203 million surplus number is based on Yale’s use of generally accepted accounting principles (GAAP) in tracking its financial information. An internal Management View” accounting method — which focuses more on resources available and used in the fiscal period presented” rather than on revenue when earned and expenses when incurred,” according to the report — showed the university ending last fiscal year with a $125 million surplus.

City: $13.2M Projected Deficit Driven By Police, Fire, Parking

Thomas Breen Photo

Parking meter fiscal woes.

The city’s September monthly financial report, meanwhile, shows an expected end-of-fiscal-year deficit of $13.2 million — driven by an anticipated $8.3 million overage in expenditures and a $4.9 million shortfall in revenues.

Those higher-than-budgeted expenditures include police overtime expected to come in $2.2 million over budget at a total of $9.3 million, and fire overtime expected to come in $3.4 million over budget at a total of $5.6 million.

Gormany said Monday night that the city police and fire chiefs will soon submit to the alders requested budget transfers to help close those expected gaps caused by overtime deficits. Elicker said during Monday’s City Hall press conference that city police and fire personnel have been stretched thin in part because of the uptick in local violence during the ongoing pandemic.

On the revenue side, Gormany pointed out that parking meter revenue is now expected to come in $2.1 million under budget and parking ticket revenue is expected to come in $2 million under.

While we did end the year in a better position” than anticipated in regards to parking revenue, he told the alders, we’ve definitely seen a decline in the number of tickets and meters [in comparison to] last fiscal year.”

Zoom

Monday’s Finance Committee virtual meeting.

Finance Committee Vice-Chair and Westville Alder Adam Marchand said he was heartened to see in the monthly financial report that property tax collection is on track and in good shape,” even with the various deferral and reduced penalties afforded by the city because of the pandemic.

There are some things that are unknown that are bigger unknowns than usual,” he said about the budget projections as a whole. The big unknowns are the virus, and it is going to get worse and will things shut down even more.” If that’s the case, parking meter and ticket revenue is likely not to rebound anytime soon.

It is early days to start looking at that nearly $14 million figure and panic, because we’ve had the experience for many years now of having an early deficit that the city has been able to chip away at,” he continued. But it’s still concerning nevertheless.”

Yale Spokesperson: University Spends $700M Each Year On New Haven

Following is the full response from university spokesperson Karen Peart about Yale’s current contributions to the city, the impact of the Covid-19 pandemic, and its operating surplus.

COVID-19 continues to have a significant impact on the university’s finances and operations.

COVID-19 has cost Yale more than $250 million in lost revenue and COVID-related expenses so far, and the ongoing pandemic and the disruption of the U.S. economy mean that the financial outlook for Yale remains uncertain.

Despite all the additional COVID-related expenses and revenue shortfalls, the university reported a surplus from operations for the 2020 – 21 fiscal year. This positive result provides Yale with a buffer for the current year during which the university has experienced significant lost revenue from reduced enrollment, conferences, and events as well as increased costs for COVID-related issues, including the public health infrastructure for testing, contact tracing, and isolation.

In addition, most of the 2020 – 21 surplus is earmarked for school- or department-specific uses and is not available to invest at the discretion of the president and provost. In fact, 89% of the operating surplus is in funds that are accumulated as reserve balances in individual schools, departments, programs, or faculty accounts. That is the nature of Yale’s decentralized financial structure, and the money will be used to invest in the university’s mission of teaching, research, and practice. The positive results have allowed many schools and units at Yale to build up reserves to cushion against negative outcomes in the uncertain future.

Yale University values its relationship and partnership with the city of New Haven. We continue to play an active role in supporting our community. A recent example is our Yale Community for New Haven Fund, which was established to address the local impacts of the COVID-19 pandemic and has since March 2020 distributed over $2 million to local nonprofits to support New Haven residents negatively impacted by the pandemic. This includes $250,000 to New Haven Public Schools to purchase Chromebooks for New Haven students.

Yale spends over $700 million annually directly on New Haven. This includes compensation to New Haven residents who work at the university and many programs and initiatives that we support throughout the city. Yale University’s $12 million voluntary payment in FY20 to the City of New Haven was the highest from a university to a host city anywhere in the United States. It represented a 44 percent increase from the payment that was made three years earlier. Yale committed to an increase of $1 million in voluntary payment to the City’s FY21 budget and Yale continues to be among the top three real estate taxpayers in New Haven due to its Community Investment Program.

Yale makes numerous other contributions to the city of New Haven. For example, the university commits significant resources to support New Haven public school students as co-founder and primary funder of New Haven Promise. Yale contributed $4 million this year to cover full tuition at any public university in Connecticut for eligible New Haven public-school students. Last year, Yale and its employees made over $3 million in charitable donations to New Haven nonprofits and the United Way Campaign, to the direct benefit of New Haven residents. Yale further contributed $1.5 million to the Yale Homebuyer Program, which offers Yale employees $30,000 to purchase homes in New Haven. Yale supports initiatives such as the New Haven Works jobs pipeline program and Market New Haven.

Yale is also New Haven’s largest employer, with nearly 14,000 faculty and staff. Through its New Haven Hiring Initiative (NHHI), Yale has hired more than 1,000 New Haven residents into full-time positions (bringing the total to 4,000). For FY20 staff, academic, and construction hires have resulted in 239 total hires, with 86 from Neighborhoods of Focus. The NHHI graduated two Gateway Learning Cohorts and launched the 3rd cohort in August 2020. Yale recently made a significant contribution to support the new Stetson Library in the Dixwell Avenue neighborhood; our medical school sponsors free clinics; our law school offers pro-bono legal advice; and our architecture school designs and builds homes for the economically disadvantaged. Yale students volunteer throughout the city, providing tutoring, mentoring, tax preparation, ESL classes, and food pantry services to the city’s residents.

Yale’s Pathways to Science programming provides extensive STEM outreach programming to New Haven youth. August was National Black Business Month, and the university-sponsored radio ads on WYBC to increase the visibility of the Black-owned businesses in Yale properties and throughout the city. We are continuing to sponsor this initiative through the holiday season. The university also hosts many events for students and families throughout New Haven, such as our monthly community breakfasts and our extensive educational outreach programs, and we regularly attend Community Management Team meetings to listen and engage with our neighbors.

Tags:

Sign up for our morning newsletter

Don't want to miss a single Independent article? Sign up for our daily email newsletter! Click here for more info.


Post a Comment

Commenting has closed for this entry

Comments

Avatar for Dennis..

Avatar for owen@large

Avatar for NickT

Avatar for formerNHIT

Avatar for Andrew Paul Giering

Avatar for Notimon

Avatar for deathandtaxes

Avatar for Cameron

Avatar for missthenighthawks

Avatar for LorcaNotOrca

Avatar for geoff

Avatar for Dennis..

Avatar for One City Dump

Avatar for Aconcernedcitizen

Avatar for TheInternet

Avatar for manofthepeople1

Avatar for NHCritic

Avatar for ACPD

Avatar for EngagedCitizen

Avatar for anonymous

Avatar for anonymous

Avatar for Westville voter

Avatar for missthenighthawks

Avatar for NHCritic

Avatar for Heather C.

Avatar for owen@large

Avatar for robn

Avatar for ElmCityAle

Avatar for missthenighthawks

Avatar for 1644

Avatar for GalleriaTerry

Avatar for Dennis..

Avatar for Andrew Paul Giering

Avatar for Dennis..

Avatar for 1644

Avatar for FD Member

Avatar for NHCritic

Avatar for Christopher Schaefer

Avatar for FD Member

Avatar for NHCritic

Avatar for robn

Avatar for owen@large

Avatar for NHCritic

Avatar for robn

Avatar for NHCritic

Avatar for robn

Avatar for NHCritic

Avatar for 1644

Avatar for 1644

Avatar for 1644