We write to you today with our yearly update on the financial state of the university.
For the fiscal year ending June 30, 2017, Yale’s operating results—on a total budget of $3.6 billion—showed a surplus of $115 million university wide. This includes a modest surplus in the central campus budget, primarily reflecting donations of restricted funds that must support specific programs in future years. The remainder of the surplus comes from some of the professional schools and especially from the medical school, a result of revenues from the clinical practice. Meanwhile, a successful year for the university’s investment team resulted in an impressive 11.3 percent endowment return. And fundraising generated new commitments of $633 million for the year, the third-largest total in Yale history.
Our task now is to maintain the commitment and focus that have brought us financial strength. The pursuit of a “more excellent Yale” depends on it. We must continue to make space in the budget each year so that we can move forward on the strategic investments that will shape Yale’s future: the initiatives to build on our academic strengths, the selective growth in key areas where a great global research university must excel, and the facilities that support our core mission.
After a very good year, where do the challenges lie? First, we cannot always rely on such exceptional endowment results. In fact, in this economy it would be imprudent to expect steady annual returns of even 8.25 percent—the rate necessary to hold steady and account for inflation. (Recall that last year’s return was 3.4 percent. Just as we did not panic then, we should not over-celebrate now.) At the same time, we are still working to address deficits in funding for retiree health care and pensions, which amounted to $1.1 billion at the end of last year. We have a long way to go before we can bring this vital aspect of our budget back into balance.
We invite you to visit a new website we have created to share more detailed information about Yale’s budget and endowment. It includes current data and reports, links to relevant resources, a series of educational videos, and answers to common questions. We hope these materials will be of interest to you and provide a useful point of reference in conversations about Yale’s finances.
We are grateful to the many colleagues around the university who have contributed to our solid financial footing. You have embraced a campus-wide culture of innovative costs savings, allowing us to redirect those funds toward our academic priorities. You have made the kind of strategic choices that help us to advance Yale’s mission while preserving our ability to plan for the future. Thanks to you, we can look forward not just to maintaining, but to advancing the university’s excellence.
President and Chris Argyris Professor of Psychology
Provost and William C. Brainard Professor of Economics
Senior Vice President for Operations
Vice President for Finance