The following discussion and analysis provides an overview of the financial position of UM-Flint as of June 30, 2015. UM-Flint is audited as part of the consolidated financial report for the University of Michigan which is referenced on this website. An unaudited separate financial report for UM-Flint is also provided through the links below.
The University’s financial positon is strong with assets of 236 million, increasing $7.8 million in 2015. Primary changes in revenues and expenses (all funds) over the past year are outlined below:
Tuition and state appropriations are the primary sources of funding in the General Fund for the University’s academic programs. Downturns in the state of Michigan tax revenues continue to put pressure on tuition as the predominate source of funding. In response, the University shifted its budget model to reward enrollment growth, which has resulted in increased enrollments over the past decade. A predicted declining amount of high school graduates will continually be a challenge for the University.
To maintain academic excellence and offset reduced state appropriations, net student fees have increased 10.2% since FY 13, predominately driven by enrollment. The struggle to diversify revenues is shared by 12 of the other 15 state universities. Expanding diversification through research and philanthropy (upcoming capital campaign) will assist. The UM-Flint campus stands on its own and receives no financial support from other campuses.
Compensation Driven: 73% of General Fund expenditures are for benefits and compensation, 7% financial aid; 9.5% and the balance for non-salary purposes (Utilities, Maintenance, etc). The University consistently looks at each open position before filling to assess the value and share services when appropriate.
Cost-Containment Focused: The University has continued to lower its utility consumption, retrofitting existing facilities, and advancing energy purchases. Consumers Power has given over $200k in rebates due to this focus. UM-Flint participates with the Ann Arbor campus in leveraging spend volume with high quality vendors to maximize pricing discounts in a number of commodities, including office supplies, computers, and temporary office staff. The Library collection is used extensively saving UM Flint from duplicating what is already available in the campus system. Expansion of these commodities and services is expected in the future.
UM-Flint also is a partner in the cost alignment to market of various benefit costs, and uses MHealthy programs to curb the rate of increase in health care costs through prevention and early intervention.
Internal Controls: The Flint campus participates in leveraging best practices from Sarbanes-Oxley Act and focuses on key areas such as employment, purchasing cards, cash handling, journal entries, stewardship of gifts, financial aid administration, and employee travel and expense. The University completed audits in the areas of……
Growing Endowment: UM-Flint invests its assets in the University's long-term portfolio whose focus is on a diversified investment strategy designed to maximize total return (10% over 10 years), while the distribution policy is designed to protect the endowment corpus in real terms and provide dependable support for operations. UM-Flint's endowment currently has a market value of $98.7 million, an increase of $3.8 M from FY 2014. The major contributor to this growth was over $3.4M from gifts for various purposes. Investment performance of 4.2% was distributed to operations. The current distribution policy calls for a quarterly distribution at an annual rate of 4.5% of the 1 quarter lagged moving average of the market value of the past 28 quarters. This is generating $3.8 M of support to supplement operations (mostly scholarships and faculty posts).
Capital and Debt Activities: One of the critical factors in continuing the quality of the University’s academic and student life programs is the renewal of its capital assets. In the past year the University had every building assessed by ISES Corporation to validate the capital needs around each building. In FY 16 the University will update its deferred maintenance priority list. The University has allocated $1.4M annually to take care of deferred maintenance needs which in FY 2015 included the painting of University Pavilion, NBC elevators, campus road and deck repairs, roofs, tunnels and carpet replacement in Thompson Library and Theatre.
The University has only one external long term debt issue outstanding which is for the First Street Residence Hall. The principal amount is $15.7M with annually debt service payments of $950k at an interest rate of 4.45%. The principle outstanding as of 6/30/15 is $13.5M.
The University’s financial condition is good, however a continued focus on some of the threats mentioned previously must be maintained. Improved student success, retention, capital campaign and signature programs/brand are current initiatives to offset the University’s current challenges.
- Declining high school population in Genesee County
- Aging facilities
- Diversification in revenue streams
Links and Data
State of Michigan Public Act 201 Section 245 Reporting
(key University statistics reported to the State of Michigan annually)