Amid conditions that continued to challenge the economy as a whole and the higher education and health care sectors in particular, the University fared well during 2002-03 in areas that are critical to the institution's financial health:
(1) Endowment Performance. Due in general to the upturn in the capital markets toward the end of the 2002-03 fiscal year and to the sound policy of maintaining a well-diversified portfolio, the University's endowment achieved a positive total return for the fiscal year. Investment performance of 4.7% was above average for the University's peer group.
(2) Performance of Patient Care Activities. Patient care activities account for over 62% of the University's annual revenue. Once again during 2002-03, the University's flagship hospital, Strong Memorial Hospital, exceeded its financial target with a positive margin of over 4.4%. This performance is exceptional, particularly among academic medical centers in the State of New York. The performance of the University's health care affiliated entities continued to improve during the year. In aggregate, they operated on a break-even basis.
(3) Academic Operating Performance. The academic divisions all operated within their authorized budgets and continued to make measurable progress on their strategic initiatives.
Overall, the University ended the year in a solid financial position with net assets of $1.9 billion and is well positioned to face the financial challenges that are likely to continue over the next several years. Adherence to the Renaissance Plan of the College and the Medical Center Strategic Plan and careful management of costs and volume in the patient care areas will remain institutional strategies. Critical to the University's continued financial health are careful management of the endowment portfolio and endowment use, focused capital budgeting and debt planning, and strengthening the asset base of the academic enterprise. The planned Campaign for the College will be important in that regard.
In the administrative and support arenas, further positive results are expected from initiatives aimed at containing costs and increasing efficiency. These initiatives include self-funding of employee health insurance, innovative purchasing programs including collaborations with other institutions, and energy management including a planned cogeneration project.
The audited financial statements are accompanied by a detailed commentary prepared by the University Controller. You are invited to contact the Controller, Douglas Wylie, or me, Ronald Paprocki, you have questions regarding the material in this document or other questions regarding the University's financial situation.
Ronald J. Paprocki
Senior Vice President for Administration and
Finance and Chief Financial Officer