Every year through the annual budget process
Yale thoroughly reviews its financial resources
and the strategic goals
that serve to advance the university's mission.
We carefully consider new and continuing opportunities
for supporting students, faculty and staff
across the university
and for partnering with our home city of New Haven.
The purpose of this video is to explain where funding for
the budget comes from, how it's allocated,
and how we make those decisions.
[upbeat music]
(Scott) The university budget falls into two basic categories.
First is the operating budget, which is the ongoing costs
of what it takes to run a university
on a day to day basis throughout the year.
The other is the capital budget and the capital budget
is what it takes to be able to build new buildings
or renovate existing buildings for their use.
One key to the budget
is that this is incredibly collaborative.
It involves input from
so many different places in the university,
all of whom are working together
to try to develop a budget by late spring
that can be approved by the corporation
and then move forward to define spending in the coming year.
This begins with a set of parameters
that are given to each budgetary unit
that define things like what we anticipate inflation
will be, what we anticipate the endowment return will be.
Those are then brought back to what's called
the Budget Advisory Group.
The Budget Advisory Group is comprised of the provost,
those in the Provost Office, senior administrative leadership
in the Department of Finance and Operations,
as well as several faculty that provide perspective
and input to understand both the financial side
as well as the academic side of all these budget requests.
We work to create a budget which reflects
our current needs, but also reflects the need to be
financially responsible into future generations.
External revenue
for the operating budget comes from a variety of sources.
For the past year, 2022, which runs from July 1st 2021
until June 30th 2022.
That revenue contributes just over $4.7 billion to the budget.
It might be surprising to see that tuition, room and board
comprise a relatively small slice of this overall revenue.
It's just $450 million or about 10% of the university budget.
That's the net amount after 50% of the gross tuition
room and board is returned in the form of financial aid.
The two biggest sources of income
are spending from the endowment, which contributes about
1.6 billion or 33%
and medical services income,
which is 1.4 billion or 29% of the total budget.
The third largest contributor of revenue is grants
and contracts at $921 million or 19%
of the total budget.
[thoughtful music]
Yale's annual operating budget
is a combination of all the sources of revenue
we anticipate for the coming year
as well as all of the expenses or spending we anticipate
for the coming year.
Every year the anticipated expenses of the annual budget
are typically close to the amount of anticipated revenue.
For the fiscal year 2022, expected expenses
net of internal revenue are about $4.6 billion.
Yale seeks to improve the world by creating knowledge
and sharing that knowledge,
and that's a mission that's carried out by and for people.
So it makes sense that the biggest category
of expenses at Yale
are the salaries and benefits for the people who work here.
The nearly 5000 faculty and about 10,000 staff.
In the fiscal year 2022 budget, salaries and benefits total
$2.9 billion or nearly two thirds
of the university's budget.
Included in the $2.9 billion is about
$700 million in employee benefit costs.
Most of which over 90% are health and retirement related.
Non-salary expenses account for another $1.5 billion
of the budget.
These include a wide range of costs, including utilities,
medical supplies and services, lab supplies and equipment,
consulting and professional services, acquisitions of books,
periodicals and artworks, and many other costs.
You can find more details on these expenses
and much more about the operating budget
in the University Budget book,
which is available to all faculty,
staff and students on the Provost's website.
The Yale budget process allows each school and unit to
bring forward their annual budget
in line with their strategic initiatives that they've
put forth in a long range plan for approval.
This is an opportunity for those that get provostial funds
to ask for funding for ideas that they have
put forward in line with the mission of their school
or in mission of the university.
Once the officers, deans and unit leaders,
along with their lead
administrators, put together their proposals,
we meet with the Budget Advisory Group
during the months of March and April.
Everyone comes forward and does a presentation.
Decisions are made really based on
the operational needs of the unit
and we also look at the president and provost
strategic initiatives for the next five to ten years.
And we also look at what ideas will
have the strongest outcomes
on the university and advance the mission of the university.
We summarize the entire budget for the provost
who then presents it to the president,
who then presents it in the June Corporation meeting
to the trustees of Yale University for approval.
Once we gain approval,
we communicate all that to the lead
administrators, the deans and officers for the new year,
and that happens in June
and we turn over the new year July 1st.
[inspiring music]
Obviously the budget is
everything that is the university,
and so it supports everything that is in the university:
all the people, all the places, all the collections,
all the operations are supported by this budget.
It involves every aspect of what the university does:
from the clinical practice to what collections are found
in the libraries, to what the salaries are for faculty
and staff, what financial aid we provide to students.
The most important thing the university does is to
recruit the next generation of scholars
as we create the community of scholars
that is Yale University.
The budget is the key tool that we utilize for that
recruitment as we further diversify our faculty
and as we develop the emerging fields
that are happening across different disciplines,
it's a moment to reimagine
what the fields are, to reimagine
what the university looks like,
what the composition of the university is,
and then to make these investments in people
and in the spaces
that are needed for those people to thrive.
The generosity of our donors over multiple decades
makes it possible for us to admit students without regard
to their need, without regard to their financial circumstance,
which is fundamentally an opportunity
to have the most diverse
student body possible where we can recruit students
to campus from all backgrounds independent of what
their financial resources reflect
that we can bring them from really all over the world.
We can create the most diverse student body utilizing the power
of the endowment
to be able to cover the costs of an education at Yale.
The university's budget
has to be part of building an inclusive workplace.
(Deborah) When we start to think about the composition
of the organization,
we think about faculty,
we think about students,
we certainly think about the 11,000
plus staff that are part of the community.
But I also think the word community is what's
most important to me.
And so the university's budget allows us to build community
through a variety of different ways
For staff diversity it helps us to attract talent.
The university's budget includes a large commitment
to the City of New Haven.
I believe our commitment is approximately $135 million
over a six year period.
And as a result of that, I think it makes us the largest
university commitment to its host city.
And for me
that's quite exciting given that I'm a resident and
native of the city of New Haven.
The budget process is dynamic.
It reflects the revenue that's coming into the university.
Sometimes the endowment goes up
and sometimes it goes down and we have to make
adjustments accordingly.
And so through the generosity of donors over
multiple years, over centuries,
that endowment has grown to the point
where it provides
a substantial portion of our budgetary support
that makes it possible for us to invest in the future,
for us to carry out our mission, for us to support our students
and our faculty and our staff,
to create a community of scholars
that is seeking the future of academic disciplines
and thriving in all of its missions.