Annual Financial Statement Analysis – FY 2010-2014

Annual Financial Statement Analysis – FY 2010-2014 Finance and Administration Committee – January 15, 2015

Page F-21

Overview

Purpose • Provide information on the financial health of the university, including

key financial metrics over time and compared to peer data.

Overview

• Public universities operate in a challenging financial environment o Volatile and declining levels of state funding o Pressure/obligation to keep tuition rates low for our students o Historic pressure to keep reserves low o Need to grow self-generated revenue o Minimal ability to budget for capital renewal o Balance competing goals of financial strength with access and affordability

Slide 1 Page F-22

Financial Analysis

Analysis separated into three sections: • Trend analysis of key financial information (Slides 3-8) • Comparison of key financial information to peer data (Slides 9-21) • Trend analysis of specific financial metrics (Slides 22-30) o Debt policy metrics o Core financial health metrics

Slide 2 Page F-23

Trend Analysis of Key Financial Information

• Presents key financial information over the past five years • Continues use of existing analysis model (OUS) • Design helps to gain insight into University operations

Slide 3 Page F-24

Slide 4

*Current assets have been restated to estimate the amount of cash that since 2012 is now included in non-current investments.

1.8 1.8

1.4 1.5 1.5

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2010* 2011* 2012 2013 2014

Oregon State University Current Ratio

Current Assests/Current Liabilities

Page F-25

Slide 5

StudentTuition & Fees

Grants &Contracts

AuxiliaryEnterprises Other State Appropriations Non-operating

2010 21% 25% 13% 5% 22% 15%2011 24% 25% 14% 5% 20% 14%2012 26% 25% 14% 5% 16% 14%2013 27% 23% 15% 5% 16% 14%2014 30% 21% 14% 5% 16% 14%

0%

5%

10%

15%

20%

25%

30%

35%

Oregon State University Contribution Margin

Page F-26

Slide 6

Oregon State University Contribution Margin

Fiscal Years 2010 & 2014

Student Tuition & Fees

21%

Grants & Contracts

25%

State Appropriations

22%

Non-operating 15%

Auxiliary Enterprises

13%

Other 5%

2010

Student Tuition & Fees

30%

Grants & Contracts

21%

State Appropriations

16%

Non-operating 14%

Auxiliary Enterprises

14%

Other 5%

2014

Page F-27

Slide 7

Instruction Other Core Support Services andStudent Aid Institutional Support Physical Plant Other

2010 26% 40% 14% 7% 4% 9%2011 27% 38% 15% 7% 4% 9%2012 27% 36% 15% 7% 4% 10%2013 29% 34% 15% 8% 4% 10%2014 31% 32% 15% 8% 4% 10%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Oregon State University Expenditures

Fiscal Years 2010 - 2014

Page F-28

Slide 8

Research and Public Service

32%

Instruction 31%

Support Services &

Aid 15%

Institutional Support

8%

Physical Plant 4%

Other 10%

2014

Research and Public Service

40%

Instruction 26%

Support Services &

Aid 14%

Institutional Support

7%

Physical Plant 4%

Other 9%

2010

Oregon State University Expenditures

Fiscal Years 2010 & 2014

Page F-29

Analysis of Key Financial Information to Peer Data

• Presents key financial information comparison to peer data for FY 2013 o FY 2014 data not available o Peer information only available if peer institution has separate audit

• Continues use of existing analysis model (OUS) • Design provides a view of the University’s operations relative

to peer institutions

Slide 9

Page F-30

Slide 10

25.8

21.7

20.4 20.0

16.9

18.7

Peer Average 19.4

0.0

5.0

10.0

15.0

20.0

25.0

30.0

OSU Arizona UC Davis Iowa State NC State MichiganState

Oregon State University Peer Institutions

Student/Faculty Ratio

Calculation: Full-time equivalent (FTE) students /FTE faculty members

Page F-31

Slide 11

1.5 1.7

2.2

1.3

3.6

1.1

Peer Average 2.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

OSU Arizona UC Davis Iowa State NC State MichiganState

Oregon State University Peer Institutions

Current Ratio

Page F-32

Slide 12

27% 25% 26% 20%

25% 18%

32%

16% 19% 14%

17%

21% 36% 14%

23% 24% 27% 33% 17%

20%

18%

15% 12% 11% 5% 16%

15%

14%

14% 12%

19%

7%

9%

10%

13%

5% 9%

3%

19% 11%

1%

8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

OSU PeerAverage

Arizona UC Davis Iowa State NC State MichiganState

Oregon State University Peer Institutions

Contribution Ratio

Student Tuition and Fees State Appropriations Grants and Contracts

Auxiliary Enterprises Nonoperating Revenues Other

Page F-33

Slide 13

State $5,576

State $9,632 State

$6,924

State $10,389 State

$8,274

State $15,654

State $6,917

Tuition & Fees $9,492

Tuition & Fees

$11,835 Tuition & Fees

$12,551

Tuition & Fees

$12,810

Tuition & Fees $9,844

Tuition & Fees $7,852

Tuition & Fees

$16,120

$-

$5,000

$10,000

$15,000

$20,000

$25,000

OSU Peer Average Arizona UC Davis Iowa State NC State MichiganState

Oregon State University Peer Institutions

State Appropriations and Tuition & Fees per Student FTE

$19,475

$23,199

$18,118

$23,506 $23,307

$15,069

$21,467

Page F-34

Slide 14

$229,851

$309,986

$436,308

$141,559 $151,330 $171,134

Peer Average $242,063

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

OSU Arizona UC Davis Iowa State NC State MichiganState

Oregon State University Peer Institutions

Grants and contracts revenues per faculty FTE

Page F-35

Slide 15

$9,059

$10,646

$19,026

$8,132

$12,580 $13,618

Peer Average $12,801

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

OSU Arizona UC Davis Iowa State NC State MichiganState

Oregon State University Peer Institutions

Instruction cost per student FTE

Page F-36

Slide 16

$215,121

$285,223

$343,588

$125,932 $134,040 $142,079

Peer Average $206,172

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

OSU Arizona UC Davis Iowa State NC State MichiganState

Oregon State University Peer Institutions

Research costs per faculty FTE

Page F-37

Slide 17

$60,623

$102,491 $106,052

$102,559

$45,458

$35,380

Peer Average $78,388

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

$110,000

$120,000

OSU Arizona UC Davis Iowa State NC State MichiganState

Oregon State University Peer Institutions

Academic support costs per faculty FTE

Page F-38

Slide 18

$1,052 $1,159

$3,087

$1,018

$752

$1,075

Peer Average $1,418

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

OSU Arizona UC Davis Iowa State NC State MichiganState

Oregon State University Peer Institutions

Student services costs per student FTE

Page F-39

Slide 19

$1,177

$1,581

$1,763

$1,055

$1,596

$1,306

Peer Average $1,460

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

OSU Arizona UC Davis Iowa State NC State MichiganState

Oregon State University Peer Institutions

Student aid costs per student FTE

Page F-40

Slide 20

11.6%

12.5% 11.9%

12.9%

14.8% 14.6% Peer Average 13.4%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

OSU Arizona UC Davis Iowa State NC State MichiganState

Oregon State University Peer Institutions

Institutional support & operation and maintenance of plant as % of total expenditures

Page F-41

Slide 21

OSU Arizona UC Davis Iowa State NC State MichiganState

PrimaryReserve 17.9% 28.6% 42.6% 43.8% 29.2% 68.1%

Debt Burden 3.2% 5.8% 4.6% 3.8% 2.7% 9.5%

Prim

ary

Rese

rve

Prim

ary

Rese

rve

Prim

ary

Rese

rve

Prim

ary

Rese

rve

Prim

ary

Rese

rve

Prim

ary

Rese

rve

0%

10%

20%

30%

40%

50%

60%

70%

Oregon State University Peer Institutions

Primary reserve & debt burden ratios

Page F-42

Trend Analysis of Specific Financial Metrics

• Presents specific financial metrics including o Metrics for the Debt Policy o Metrics considered industry standard core measures of financial health

• Design provides a view of the University’s financial health

Slide 22

Page F-43

Slide 23

3.5%

3.7%

3.4%

3.2%

3.0%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

2010 2011 2012 2013 2014

Oregon State University Debt Burden Ratio

Calculation: Debt service*/Adjusted Expenses(I) *Debt service & debt excludes State paid debt, example XI-G

(I) Total expenses: Operating expenses & principal and interest paid less depreciation expense

Page F-44

Slide 24

2.2

3.3

4.8

4.4

4.1

0.0

1.0

2.0

3.0

4.0

5.0

2010 2011 2012 2013 2014

Oregon State University Debt Service Coverage Ratio

Calculation: 3 year average net revenues available for debt service/Debt service *Debt service & debt excludes State paid debt, example XI-G

Page F-45

Slide 25

36.5% 35.9% 38.1%

35.1%

41.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

2010 2011 2012 2013 2014

Oregon State University Income Statement Leverage Ratio

Calculation: Debt/Revenues *Debt service & debt excludes State paid debt, example XI-G

Page F-46

Slide 26

121.2%

132.6%

113.5%

125.3%

107.7%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

2010 2011 2012 2013 2014

Oregon State University Viability Ratio

Calculation: Expendable net assets/Debt *Debt service & debt excludes State paid debt, example XI-G

Page F-47

Slide 27

47.8% 49.9%

43.1% 43.6% 43.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

55.0%

2010 2011 2012 2013 2014

Oregon State University Primary Reserve Ratio

Calculation: Expendable net assets/Operating expenses plus interest expense

Page F-48

Slide 28

10.6%

8.2%

-0.7%

3.6%

6.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2010 2011 2013 2014

Oregon State University Return on Net Assets Ratio

2012

Calculation: Change in net assets/Total net assets

Page F-49

Slide 29

4.4%

2.7%

-6.9%

-3.2% -3.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

2010 2011 2012 2013 2014

Oregon State University Net Operating Revenues Ratio

Calculation: Income(loss) before capital & other/Operating revenues plus non-operating revenues

Page F-50

Slide 30

Oregon State University Core Financial Health Metrics – Graphical Presentation

Page F-51

Questions?

Slide 31

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