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October 28, 2010

Pitt bottom line recovering

The University’s net assets have not recovered entirely from fiscal year 2009’s largest-ever decline; however, Pitt’s consolidated financial statement for fiscal year 2010, which ended June 30, shows net assets have rebounded in part and Pitt’s endowment — a major negative factor in the FY09 performance — ended the year with a positive return.

After falling more than 17 percent to $2.6 billion at the end of FY09  (down from FY08’s $3.14 billion), net assets grew to $2.89 billion as of the June 30 end of FY10, up more than 11 percent from the prior year, but still off 8 percent compared with FY08.

Pitt’s endowment ended FY10 with $2.02 billion in net assets, up from $1.83 billion at the prior year-end, according to FY10 audited financial statements approved by the Board of Trustees audit committee Oct. 14.

FY10’s total endowment return (earnings plus net gains) totaled $235.1 million. In contrast, endowment returns for FY09 were a negative $499.8 million.

Gifts in FY10 added $21.85 million to Pitt’s endowment, up from $20.8 million in FY09.

“Last year was a very difficult year,” said Arthur G. Ramicone, vice chancellor for Budget and Controller. “This year the endowment did quite well. It bounced back. We had a return of over 12.5 percent,” he said, noting that the upswing has continued in the current fiscal year.


While the economic downturn was responsible for some of the FY09 decline in Pitt’s endowment value, some of the loss was related to securities fraud involving the operators of Westridge Capital Management and related firms, with whom the University had invested approximately $70 million. Last year, the University valued its Westridge investment at $34.9 million, representing a 50 percent write-down that continues to be carried in FY10.

Paul Greenwood, one of two fund operators indicted in 2009, pleaded guilty in July to the fraud charges and is to be sentenced in federal court in December. His partner, Steven Walsh, has not changed his not-guilty plea.

According to the U.S. Securities and Exchange Commission, Greenwood and Walsh “essentially treated their clients’ investments as their personal piggy bank to purchase multi-million dollar homes, a horse farm and horses, luxury cars and rare collectibles such as Steiff teddy bears.”

Those assets were frozen and are being liquidated. Earlier this month, Greenwood’s Steiff stuffed animal collection brought about $1.75 million at auction.

Ramicone said he was unsure when distribution of the proceeds from the liquidated assets would begin.

Revenue highlights

Research grants and contracts were the largest line item on the FY10 balance sheet’s revenue side.

Not counting nearly $43.7 million in grants and contracts associated with the American Recovery and Reinvestment Act (ARRA), which were listed separately, research revenues grew to $693.36 million in FY10, an increase of 6 percent.

Ramicone said the University is anticipating some $75 million in ARRA research funding this fiscal year, noting that the end of the stimulus plan is expected to reduce Pitt’s research total in FY12 and FY13. Distinguishing the ARRA dollars from other research revenue will clarify what is behind the expected decline. “We want to make clear it’s because of the stimulus’s effect,” Ramicone said.

Pitt’s research total in FY10 was $737 million, approximately 63 percent of which came from the National Institutes of Health.

After research, net tuition was the second-largest revenue line item, totaling $457.3 million. The commonwealth appropriation followed, adding $185.4 million.


Compensation, perennially the University’s largest expense, exceeded $1 billion in FY10 ($796.2 million in salaries and wages plus $240.7 million in benefits), up from $987.35 million in FY09.

Utility costs were the sole expense to decline, albeit modestly, in FY10, dropping 1.2 percent to $54.66 million. Ramicone attributed the result to lower-than-projected steam rates for the Bellefield Boiler Plant.

In other business, the audit committee approved KPMG as Pitt’s independent auditor and tax adviser for FY11.

KPMG replaced Deloitte and Touche in FY10.

The full FY10 report can be viewed online at

—Kimberly K. Barlow

Filed under: Feature,Volume 43 Issue 5

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