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September 26, 2013

Audit shows nothing unexpected in FY13 financial report

The Board of Trustees audit committee approved the University’s annual financial statement at its Sept. 17 meeting. Pitt Chief Financial Officer Arthur G. Ramicone said there was nothing unexpected in the FY13 financial report. “It was a solid year. We stayed on budget,” he told the University Times.

Operating revenues

Pitt’s fiscal year 2013 operating revenues rose $8.96 million to nearly $1.99 billion, with grants and contracts making up the bulk. Despite shrinking revenue from federal stimulus dollars (down from $50.32 million last year to $20.89 million), other grants and contracts rose to $738.5 million, up from nearly $730.09 million a year ago, according to the University’s FY13 consolidated financial statements.

That increase was not sufficient to counteract the declining American Recovery and Reinvestment Act (ARRA) dollars, with grants and contracts falling more than $20 million overall (from $780.41 million to $759.39 million).

Ramicone noted that ARRA contracts will decrease to about $5 million in the current fiscal year, which ends June 30, 2014, and will be gone next fiscal year.

Net tuition, the second-largest contributor of operating revenues, was up almost 4 percent from FY12, rising to nearly $545.7 million.

Operating expenses

The University posted operating expenses of $1.88 billion in FY13 — $8.4 million lower than the prior year. Ramicone said the lower expenses go hand in hand with fewer research dollars: less operating revenue for research in turn means less in related operating expenses.

The largest operating expense, compensation, fell nearly $3.32 million to $1.13 billion. The compensation line’s components — salaries and wages and fringe benefits — both fell slightly from FY12. Salaries and wages dropped from $869.17 million to $867.75 million, while benefits fell from $266.11 million to $264.22 million.

Endowment activity

Better interest rates contributed to investment gains (net of endowment distributions for operations) of $187.02 million in FY13. In FY12, endowment distributions wiped out gains, resulting in a negative $40.7 million in the investment gains line item.

Ramicone noted that the University received its first distribution — $3.6 million — from the Dietrich Foundation in FY13. That amount will rise as the foundation’s investments grow, Ramicone said.

The foundation, established by the late William S. Dietrich II, who was a Pitt alumnus and former Board of Trustees chair, supports charitable, scientific and educational purposes. (See Sept. 29, 2011, University Times.)

Pitt receives 25 percent of the foundation’s annual distribution as a contribution to the University’s endowment. Because the contributions go into the endowment, the dollars compound twice: first as part of the foundation’s assets, then as part of the endowment’s, Ramicone noted. While $3.6 million is no small sum, “In 10 or 20 years, the amount (that the distribution) will mean will be quite significant,” he said.

Net assets

Pitt’s net assets rose $402.71 million to stand at just over $3.8 billion at the end of FY13, up from $3.4 billion in FY12.


The FY13 financial report is posted at


In other business, the audit committee approved the firm KPMG   LLP as Pitt’s independent auditor and tax adviser for FY14. The firm has held that role at Pitt since 2010.

—Kimberly K. Barlow

Filed under: Feature,Volume 46 Issue 3

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