Financial Highlights from Angela Blanton, Vice President for Finance and Chief Financial Officer
It is my honor to present Carnegie Mellon University’s Annual Financial Report for the fiscal year ended June 30, 2023 (FY23).
Carnegie Mellon’s vision is to advance humanity through work that matters; we do this not only by investing in our education and research mission, but by eliminating obstacles for the great thinkers, innovators, artists, and leaders of the future.
The financial strength and sustainability of Carnegie Mellon unlocks great potential to advance humanity and make broad societal impacts both locally and globally.
This would not be possible without the continued support of our vast network of alumni, partners, and friends. In FY23, Make Possible: The Campaign for Carnegie Mellon University surged past its fundraising goal of $2 billion, reaching that incredible milestone more than 18 months ahead of schedule, and announcing a one-year extension to continue the campaign’s momentum. It is impossible to overstate the opportunities that these funds have created and will create, including endowed professorships, student scholarships and fellowships, academic support, enhancements to the student experience, physical infrastructure improvements, and the ability to invest in major strategic projects. The generosity of our Carnegie Mellon community is awe-inspiring and puts the university in a stronger position than ever before.
Below, stories of impact from FY23 highlight how Carnegie Mellon continues to advance humanity through endless discovery, thoughtful leadership, and ongoing investment in access to education, opportunity, and the pursuit of excellence.
Advancing Humanity Through Discovery
Carnegie Mellon opens new pathways of discovery that accelerate innovation and invention across disciplines. To enable this, it is paramount to invest in infrastructure and programs that benefit our students and support our community’s collective imagination and creative power.
We are eagerly anticipating the start of construction for the Richard King Mellon Hall of Sciences, a new hub for scientific research, collaboration, and innovation on CMU’s campus. The development of the building was made possible by a $75 million lead grant from the Richard King Mellon Foundation. In the true interdisciplinary spirit of CMU, the building will not only bring together the brightest minds in science, but also the arts, as the new home of the Institute for Contemporary Art (ICA). The ICA’s location in the new building, made possible by a $15 million grant from the Juliet Lea Hillman Simonds Foundation and Henry L. Hillman Foundation, will greatly expand its gallery space and capacity, while also elevating its importance as a civic institution, especially with a closer proximity to the Carnegie Museums.
Carnegie Mellon University Libraries also received a generous grant from the Alfred P. Sloan Foundation to support and coordinate open-source activities across campus. Keith Webster, Dean of University Libraries, received the grant to establish a new Open Source Program Office (OSPO), which will support the development of open-source software and tools at CMU. Early initiatives at CMU’s OSPO include support for automated science, which is especially relevant given the announcement of the CMU Cloud Lab last year, the world's first cloud lab at a university.
Carnegie Mellon researchers received $20 million in renewed funding from the National Institutes of Health, which will provide infrastructure and leadership for a project to map the human body at the cellular level. The project, called the Human BioMolecular Atlas Program (HuBMAP), is creating tools that will be openly available to researchers to accelerate understanding of how cell and tissue organization and function affect human health.
On the transportation front, Carnegie Mellon faculty and leadership were joined by Pennsylvania transportation officials at the launch of a revolutionary new autonomous vehicle testing, safety, and training facility called PennSTART. The facility will benefit emergency responders, transportation technology companies, and research institutions, further promoting the state and region’s position as a national leader in autonomous vehicle testing and smart transportation development.
Through strategic investments, generous gifts, and close partnerships, we can target investments that unlock groundbreaking research and novel lines of inquiry, enabling our faculty and students to push the boundaries of discovery in exciting new ways.
Advancing Humanity Through Leadership
Renowned for bold and inclusive leadership, Carnegie Mellon forges the path ahead toward solving some of humanity’s most complex problems.
In September 2022, President Biden announced that Southwestern Pennsylvania was awarded a $62.7 million Build Back Better grant over four years. Carnegie Mellon was integral in securing the grant and will play a key role in implementing the projects outlined in the proposal, which will expand Pittsburgh’s robotics, artificial intelligence (AI), and automation cluster to 11 counties in Southwestern Pennsylvania and broaden access to the tech economy.
These projects are designed to address specific regional challenges, including critical supply chain access for local industries; workforce development with a focus on emerging technologies; increasing adoption of robotics and automation by the region's largest sectors; and expanding opportunities in the innovation ecosystem for people of color, women, and rural residents. CMU President Farnam Jahanian is co-chair of the Southwestern Pennsylvania New Economy Collaborative, the governing board that advised on the region’s proposal and will oversee and ensure the successful implementation of the grant’s projects.
One of the sites in Southwestern Pennsylvania that will receive funds from the Build Back Better grant is Carnegie Mellon’s Mill 19 advanced manufacturing facility. Mill 19 has become a shining example of our region’s economic transformation and commitment to sustainability, which took center stage during the inaugural Global Clean Energy Action Forum hosted by the U.S. Department of Energy and CMU in Pittsburgh in September 2022. The forum attracted energy ministers and leaders from around the world and featured several tours of CMU facilities and demonstrations of innovations in manufacturing being pioneered right here in Pittsburgh.
As Carnegie Mellon’s national influence continues to grow, so does its ability to attract federal funding to support its impactful research. The university has been tapped to lead two new national research institutes doing fascinating and essential work. A new NASA Space Technology Research Institute (STRI) led by Carnegie Mellon will endeavor to dramatically shorten the amount of time needed to design, manufacture, and test parts and materials for vehicles used in spaceflight and exploration. CMU has also been chosen to lead the new AI Institute for Societal Decision Making established by the National Science Foundation.
This $20 million initiative will catalyze collaborations between AI researchers and social scientists to develop powerful human-centered AI tools for critical uses including disaster management and public health.
These are just a few examples of how CMU has built a reputation as a trusted, thoughtful leader driving progress and sustainability in our region, our nation, and beyond.
Advancing Humanity Through Excellence
Carnegie Mellon is a highly sought institution for exceptionally talented students — a place where the best and brightest can learn from each other and accomplish remarkable things together.
To foster and maintain that environment of excellence, Carnegie Mellon is sharply focused on the issue of access and ensuring that all admitted students can come to CMU to pursue their academic passions and succeed.
In partnership with the Norman and Ruth Rales Foundation, we were thrilled to announce in February 2023 the establishment of the CMU Rales Fellows Program, a staggering $150 million investment that will eliminate cost as barrier to select master's degree and Ph.D. programs for students from under-resourced and underrepresented backgrounds, including first-generation students. In addition to full tuition and a stipend, Rales Fellows will be provided developmental and networking support during their time at CMU and beyond. This is a groundbreaking program that will promote equitable opportunities and expanded access to education and careers in STEM fields and expects to support a cohort of more than 80 fellows annually once fully implemented.
CMU artists continue to deliver experiences and performances that move audiences and win wide recognition. In February 2023, School of Drama alumna Patina Miller took home a Grammy Award for her work as the Witch in the Broadway revival of Stephen Sondheim’s “Into the Woods,” which won for Best Musical Theater Album.
And of course, the students here at Carnegie Mellon find many ways to express their excellence both in and out of the classroom. Case in point: the CMU men’s golf team won the first NCAA Division III Championship in university history! In addition to fostering talent academically, we pride ourselves in making investments that enhance the holistic CMU experience and allow our students’ minds, bodies, and spirits to thrive — such as the Highmark Center for Health, Wellness and Athletics, one of our major campus projects currently under construction.
Through a constant commitment to excellence in everything we do at Carnegie Mellon, we nurture and prepare our students to be the leaders humanity needs now and in the future.
Financial Results
I now present you with an overview of our financial results, which highlight the university's performance for the fiscal year ended June 30, 2023.
Overall Results
The university’s operating revenues exceeded its operating expenses, yielding an operating gain of $118.2 million. University net assets increased $303.6 million or 5.8% since the fiscal year ended June 30, 2022 to an ending value of $5.6 billion on June 30, 2023. The asset growth was driven by the operating surplus, growth in restricted gifts, and gains associated with investment income generated by the university’s working capital liquidity portfolio.
Investments
Carnegie Mellon’s investment portfolio represented 57.9% of total assets and was valued at $4.0 billion on June 30, 2023. The portfolio, which includes endowment assets totaling $3.1 billion, decreased by $38.2 million or -1.0% from June 30, 2022. The decrease can be attributed to the long-term pool investment return of 2.9% offset by activity in other investments.
Long-Term Debt
On November 15, 2022, Carnegie Mellon issued one senior note in the aggregate amount of $70.0 million to a life insurance company. The note bears interest payable semi-annually with principal due on November 15, 2052. Proceeds from the issuance will be used for general corporate purposes of the university.
In FY23, Standard & Poor’s maintained the university’s long-term credit rating of “AA” with a positive outlook, citing Carnegie Mellon’s extremely strong enterprise profile characterized by solid demand and research presence, strong financial profile with positive operating results, and diverse revenue streams.
Operating Revenues and Expenses
Operating revenues for FY23 were $1.59 billion, an increase of $120.6 million, or 8.2%, from Fiscal Year 2022 (FY22). Through June 30, 2023, operating expenses totaled $1.48 billion, an increase of $129.2 million, or 9.6%, from FY22.
Fiscal Year 2023 Operating Revenues
The increase in operating revenues was driven primarily by investment income growth, tuition rate and enrollment increases in both undergraduate and graduate populations, as well as increased sponsored research funding. Driven by higher short-term interest rates, Investment Income increased by $41.3 million (361.7%) over FY22. Tuition and other educational fees, net of financial aid, increased by $50.5 million or 7.6% to $714.4 million compared to FY22.
FY23 Sponsored Research revenues totaled $494.0 million; a $28.8 million (6.2%) increase over FY22. Sponsored revenue growth was driven in large part by funding from the Department of Defense, the National Science Foundation, the Office of Naval Research, and various industry partners.
Fiscal Year 2023 Operating Expenses
Personnel costs, consisting of salaries, wages, and employee benefits, remain the university’s single largest category of expense totaling $981.9 million or 66.5% in FY23, an increase of $63.7 million or 6.9% from the prior fiscal year. Over the past two fiscal years, the university has made intentional efforts to further invest in employees by addressing retention, market, and equity-based compensation across campus, including annual merit increases and one-time payments made to eligible employees. Other operating expenses increased by $65.5 million or 15.3% driven by increased campus operations and interest expense supporting capital investments.
Looking Ahead
Since its founding, Carnegie Mellon has always been an institution of the future, and we take an active role in shaping that future for the greater good. The success of the Make Possible campaign and continued financial strength of the university puts us in the position to drive the future of innovation and expand knowledge to create shared prosperity across our region and around the world. Advancing humanity means a better world for all of us — at Carnegie Mellon, that promise is woven into our community, our culture, and our commitments.
Sincerely,
Angela Blanton
Vice President for Finance and Chief Financial Officer
November 2, 2023