No t e s t o Co n s o l i d a t e d F i n a n c i a l S t a t eme n t s J u n e 3 0 , 2 0 2 2 a n d 2 0 2 1 The composition of endowment net assets, including endowment-related pledges receivable of $37.8 million, by type as of June 30, 2021, was as follows (in thousands): Without Donor Restrictions With Donor Restrictions 2021 Total Donor-restricted: Portion of perpetual funds that is required to be retained permanently by explicit donor stipulation1 $ - $ 101,339 $ 101,339 Term endowment funds subject to a time or purpose restriction2 - 59,345 59,345 Board-designated 66,310 - 66,310 Total net assets $ 66,310 $ 160,684 $ 226,994 1 includes endowment-related pledges of $37.7 million 2 includes endowment-related pledges of $0.1 million From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor requires the university to retain as a fund of perpetual duration. These deficiencies result from unfavorable market fluctuations that may occur. As of June 30, 2022, donor-restricted endowment funds with an original gift value of $16.2 million had a market value of $15.6 million, resulting in a deficiency of $0.6 million. There were no such deficiencies at June 30, 2021. 12. Expenses by Functional and Natural Classification Expenses are presented by functional classification in alignment with the overall mission of the university. The university’s primary service mission is academic instruction and research, which includes program services and directly supporting functions such as the university’s library system and art museum. Student services and support include various student-supporting functions such as admissions and enrollment services, and athletics, as well as health care clinics and other auxiliary enterprises. General administrative and operations include fundraising and other institutional support. Natural expenses attributable to more than one functional expense category are allocated using reasonable cost allocation techniques. Depreciation and plant operations and maintenance expenses are allocated on a square footage basis. Interest expense on indebtedness is allocated to the functional categories which have benefited from that associated debt. Expenses by functional and natural classification for the year ended June 30, 2022, were as follows (in thousands): Academic and Research Student Services and Support General Administrative and Operations Total Salaries and wages $ 216,847 $ 44,637 $ 42,479 $ 303,963 Employee benefits 53,457 7,782 13,052 74,291 Supplies and services 63,335 25,255 23,323 111,913 Space and occupancy 46,752 8,690 11,368 66,810 Other 19,015 20,939 21,403 61,357 Allocations: Depreciation 29,289 13,257 5,685 48,231 Interest 6,492 10,469 2,514 19,475 Operations and maintenance 8,680 7,736 (16,416) - $ 443,867 $ 138,765 $ 103,408 $ 686,040 37
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