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 3 a n d 2 0 2 2 The composition of endowment net assets, including endowment-related pledges receivable of $39.2 million, by type as of June 30, 2022, was as follows (in thousands): Without Donor Restrictions With Donor Restrictions 2022 Total Donor-restricted: Portion of perpetual funds that is required to be retained permanently by explicit donor stipulation1 $ - $ 106,315 $ 106,315 Term endowment funds subject to a time or purpose restriction2 - 40,312 40,312 Board-designated 54,139 - 54,139 Total net assets $ 54,139 $ 146,627 $ 200,766 1 includes endowment-related pledges of $39.1 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, 2023, donor-restricted endowment funds with an original gift value of $1.6 million had a market value of $1.5 million, resulting in a deficiency of $0.1 million. 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. 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, 2023, were as follows (in thousands): Academic and Research Student Services and Support General Administrative and Operations Total Salaries and wages $ 239,852 $ 49,207 $ 49,018 $ 338,077 Employee benefits 58,543 9,079 12,056 79,678 Supplies and services 72,380 33,193 24,876 130,449 Space and occupancy 50,780 11,925 11,785 74,490 Other 20,949 11,781 24,290 57,020 Allocations: Depreciation 28,146 12,126 5,965 46,237 Interest 6,185 10,213 7,476 23,874 Operations and maintenance 9,202 7,831 (17,033) - $ 486,037 $ 145,355 $ 118,433 $ 749,825 37
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