Budget and Finance

UNIVERSITY OF CINCINNATI JUNE 30, 2 008

Non-Operating Excluding Other Revenues, Expenses, Gains or Losses

• State appropriations increased by $8 million in 2008 and $6 million in 2007, reflecting an improvement from
  the recent trend of flat or decreasing state support for higher education. State appropriations now contribute
  a significantly lower percentage of the overall funding of University operations, particularly compared to
  tuition. Nonetheless, such resources remain a vital source of funding for academic programs and
  administrative costs.


• Revenues from federal and state grants (non-exchange) provide for the recovery of direct and indirect costs.
  Such revenues increased $3 million in 2008 and $1 million in 2007. In a time of heightened
  competitiveness, especially for federal research funding, the University is maintaining its research base.


• The results of fund-raising efforts have been an important component of financial resources. Expendable
  gifts to the University totaled $56 million and $46 million in 2008 and 2007, respectively. It will be difficult to
  sustain the current level of operations without continued increases in donor support, which highlights the
  importance of the success of the 8-year gift campaign that spans 2005 – 2013.


• Investment income increased $12 million in 2008 and $6 million in 2007, primarily reflecting higher interest
  rates in the short-term market.


• The University’s fair value of investments decreased by $97 million in 2008 due to volatile financial market
  conditions, expendable endowment commitments, and fund-raising fees. The University’s fair value of
  investments increased by $167 million in 2007 due to a favorable investment market.

Overall Summary

There are significant transactions included in the income (loss) before other revenues, expenses, gains or

losses amount. These items, which fluctuate each year, are listed below with their net effect on the financial

statements.

• Fluctuations in the market value of investments


• Depreciation expense


• Additions to permanent endowments


• State capital appropriation revenue

The net effect of these significant transactions on income (loss) before other revenues, expenses, gains or

losses is shown below.

(in millions) 2008 2007 2006

Change in investment value $ (97) $ 167 $ 130

Depreciation (88) (87) (79)

Additions to permanent endowments 38 17 13

State capital appropriations 39 9 19

$ (108) $ 106 $ 83