Financial Summary and Strategic Planning Insights for Fiscal Year 2023
Explore the comprehensive financial overview and strategic planning details for Fiscal Year 2023, including bond ratings, revenue allocation, operating expenses, net position statements, and more. Gain insights into key investments, revenue sources, expense distributions, and performance metrics to inform decision-making and future financial strategies.
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Presentation Transcript
Financial Summary Board of Trustees Presentation March 2024
FY2023 Financial Summary Bond Rating and Metrics Financial Planning
FY2023 Financial Statement Summary
Fiscal Year 2023 Strategic fiscal planning Strategic fiscal planning Continued Wellness and Safety Investments Inflationary impacts Hospital Housing and auxiliaries SHIELD testing programs winding down Capital Investments Healthy financial investment returns 4
FY23 Revenues Used for Operations Investment Income 2% Change from FY22 Grants, Nonoperating 4% Educational and Other Activities 9% Tuition and Fees, net 22% Tuition and Fees Sponsored Programs Patient Care (Hospital) Patient Care (Physician Practice Plans) State Appropriations Auxiliary Enterprises Private Gifts Educational and Other Activities Grants, Nonoperating * Investment Income 1.2% 4.0% 12.6% 2.6% 0.1% 2.2% 14.8% -10.0% -35.6% 111.4% Private Gifts 4% Auxiliary Enterprises 7% $6.2 Billion Sponsored Programs 18% State Appropriations 11% Patient Care (Physician Practice Plans) 5% Patient Care (Hospital) 18% * FY22 had federal stimulus expenditures Excludes payments on behalf
FY23 Operating Expenses Depreciation 6% Student aid 3% Change from FY22 Compensation and benefits 3.0% Supplies and services 3.9% $5.7 Billion Student aid * -29.0% Supplies and services 35% Compensation and benefits 56% Depreciation 12.8% * FY22 had federal stimulus expenditures
FY23 Statement of Net Position ($ Billions) Increase from FY22 Total Assets and deferred outflows of resources $0.680 6.9% $ 10.484 Total Liabilities and deferred inflows of resources $ 4.581 $0.070 1.5% Net Position $ 5.903 $0.611 11.5% Impact of Other Post-Employment Benefits (OPEB) $ 0.153 Impact of OPEB $ 0.458 Increase in net position, excluding OPEB
Bond Ratings Bond Ratings and Metrics and Metrics
Comparative Rating History at Calendar Year End University AFS Bonds State of IL GO Bonds Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 S & P AA- AA- AA- A+ A- A- A- A- A+ A+ AA- Moody's Aa3 Aa3 Aa3 Aa3 A1 A1 A1 A1 A1 Aa3 Aa2 S & P A- A- A- BBB BBB- BBB- BBB- BBB- BBB- BBB A- Moody's A3 A3 Baa1 Baa2 Baa3 Baa3 Baa3 Baa3 Baa2 Baa1 A3
System Credit Ratings Standard & Poors Projected University Debt Principal at 6/30/2024* Projected P3 Project Principal at 6/30/2024 Total University Debt & P3 Principal $1,054 million $ 406 million $1,461 million Qualitative Factors Revenue Diversity State Relationship / State Rating Management / Governance Capital Plans / Facility Needs Market Position AA+ AA AA- Auxiliary Facilities System Aa2 / AA- Certificates of Participation Aa2 / AA- Qualitative Factors A+ A A- Health Services Facilities System A2/ A- BBB+ State of Illinois GO Bonds A3 / A- BBB BBB- Quantitative Factors Leverage / DS Coverage Enrollment / Student Demand Operating Margins Financial Resources Comparison to Peer Universities Quantitative Factors *projected principal does not include transactions planned after February 2024
System Credit Ratings Moodys Projected University Debt Principal at 6/30/2024* Projected P3 Projects Principal at 6/30/2024 Total University Debt & P3 Principal $1,054 million $ 406 million $1,461 million Qualitative Factors Revenue Diversity State Relationship / State Rating Management / Governance Capital Plans / Facility Needs Market Position Aa1 Aa2 Auxiliary Facilities System Aa2 /AA- Certificates of Participation Aa2 / AA- Aa3 Qualitative Factors A1 A2 Health Services Facilities System A2 / A- A3 State of Illinois GO Bonds A3 / A- Baa1 Baa2 Baa3 Quantitative Factors Leverage / DS Coverage Enrollment / Student Demand Operating Margins Financial Resources Comparison to Peer Universities Quantitative Factors *projected principal does not include transactions planned after February 2024
Current U of I System Ratios to Peer Institution Medians Desired Trend Moody's Key Credit Ratios University of Illinois Moody's Medians FY2022 Fiscal Year Liquidity Ratios 2023* 2019 2020 2021 2022 Aa3 Aa2 Aa1 Spendable Cash & Investments to Operating Expenses (x) 0.7 0.7 0.7 0.8 0.9 0.8 0.8 1.1 Total Debt to Operating Revenues (x) 0.2 0.2 0.2 0.2 0.2 0.5 0.7 0.4 Monthly Days Cash on Hand (days) 196 187 176 199 235 179 208 210 Leverage Ratios Spendable Cash & Investments to Total Debt (x) 2.9 3.0 3.7 3.6 3.8 1.5 1.8 2.6 Debt Service to Operating Expenses (%) 2.9 2.6 2.2 2.2 2.2 4.4 4.3 2.9 Total Debt-to-Total Capitalization (%) 18.9 18.3 15.3 15.0 14.2 24.3 28.5 18.9 Quality Increase Notes: On April 4th, 2023, the Moody s rating agency upgraded the University s AFS rating to Aa2 from Aa3 . On May 6th, 2022, the S&P rating agency upgraded the University s AFS rating to A+ from A . * These ratios are calculated based on the University of Illinois System FY 2023 financial statements, which include operating and non-operating revenues and expenses of the three universities, the AFS and UI Health system. FY 2020 to 2022 data calculated by Moody s. FY 2023 data calculated by the Office of Capital Financing and actual Moody s results may vary.
Current U of I System Ratios to Peer Institution Medians University of Illinois Moody's Key Credit Ratios** Desired Trend Moody's Medians FY2022 Fiscal Year 2020 2021 2022 2023* Aa3 Aa2 Aa1 Market & Operating Performance Adjusted Operating Revenue ($ millions) 6,375 7,308 7,497 6,811 867 2,565 4,103 EBIDA Margin (%) 7.7 5.2 12.9 14.0 15.1 14.7 14.0 Wealth & Liquidity Ratios Total Cash & Investments ($ millions) 5,822 6,959 7,026 7,623 1,038 2,895 5,715 Total Cash & Investments to Operating Expenses (x) 0.9 1.0 1.0 1.2 1.2 1.1 1.4 Leverage Ratios Total Cash & Investments to Total Adjusted Debt (x) 3.7 4.4 4.3 4.4 0.9 0.7 1.6 Annual Debt Service Coverage (x) 3.1 2.4 6.3 6.8 3.9 3.4 5.1 Notes: * These ratios are calculated based on the University of Illinois System FY 2023 financial statements, which include operating and non-operating revenues and expenses of the three universities, the AFS and UI Health system. FY 2020 to 2022 data calculated by Moody s. FY 2023 data calculated by the Office of Capital Financing and actual Moody s results may vary. ** In August 2021 Moody s revised its rating methodology and scorecard. The ratios provided in the table above are selected ratios emphasized under the new methodology. Quality Increase
University of Illinois System Peer Comparison Total Cash & Investments to Operating Expenses Source: Information compiled using the Moody s Sector Report Municipal Financial Ratio Analysis (MFRA) database. Peer data are reported as of Fiscal Year 2022. The total cash and investments to operating expenses ratio has remained constant, with growth in cash and investments matched by equal year-over-year growth in operating expenses.
University of Illinois System Peer Comparison Total Cash & Investments to Total Adjusted Debt Source: Information compiled using the Moody s Sector Report Municipal Financial Ratio Analysis (MFRA) database. Peer data are reported as of Fiscal Year 2022. Growth in University cash and investments has tempered the impact of new debt, such as transactions (P3 projects) and the large debt maturities of AFS bonds and COPs.
University of Illinois System Peer Comparison Annual Debt Service Coverage Source: Information compiled using the Moody s Sector Report Municipal Financial Ratio Analysis (MFRA) database. Peer data are reported as of Fiscal Year 2022. Increases to the University s net position combined with principal repayment of AFS, South Campus Development Bonds and COPS have improved the University s DSCR.
Healthy Position for Critical Investments Student success and accessibility Building renewal and deferred maintenance Digital infrastructure and maintenance Capital Security Safety investments for our students, staff, and patients Cyber and data security
Financial Planning is Critical Strategic multiyear scenarios Continued emphasis on operational excellence and business process improvement Utilization of AI Thoughtful and strategic capital and investment planning Inflation reduced margins
