JHU Financial Report 1995
Introduction

Nineteen ninety-five was a financial high-water mark for Johns Hopkins University. This final year of William C. Richardson s presidency culminated a decade of rapid growth and expansion. University revenues have grown an average of 8.5% a year for the past 10 years. Excluding the Applied Physics Laboratory, where growth has been slower, revenues of the academic and support divisions grew an average of 10.4% a year. This growth was attributable to nearly consistent double-digit expansion of sponsored research, student enrollment, and clinical revenue -- although clinical growth moderated sharply in the last two years.

This year, under new accounting rules established by the Financial Accounting Standards Board, the University posted its highest-ever excess of revenues over expenses: $27.5 million. Surpluses like this from operations added $156 million to University assets over the past 10 years, $85 million in the past five. These surpluses, combined with gifts and growth in investments, increased the net assets of the University by nearly 50% -- from $934 million to $1,398 million -- during the 10-year period.

Similar growth cannot be expected in the decade ahead, and the University has prepared itself for a slowdown by a series of carefully planned restructuring moves. The Applied Physics Laboratory, for example -- long dependent on a single Department of the Navy contract has diversified its research portfolio to serve the needs of civilian agencies and other components of the Department of Defense. In addition, the Laboratory has established a number of collaborative research and teaching programs with other divisions of the University, most notably the Schools of Engineering, Medicine, and Arts and Sciences. At the same time, the Laboratory has moved to cut costs by reducing staff levels and downsizing its subcontracted work.

Similarly, the School of Medicine -- recognizing the restructuring that has occurred in the health care marketplace -- has adjusted its expectations for physical and programmatic expansion and implemented a program of cost control and productivity improvement. The program involves a complete reevaluation of all cost centers in the School, and a realignment of financial incentives in its relationships with the Johns Hopkins Health System and other affiliates. Other academic divisions are following Medicine's lead in examining core programs to assure their continued excellence, while curbing cost growth in administrative and ancillary programs.

Next year will be one of transition for Johns Hopkins. Interim President Daniel Nathans, a Nobel laureate from the faculty of the School of Medicine, will be succeeded by a new president who will face new challenges and new opportunities in a rapidly changing environment for higher education. Hopkins track record for high-quality undergraduate and graduate instruction, its solid base of research support, its strong service programs, and the extraordinary generosity of its alumni and friends provide the underpinnings to make that transition a smooth one. Much as Bill Richardson is missed at Hopkins, he left behind a University that is sound, academically and financially, and structured to remain so.

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