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| In fiscal 1998 Hopkins again generated operating surpluses. Continued revenue growth, a tremendously successful fundraising campaign, and strong investment returns combined with tight expenditure controls reduced debt levels, and a refinancing of debt further enhanced the University's financial stability. The operating surplus for the year was $30 million-on revenues of nearly $1.7 billion. The fundraising campaign-The Johns Hopkins Initiative-reached its $900 million goal almost two years early, and consequently the trustees increased the target to $1.2 billion. Investment income topped $249 million, and debt levels were cut by $15 million. Operations provided a net cash flow of $115 million, and unrestricted net assets grew $207 million. And, after two years of little or no growth, clinical service revenue-responding to School of Medicine strategic initiatives-increased $6.5 million. These strong financial results rest upon strong programs. Once again Johns Hopkins Hospital, staffed by faculty of the School of Medicine, was ranked best in the nation by U.S. News & World Report, with the University ranked 14th overall. The School of Public Health was ranked first, the School of Medicine second, and the Whiting School of Engineering's graduate programs 17th. Other divisions added to Hopkins honors and awards. Research programs expanded in all divisions of the University, with grant and contract revenue approaching $1 billion for the year, with another $500 million in awards already in hand for next year. The Applied Physics Laboratory (APL) added $26 million to its research base, and the academic divisions $12 million more. The University remained number one in receipt of federal research awards, and its School of Medicine, School of Public Health, and APL remained first in their respective categories. The key to Hopkins' success has been investment in world-class faculty, state-of-the-art facilities, and-most recently-attractive student amenities. Hopkins' faculty have been able to take full advantage of research opportunities because of the availability of up-to-date facilities. The average age of Hopkins' plant assets is 7.8 years, 20% lower than the average of a group of peer institutions, reflecting the University's recent modernization of its buildings, equipment, and infrastructure. Fiscal 1998 completes a 10-year period of growth in program activity that matched the growth in physical facilities that took place in the late 1980s and early 1990s. Now another carefully controlled cycle of additions to facilities is under way, with: * a cancer research building for the School of Medicine scheduled to open in the fall of 1999. * a student arts center, recreation center, and interfaith center on the Homewood campus. * the first building of its own for the School of Nursing. * an expansion of the research and teaching complex of the School of Public Health. * a second Montgomery County Center building to support part-time programs in a rapidly growing part of Maryland. * plans for a Washington Center for the School of Arts and Sciences. These facilities represent an investment of almost $200 million that will be made without adding to long-term University debt. Their annual operating costs have been included in the University's five-year planning process, and each affected division has been able to project balanced budgets that cover the costs with new revenue generated by the facilities, endowment support, or other reliable sources. Additional facilities are now in the planning stages, including: * a biomedical engineering institute on the Homewood campus. * an upgrade of basic sciences laboratories at the School of Medicine. * further expansion of the School of Public Health complex. * an additional research building for the School of Medicine. Each of these initiatives will be subjected to the same rigorous analysis as projects that are under way. They will proceed as reliable revenue sources are identified and will provide the infrastructure necessary to match the University's programmatic needs well into the 21st century. Hopkins is positioning itself for continued excellence. It is engaged in careful long-term planning, prudent strategic investment, and recruitment and retention of the best faculty, students, and staff.
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