University of Oregon 2019 Annual Financial Report

Management's Discussion and Analysis For the Year Ended June 30, 2019 (dollars in thousands) Expenses Operating Expenses Operating expenses increased $12,462, or 1 percent, to $967,829 in fiscal year 2019 as compared to fiscal year 2018. A $43,714 decrease in the change in the components of net pension & other postemployment benefits (OPEB) liabilities, from $55,635 in fiscal year 2018 to $11,921 in fiscal year 2019 was offset by an increase in auxiliary programs expense of $16,799 or 9 percent, an increase in instruction expense of $13,480 or 5 percent, an increase in research expense of $11,179 or 16 percent, and smaller increases in most of the other expense categories. Operating expenses increased $34,429, or 4 percent, to $955,367 in fiscal year 2018 as compared to fiscal year 2017. A $14,551 increase in the change in the components of net pension & other postemployment benefits (OPEB) liabilities, from $41,084 in fiscal year 2017 to $55,635 in fiscal year 2018 was offset by a decrease in auxiliary programs expense of $7,612 or 4 percent, and other operating expenses. Operating Expense by Function For the Year Ended June 30, Instruction Auxiliary Programs Research Institutional Support Academic Support Public Service Student Aid Other Operating Expenses Change in Components of Net Pension & OPEB Liabilities Total Operating Expenses For the Year Ended June 30, Instruction Research Public Service Academic Support 2019 as shown on the SRE GASB 68 effect GASB 75 effect 2019 with GASB effect allocated 293,053 81,412 $ 5,593 $ (708) $ 297,938 50,695 1,098 668 (207) 82,303 (161) 51,202 68,384 1,251 (208) 69,427 Student Services 48,299 768 (143) 48,924 Auxiliary Programs 209,328 2,299 (355) 211,272 Institutional Support 74,681 1,610 (255) 76,036 Operation and Maintenance of 53,072 359 (69) 53,362 Plant Student Aid 37,247 - 37,247 39,737 499 11,921 (14,145) (118) 2,224 40,118 $ 967,829 $ $ $ 967,829 Other Operating Expenses Change in Components of Net Pension & OPEB Liabilities Total Operating Expenses For the Year Ended June 30, Instruction Research Public Service Academic Support 2018 as shown on the SRE GASB 68. effect GASB 75 effect 2018 with GASB effect allocated $ 279,573 $ 70,233 22,995 4,249 $ (488) $ 302,079 (103) 74,379 47,680 2,601 (84) 50,198 63,995 4,847 (130) 68,712 Student Services 44,707 3,175 (101) 47,781 Auxiliary Programs 192.529 9,267 (235) 201,561 Institutional Support 69,856 6,488 (168) 76,176 Operation and Maintenance of 54,632 2,278 (88) 56,822 Plant Student Aid 37,677 Other Operating Expenses 38,850 Change in Components of Net 55,635 1 1,166 (57,069) - 37,678 (36) 39,980 1,434 $ 955.367 $ $ $ 955,367 Pension & OPEB Liabilities Total Operating Expenses For the Year Ended June 30, 2019 2018 2017 2017 as shown on the SRE 2017 with GASB 68 effect GASB effect allocated $ 293,053 209,328 $ 279,573 $ 192,529 274,772 200,141 Instruction $ 81,412 70,233 66,711 Research 274,772 66,711 $ 13,836 3,013 $ 288,608 69,724 74,681 69,856 67,894 Public Service 43,282 2,413 45,695 68,384 63,995 59,242 Academic Support 59,242 4,034 63,276 50,695 47,680 43,282 Student Services 42,042 2,468 44,510 37,247 141,108 37.677 138,189 34,433. 133,379 Auxiliary Programs 200,141 6.535 206,676 Institutional Support 67,894 5,250 73,144 11,921 55,635 41,084 Operation and Maintenance of 52,109 2,354 54,463 Plant $ 967,829 $ 955,367 $ 920,938 Student Aid. 34,433 34,433 Other Operating Expenses 39,228 Change in Components of Net. 41,084 1,181 (41,084) 40,409 Pension & OPEB Liabilities $ 920,938 $ $ 920,938 2019 Operating Expense by Function Change in Components of Net Pension & OPEB Liabilities Other Operating 1%. Research 8% Expenses 15% Public Service 5% Institutional Support 8% Auxiliary Programs 22% Academic Support 7% Student Aid 4% Instruction 30% The implementation of GASB 68 in 2015 and GASB 75 in 2018 has had a significant impact on the operating expenses reported by the UO. The following shows the effect of GASB 68 and 75 on operating expenses across the functional classifications: 12 University of Oregon Total Operating Expenses Due to the way in which expenses are incurred by the UO, variances are presented and explained by analyzing changes in the natural classification of expenses. Each natural classification analysis can be applied to many of the functional expense caption items. The following summarizes operating expenses by natural classification: Operating Expenses by Natural Classification For the Year Ended June 30, Compensation and Benefits & OPEB Liabilities Services and Supplies 2019 2018 2017 $ 651,847 $ 608,875 $ 602,594 Change in Components of Net Pension 11,921 190,563 36,953 55,635 41,084 179,258 171,873 36,420 33,675 65,553 65,351 62,155 10,992 9,828 9.557 $ 967,829 $ 955,367 $ 920,938 Scholarships and Fellowships. Depreciation and Amortization Other Expenses Total Operating Expenses

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