Yale University Financial Report 1999-2000www.yale.edu/fr99-00

Fiscal years

Five-Year Financial Overview ($ in millions) 2000 1999 1998 1997 1996

Budget Activity Surplus (Deficit) $— $0.7 $— ($3.8) ($7.5)

Financial Position Highlights:Total assets $12,370.0 $9,347.4 $8,487.5 $7,362.9 $6,327.9Total liabilities 1,416.2 1,336.6 1,099.9 857.3 759.6

Total net assets $10,953.8 $8,010.8 $7,387.6 $6,505.6 $5,568.3

Endowment:Total investments $10,092.3 $7,221.7 $6,635.3 $5,795.2 $4,884.7Total return on investments 41.0% 12.2% 18.0% 21.8% 25.7%Spending from endowment 3.9% 3.9% 3.8% 4.0% 4.3%

Facilities:Land, buildings and equipment, net

of accumulated depreciation $1,352.5 $1,197.4 $1,067.2 $923.5 $819.6Disbursements for building projects 191.3 172.8 180.9 130.6 118.1

Debt:For facilities improvements $1,028.3 $989.9 $751.3 $529.3 $453.9For student loans and other 45.6 45.6 45.4 45.4 45.4

Statement of Activity Highlights:Operating revenue $1,263.6 $1,149.5 $1,083.4 $992.4 $930.7Operating expenses 1,283.5 1,129.9 1,066.5 995.2 927.7

Increase (decrease) in net assetsfrom operating activities ($19.9) $19.6 $16.9 ($2.8) $3.0

Five-Year Enrollment Statistics 2000 1999 1998 1997 1996

Student Fees:Yale College term bill $31,940 $30,830 $29,950 $28,880 $27,630

Freshmen Enrollment:Freshmen applications 13,270 11,947 12,046 12,952 12,620Freshmen admitted 2,135 2,100 2,144 2,371 2,522Admissions rate 16.1% 17.6% 17.8% 18.3% 20.0%Freshmen enrollment 1,371 1,299 1,309 1,409 1,364Yield 65.0% 63.0% 61.7% 60.4% 55.2%

Total Enrollment:Yale College 5,340 5,411 5,375 5,376 5,281Graduate and professional schools 5,512 5,455 5,449 5,542 5,549

Highlights

On October 21, 2000, President Levinlaunched the year-long celebration of Yale’s300th birthday by opening the University tofamily and friends for an inside look at thekaleidoscopic variety of activities that goes onat the University daily. As visitors fanned outacross the campus, they were treated tobehind-the-scenes looks at many of theUniversity’s museums, galleries, residential colleges, libraries, athletic facilities, andresearch and science labs. Included were spe-cial tours and exhibitions showcasing theexcellence of the arts at Yale—at the School ofArt, the Yale Center for British Art, The YaleUniversity Art Gallery, Paul Rudolph’s Art andArchitecture building, the Yale RepertoryTheatre, the University Theatre, and the YaleSchool of Drama’s New Theater at HolcombeT. Green Jr. Hall, among others. As we beginour tercentennial celebration, the University’sarts offerings have never been more vibrant orvaried. A special section of this report presentsjust a snapshot of the resplendent panoramaof the arts at Yale.

On the financial front, the University hascontinued to have impressive success in build-ing its asset base through the growth of theendowment, which had a stellar year, earninga return of 41%. The combination of endow-ment returns and contributions from donorsaugmented the value of the endowment by$2.9 billion this year; overall, the University’stotal net assets therefore also increased by$2.9 billion.

The University’s long-range capital planincludes more than $1 billion to be spent onscience, engineering, and residential facilitiesover the next ten years. This carries forwardand expands the current effort to renew stu-dent housing and academic facilities. The com-pletion of the Berkeley College renovation andthe initiation of Saybrook College renovationsthis year highlight the University’s dedicationto providing up-to-date student facilities.Construction began this year on a major newresearch and education facility at the Schoolof Medicine that, when complete, will increasethe University’s capacity for biomedicalresearch and will house state-of-the-art educa-tional facilities as well. The longer-range planfor Medical School facilities invests $500 mil-lion over the next ten years to expand andimprove laboratory and classroom facilities.This will complement the new $500 millionscience and engineering capital plan, whichcalls for constructing five new buildings; reno-vating existing classrooms and laboratories;and physically grouping programs of study by discipline to create an “environmental

campus” on one stretch of Science Hill and a“molecular campus” on another. The PhysicalCapital section of this report provides a closerlook at these plans.

In the academic area, the University’s com-mitment to the highest standards was againdemonstrated this year through continuingimprovements to existing programs as well asthrough the development of new and innova-tive offerings. Signalling important advancesin the Social Sciences, Yale has pursued newprogram initiatives in Political Science andSociology, made several outstanding seniorappointments in Psychology, and has a num-ber of exciting senior recruitments under wayin Economics. During the year, the Universityrecruited seven new faculty in PoliticalScience. Yale continues the effort to enhanceboth undergraduate and graduate programs inEngineering and Applied Science, including therecruitment of new faculty in these areas, andan expansion of the curriculum to includeinterdisciplinary majors in EnvironmentalEngineering and Biomedical Engineering. The University now offers a five-year “SelectProgram in Engineering” that awards mastersdegrees to students who aspire to leadershippositions in technology. The Yale Law School,continuing its historical leadership in corpo-rate law, has launched the Center for theStudy of Corporate Law, which will bring pre-eminent legal scholars and practitioners tocampus to participate in roundtable discus-sions and conferences. The School of Medicinereceived an $11 million grant from theNational Institute of Drug Abuse to establishthe New England Node of the National DrugAbuse Clinical Trials Network. This new orga-nization will provide a research infrastructureto evaluate drug addiction treatments in real-life settings with diverse client populations.These are just a few examples of continuedefforts by Yale to contribute to society in theexpansion of education and research on aworld-wide basis.

The University’s successes and continuedgrowth would not be possible without theremarkable generosity of contributors to theUniversity. We will enjoy this year’s celebra-tion of Yale’s 300-year-long history of commit-ment to providing the highest quality teachingand research, as we actively ensure that thetradition continues.

Kemel DawkinsActing Vice President for Finance and Administration

Message from the Acting Vice Pre s i d e n tfor Finance and Administration

On October 21, 2000, President Levinlaunched the year-long celebration of Yale’s300th birthday. The University was opened tofamily and friends for an inside, kaleidoscopicview of our daily activities. As visitors fannedout across the campus, they were treated to a behind-the-scenes look at the University’smuseums, galleries, residential colleges,libraries, athletic facilities, and research andscience labs. Special tours and exhibits showcased the excellence of the arts at Yale:the School of Art, the Yale Center for BritishArt, the Yale University Art Gallery, PaulRudolph’s Art and Architecture building, the Yale Repertory Theatre, the UniversityTheatre, and the Yale School of Drama’sNew Theater at Holcombe T. Green Jr. Hall,among others. Never have the University’sarts offerings been more vibrant or varied. A special section of this report presents asnapshot of the resplendent panorama of the arts at Yale.

On the financial front, the University has continued to have impressive success inbuilding its asset base through the stellargrowth of the endowment (a return of 41%for the year). The combination of endowmentreturns and contributions from donors aug-mented the value of the endowment by $2.9billion this year, increasing the University’stotal net assets by that amount.

The University’s long-range capital planincludes more than $1 billion for science, engineering, and residential facilities over thenext ten years. This carries forward andexpands the current effort to renew studenthousing and academic facilities. The comple-tion of the Branford College renovation andthe initiation of renovation of SaybrookCollege highlight the University’s dedication to providing up-to-date student facilities.Construction began this year on a major facility at the School of Medicine that will significantly increase the University’s capacityfor biomedical research while housing state-of-the-art educational facilities. The longer-rangeplan for Medical School facilities invests $500million over the next ten years to continueexpansion and improvement of laboratory andclassroom facilities. This plan complementsthe new $500 million science and engineeringcapital plan, which calls for constructing fivenew buildings and renovating existing class-rooms and laboratories. Programs of studywill be physically grouped by discipline to create an “environmental campus” on onestretch of Science Hill and a “molecular campus” on another. The Physical Capital

section of this report provides a closer look at these plans.

In the academic arena, the University’scommitment to the highest standards wasagain demonstrated through continuingimprovements to existing programs as well as the development of new and innovativeofferings. Signaling important advances in the Social Sciences, Yale has pursued new program initiatives in Political Science andSociology, with the former recruiting sevennew faculty. Several outstanding seniorappointments have been made in Psychology.Economics is also engaged in an effort torecruit a number of exciting senior faculty.Yale continues the effort to enhance bothundergraduate and graduate programs inEngineering and Applied Science by recruitingnew faculty and expanding the curriculum to include interdisciplinary majors inEnvironmental and Biomedical Engineering.The University now offers a five-year “Select Program in Engineering” that awardsmasters’ degrees to students who aspire toleadership positions in technology. The Yale Law School, continuing its historicalleadership in corporate law, has launched the Center for the Study of Corporate Law.The Center will bring preeminent legal scholars and practitioners to the campus toparticipate in roundtable discussions and conferences. The School of Medicine receivedan $11 million grant from the NationalInstitute of Drug Abuse to establish the NewEngland Node of the National Drug AbuseClinical Trials Network. This new organiza-tion will provide a research infrastructure toevaluate drug addiction treatments in real-lifesettings with diverse client populations. These are just a few examples of continuedefforts by Yale to contribute to societythrough the expansion of education andresearch on a worldwide basis.

The University’s continued success andgrowth would not be possible without theremarkable generosity of its supporters. We will enjoy this year’s celebration of Yale’s300-year-long history of commitment to providing the highest quality teaching andresearch, as we act to ensure that the tradition continues.

Kemel DawkinsActing Vice President for Finance and Administration

Message from the Acting Vice Pre s i d e n tfor Finance and Administration

1

Yale has enjoyed a long history of distinctionin the arts. President Richard Levin hasrecommitted the University to the arts, and theenhancement of the fine and performance arts,history of art programs, and the University’sarts and library collections figure prominentlyin the University’s plan for its fourth century.“Arts” at Yale is a broad umbrella encompass-ing many programs and activities. The schoolsof Art, Architecture, Drama, and Music rankamong the top professional arts schools in thecountry and boast stellar and world-renownedgraduates. Linked to the School of Music andalso the Yale Divinity School is Yale’s uniqueInstitute of Sacred Music, which trains students who sing and play for worshippingassemblies and who study liturgy and theliturgical arts. Within the Faculty of Arts and Sciences, two distinguished departmentsprovide additional arts programs: theDepartment of the History of Art, whichoffers courses in eastern and western art fromantiquity to the present, and the Departmentof Music, offering courses in music history,theory, composition, technology, and perfor-mance.

The holdings of the Yale University ArtGallery and the Yale Center for British Art areextraordinary and diverse. The Art Gallery isthe oldest university art museum in the coun-

try, while the Center for British Art is the mostnotable assemblage of British art outside GreatBritain. More recently, the Digital MediaCenter for the Arts was established to teachnew digital media technologies and encouragecollaboration among artists and scholars.Underpinning the arts units at Yale is the ArtsLibrary with a comprehensive collection ofvolumes on art, architecture, art history, anddrama.

Complementing the educational and artistic missions of the School of Music, theInstitute of Sacred Music, and the Departmentof Music in the Faculty of Arts and Sciencesare a wide variety of performance groups inthe School of Music and Yale College, includ-ing the Yale Symphony Orchestra, Glee Club,Concert and Marching Bands, jazz ensemble,and a plethora of singing groups. Two musictechnology labs allow for the exploration ofthe interface between music and new digitaltechnologies. These enterprises are supportedby the scholarly holdings of the Irving S.Gilmore Music Library, the Historical SoundCollection, Beinecke Library, and theCollection of Musical Instruments. Togetherthese music institutions comprise a culturalresource for the community, region, andnation. Over 300 concerts are staged annually, and the music facilities are used by

The Arts at YaleConfront the Challenges of a New Era

Hancock, MI, 2000, digital printRichard Benson, Dean of Yale School of Art

Paris, 1997, photographTod Papageorge, Director of Graduate Studies, Photography

School Colors, 2000, acrylic, oil, paper, metal fastenersRobert Reed, Director of Undergraduate Studies

With Wanton Heed and Giddy Cunning Hedging Red and That’s Not Funny, 1999Centre for Visual Arts, Cardiff, WalesJessica Stockholder, Director of Graduate Studies, Sculpture

Before & After, 1999 oil on canvasRochelle Feinstein, Director of Graduate Studies, Painting/Printmaking

At the start...At long last...A train mezzanine, 207th Street NYC, 1999

Sheila Levrant de Bretteville,Director of Graduate Studies, Graphic Design

at left: Holcombe T. Green Jr. Hall,1156 Chapel

The work shown here is by theDean and the Directors of Study in the School of Art.

www.yale.edu/artSchool of Art

2

many local organizations. Increasingly, Yale’smusicians and music scholars are workingwith artists, performers, and other arts schol-ars to explore innovative ventures, especiallythose utilizing the new digital media.

Arts activities have been thriving understrong leadership as Yale rededicates itself tothe arts. Nonetheless, the University recog-nizes that the distinction of these great pro-grams is not matched by their facilities, whichare in serious disrepair. Two planning effortshave been initiated to meet this challenge, onefor the arts programs clustered around theintersection of York and Chapel streets, the“arts area,” and the other, more recently, forthe “music campus.” The focus of this reportis on the former initiative. To study the chal-lenges facing the arts programs and recom-mend solutions, the University convened theArts Area Planning Committee, headed byJules Prown, Paul Mellon Professor of theHistory of Art. The Committee completed itsfinal report in 1995. It was succeeded by theArts Area Advisory Committee (AAAC), con-vened by the Provost and chaired by Diana E.E. Kleiner, Dunham Professor of Classics andHistory of Art and Deputy Provost for theArts. Still active, the AAAC is composed of thedeans, chairs, and directors of the arts unitsand is charged with being the keeper of the

vision for the arts at Yale and maximizing theopportunity for the exchange of ideas, skills,resources, and people among the arts entities.The Prown Committee found that the artsbuildings showed considerable signs of physi-cal deterioration and that space for the artswas too restricted, causing the dispersion ofprograms in scattered locations and inhibitinginteractivity critical to arts education. As aresult, a plan of action was devised thatinvolves extensive building and renovationthat will allow the arts community to achieveeven greater excellence through programmaticreconfiguration and realignment in enhanced,consolidated facilities. Arts units will be ableto take advantage of mutual intellectual andaesthetic enrichment, so that boundariesbetween arts disciplines can be permeated,both in theory and in practice.

The Arts Area Plan, totaling $250 million,was approved by the Officers of the Universityand the Yale Corporation. Altogether, 500,000square feet will be renovated and an addition-al 275,000 is planned. Because of the com-plexities and cost of construction and reassign-ment, the Plan will be carried out over thecourse of eight to ten years, with the oversightof the AAAC. A carefully planned implementa-tion sequence has been designed to accomplishthe goals of expanding and modernizing

Mantauk House, Long Island, N.Y., 1999,Design: Deamer + Phillips, architecturePeggy Deamer, Associate Professor (Adj) of Architecture

Battery Park City Parks Corporation Headquarters, New York, N.Y., 1998,Design: Deborah Berke Architect PCDeborah Berke, Associate Professor (Adj) of Architecture

GilderBoathouse,Derby, CT, 2000,Design: Turner BrooksArchitects/E-L Pelkonen/Michael Curtis,

Turner Brooks, AssociateProfessor (Adj)of Architecture

Eeva-LiisaPelkonen,AssistantProfessor (Adj)of Architecture

29-45 Broadway, New Haven, CT, 2001Design of buildings B and C above: Hammond Beeby, Rupert AingeThomas Beeby, Professor (Adj) of ArchitectureDesign of building A above: Judith DiMaio, Associate Professor (Adj) of Architecture

Ohrstrom Library, 1998, St. Paul’s School, Concord, N.H.Design: Robert A.M. Stern ArchitectsRobert A.M. Stern, Dean & JM Hoppin Professor of Architecture

Public Buildings for TEDA: New AdministrativeCenter, Cultural Center, and Sports Center, 1999, Tiangin Province, Peoples Republic of ChinaDesign: Koetter Kim & AssociatesFred Koetter, Professor (Adj) of Architecture

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Examples of professional work by faculty members.

www.architecture.yale.edu

Horse jumping through the wings,Great Platte River Road Memorial

Archway, 2000, Kearney, NebraskaDesign: Kent Bloomer, Professor

(Adj) Architectural Design

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School of ArtRichard Benson, Dean

Degree offered:Master of Fine Arts (MFA), two-yearprogram

Chronology:1864 School of Fine Arts establishedthrough the generosity of AugustusRussell Street.1869 Opens as first school of artconnected with an institution of high-er learning in the country. Offersclasses in drawing, painting, sculpture,and art history.1871 Moves to a building endowedby Augustus Street, named StreetHall; collection augmented by theacquisition of the Jarves Collection ofearly Italian paintings.1953 Opening of the Art Gallerybuilding at 1111 Chapel Street, inwhich some art classes are conducted.1963 Opening of Art andArchitecture building, designed byPaul Rudolph, in which classes ofboth the schools of Art andArchitecture are held; sculpture pro-gram housed in Hammond Hall, 14Mansfield Street.2000 Opening of the new home forthe School of Art, in Holcombe T.Green Jr. Hall, 1156 Chapel Street-353 Crown Street.

Yale University Art GalleryJock Reynolds, Director

Chronology:1832 Opening of the TrumbullGallery, one of the earliest art muse-ums in the Anglo-Saxon world andthe first (and long the only) to be con-nected with a college in this country.1928 Addition of new art gallery(connected to Street Hall by a bridgeabove High Street); Street Hall usedfor art instruction.1953 Opening of large addition tothe gallery, at 1111 Chapel Street,designed by Louis I. Kahn.

Exhibitions presented in 1999-2000: Dance of the Dragon: Fabulous Beastsin Asian Art Imaging African Art: Documentationand Transformation Philip Guston: A New Alphabet Modern Gothic: The Revival ofMedieval Art

School of ArchitectureRobert A. M. Stern, Dean

Degrees offered:Master of Architecture IMaster of Architecture IIMaster of Environmental Design

Chronology:1905 Appointment of a full-timeprofessor of architecture to the facultyof the School of Fine Arts. 1916 Establishment of a Departmentof Architecture under ProfessorEverett V. Meeks, which offered athree-year course leading to a certifi-cate.1942 Conferral of the first Bachelorof Architecture degree (in lieu ofBachelor of Fine Arts in Architecture).1947 Awarding of first Master ofArchitecture degree.1953 School of Art and Architecturemoves to new Art Gallery wing at1111 Chapel Street.1963 Opening of the Art andArchitecture building, designed byPaul Rudolph, in which classes ofboth the schools of Art andArchitecture are held.1972 Architecture established as sep-arate school.

Yale Center for British ArtPatrick McCaughey, Director

Chronology:1965 Announcement of the intentionto found the Center through a giftfrom Paul Mellon ‘29, the largest giftever made to Yale.1977 Center opens to the public,displaying the most comprehensivecollection of English paintings, prints,drawings, rare books, and sculptureoutside Great Britain, in buildingdesigned by Louis I. Kahn.

Exhibitions presented in 1999-2000:The Art of BloomsburyC. R. W. Nevinson: The TwentiethCenturyThe Twentieth Century Collection:Paintings, Sculpture, and Works ofArt on PaperRuskin: Past, Present, FuturePatrick Caulfied: A RetrospectiveA Treasure House in Farmington: TheLewis Walpole LibraryJames Tissot: Victorian Life/ModernLoveJohn Walker: A Theatre ofRecollection and the Anthony andMadeleine Carter GiftRachel Whiteread: Untitled (TenTables) Doomed Youth: The Poetry and thePity of the First World War

School of DramaStan Wojewodski, Jr., Dean

Degrees offered:Master of Fine Arts (MFA), two-yearprogramDoctor of Fine Arts (DFA)Certificate in Drama

Chronology:1924 Department of Drama foundedin the School of Fine Arts through thegenerosity of Edward S. Harkness,B.A. 1897.1925 George Pierce Baker broughtto Yale his playwriting course andworkshop; first students are regis-tered.1926 Opening of the UniversityTheatre.1931 First Master of Fine Arts inDrama awarded.1955 Drama becomes an indepen-dent school. 1967 Yale Repertory Theatre found-ed by the School of Drama to foster acloser relationship between trainingand the professional theater.

School of MusicRobert L. Blocker, Dean

Degrees offered:Master of MusicMaster of Musical ArtsDoctor of Musical ArtsArtist DiplomaCertificate in Performance

Chronology:1855 Appointment of GustaveJoseph Stoeckel as instructor in musicand director of the choir in YaleCollege.1889 Creation of the Department ofMusic by the Yale Corporation.1890 Gustave Joseph Stoeckelappointed Battell Professor of Music;Yale offers first courses in music forcredit.1894 Awarding of first Bachelor ofMusic degrees; establishment of theYale School of Music.1917 Opening of the Albert ArnoldSprague Memorial Hall as a home forthe School.1932 First Master of Music con-ferred.1958 School becomes exclusively agraduate professional school.1973 Establishment of the Instituteof Sacred Music as an interdiscipli-nary graduate center for the study ofmusic, liturgy, and the arts.

Digital Media Center for the Arts (DMCA)Carol Scully, Director

Activities of DMCA:• encourage and enable discoveryand creation within the Arts Areacommunity in the field of electronicmedia• investigate how new informationtechnologies fit into established edu-cational systems in the Arts• implement new models of artseducation. DMCA Project Grants: The Digital Media Center for the Artssolicits proposals for project grants tobe produced at the Center during theacademic year. The Project Grantsoffer faculty, staff and students theopportunity to explore the uses ofinteractive digital technology. Academic Program:The DMCA features multi-disciplinarycourses that break down the barriersbetween the schools of Art,Architecture, Music, and Drama, andthe Departments of Film Studies andthe History of Art and converge cre-ative energies in the arts. It provides aforum for experiments in digitalimaging, time-based art forms, andinteractive modes of communication.Current Classes:The DMCA facilities are open to mem-ber units for the teaching of classeseach semester.

Chronology of the Arts at Yale

Department of the History of ArtEdward S. Cooke, Jr., Chair

Graduate program leading to the Doctor of Philosophy Undergraduate Major

Chronology:1869 Beginning of instruction in arthistory within the School of Fine Arts.1940 Establishment of a departmentin the Faculty of Arts and Sciences.

Field of study:Greek and Roman; Medieval andByzantine; Renaissance; Baroque; eigh-teenth, nineteenth, twentieth centuryEuropean; African; African American;American; British; Pre-Columbian;Chinese; Japanese; and film.

Arts LibraryMax Marmor, Librarian

Chronology:1952 Established as a separate col-lection in the Yale libraries prior to itsmove in 1953 from Weir Hall to theSculpture Hall of the Old Art Gallery.1963 Named as the Art andArchitecture Library.1963 Moved to new space in theRudolph building.1999 Renamed as the Arts Library aspart of the Arts area Plan.

More than 100,000 volumes.Basic reference works, monographs,exhibition catalogues, and histories ofthe various arts fields, bound periodi-cals, and more than 500 current peri-odicals and museum bulletins.

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spaces while not overly disrupting the operations of the programs.

Geographically, the Arts Plan encompassesthe region roughly bounded by High Street(including Street Hall) to the east, theUniversity Theatre building on York Street tothe north, Crown Street to the south, and ParkStreet to the west. Institutionally, the Planencompasses the schools of Art, Architecture,and Drama; the Yale University Art Gallery;the Center for British Art; the Arts Library;the Digital Media Center for the Arts; and theDepartment of the History of Art. The Planimproves the space available for all the unitswhile also invigorating the urban assets of theArts Area of the campus. It was conceivedwith the University’s urban environment inmind, and the expansion of the arts complexwestward on Chapel Street is intended toencourage more interaction with the surround-ing community and the many visitors to theGreater New Haven area each year.

Holcombe T. Green Jr. Hall - A New Homefor the School of ArtThe first phase of the Arts Area Plan has beenrealized with the opening of the newHolcombe T. Green Jr. Hall at 1156 ChapelStreet–353 Crown Street as the home of theSchool of Art and the School of Drama’s New

Theater. The School of Art programs were formerly spread across several buildings,including the Rudolph building, various siteson Park Street, and one on Wall Street. Now,with the exception of the sculpture programwhich remains in Hammond Hall onMansfield Street (to take advantage of thelarge-scale space there), they have been unifiedinto this 105,000-square-foot building com-plex. The sculpture program may eventuallymove closer to Green Hall.

Green Hall is the fifth home to be occupiedby the Yale School of Art in the course of itshistory. Founded in 1864, the School was thefirst school of art in the country to be connect-ed with an institution of higher learning. Since1959, the School has been an exclusively grad-uate-level institution, which confers the degreeof Master of Fine Arts and requires thatmatriculating students hold a bachelor’sdegree. At the same time, in keeping withUniversity policy on integrated teachingbetween the Faculty of Arts and Sciences andthe professional schools, the School of Artoffers a major program for undergraduate stu-dents in Yale College and opens art courses tostudents in other schools within the University.On average there are about fifty undergradu-ate majors at any one time, and approximately800 undergraduate enrollments in classes over

School of Dramawww.yale.edu/drama

photo top center:Angel Desai as Tina in Yale Repertory Theatre’sworld premire of Rice Boyby Sunil Kuruvilla,November 2000

More than 200 evenings of theater are offered each year through the School of Drama.

The Arts at Yale

6

the course of a year. The availability of thiscurriculum to students in other fields or pro-grams is a distinctive trait of a Yale Universityeducation.

In addition to the School’s regular faculty,many visiting artists and scholars participatein the programs of the various departmentsoffering individual critiques, workshop semi-nars, and formal lectures. Throughout its his-tory, the School of Art has benefited from thepresence of exceptional teachers who werealso famous for their own work as artists.Among notable names that stand out are thoseof Josef Albers, who chaired Yale’sDepartment of Design (which included paint-ing, sculpture, and graphic arts) from 1951 to1959; William Bailey, who taught paintingfrom 1956 to 1995; photographer WalkerEvans, who taught graphic arts at Yale from1964 to 1975; Herbert Matter, a teacher ofphotography from 1952 to 1976; and PaulRand, a professor of graphic design from1956 to 1996 who was known as “the fatherof modern American graphic design” in theindustrial sector and after whom the graphicdesign studio is named. Among an impressivelist of artists who have studied at Yale areJennifer Bartlett, Leonard Baskin, ChuckClose, Eva Hesse, Sylvia Mangold, RichardSerra, and Gary Trudeau.

The School of Art aims to provide an edu-cational context within which artists anddesigners of unusual artistic promise andstrong motivation can explore the horizons oftheir own talents in the midst of an intensecritical dialogue. The students’ primary educa-tional experience is centered on studio activity,but opportunities for interactions, especially inworkshops and critiques, abound. This jointemphasis on individual studio work and com-munal projects helps to make the School aplace of energy and dynamism.

Green Hall also is the home of the NewTheater of the School of Drama. This NewTheater now joins other Drama School venuesincluding the Yale Repertory Theatre on thecorner of York and Chapel streets, theUniversity Theatre, and the ExperimentalTheater, both located at 222 York Street.

Paul Rudolph Building and the School of Architecture Known informally as the Art and Architecturebuilding, the Rudolph building at 180 YorkStreet is slated for a thorough renovation andrestoration that will result in considerablyenhanced facilities for the Yale School ofArchitecture.

The School of Architecture, which hasbeen a separate institution at Yale since 1972,

School of Musicwww.yale.edu/schmus

The members of The Tokyo String Quartet,in residence at Yale since 1976

The School of Music presents 200 of the more than300 concerts that take place onthe Yale campus each year.

7

views the task of architecture as the creationof human environments through a designprocess that addresses the interrelated physi-cal, behavioral, and cultural issues that under-lie the organization of built form. The studentof architecture is called upon to direct sensitiv-ity, imagination, and intellect to the physicalsignificance of these fundamental issues indesigning a coherent environment for people.Architectural design as a comprehensive cre-ative process is the focus of the Yale School ofArchitecture.

The School offers instruction by distin-guished theorists and practitioners, including anumber of visiting faculty members each year.Celebrated architects who have taught here oracted as visiting critics include Peter Eisenman,Charles Gwathmey, Frank Gehry, ZahaHadid, Philip Johnson, Daniel Libeskind, Greg Lynn, Richard Meier, I.M. Pei, CesarPelli, Aldo Rossi, Paul Rudolph, MosheSafdie, James Sterling, Robert A.M. Stern (currently Dean), Stanley Tigerman, andRobert Venturi. Alumni of the School haveachieved distinction in a wide range of architectural disciplines.

The School’s professional degree, theMaster of Architecture I, is fully accredited bythe National Architectural Accrediting Board.The School also offers a post-professional

Master of Architecture and a Master ofEnvironmental Design as well as combineddegree programs with the School ofManagement and a major course of study forYale College students. As a basis for develop-ing a comprehensive approach to architecturaldesign, students take courses in architecturaltheory; building technology; architecturalpractice and construction; planning, design,and development of the urban landscape; digi-tal media design; and visual studies. Studentsmay also find support for urban studiesthrough the extracurricular programs of theYale Urban Design Workshop and Center forUrban Design Research. The diversity ofcourse offerings in the School represents aconcern for design that ranges in scale fromthe individual building to the urban landscape.

The Paul Rudolph building, the School’shome for the past twenty-seven years, wasremodeled after a fire in 1969 and received asmall but dramatic interim renovation in thesummer of 2000. Under the Arts Area Plan,however, it will be restored to its original1963 configuration, which included strikingmulti-story spaces that had been divided withthe subsequent addition of new floors and partitions.

With the School of Art now housed inGreen Hall, the School of Architecture has

Yale University Art Gallery

Editet by Diana E.E. Kleiner, DunhamProfessor of Classics and History of Art,and Susan B. Matheson, Molly andWalter Bareiss Curator of Ancient Art,Yale University Art Gallery

By Robin Jaffee Frank,Associate Curator of American Paintings & Sculpture, Yale University Art Gallery

By Patricia E. Kane, Curator of American Decorative Arts, Yale University Art Gallery

By Helen A. Cooper, Holcombe T. GreenCurator of American Painting, Yale University Art Gallery

By Daphne Deeds, Former Curator of Exhibitions andPrograms, Yale University Art Gallery

By Gerald W. R. Ward, Former Assistant Curator of the Garvanand Related Collections of American Art, Yale University Art Gallery

By Fangyu Wang and Richard M. Barnhart,Former John M. Schiff Professor of the History of Art

www.yale.edu/artgallery

TheSculpture

Courtfaçade of the

Gallery

The Arts at Yale

A sampling of published worksby past and present staff members

8

assumed more space in the Rudolph building.In addition, the undergraduate architectureprogram, which had been housed in the FenceClub at 220 York Street, has moved to theRudolph building, increasing the interactionsbetween the undergraduate and graduate programs. Also, as noted in the next section,the Arts Library will occupy the ground floorand basement of both this building and theHistory of Art building.

History of Art Building Adjacent to the Rudolph building and locatedat 194-200 York Street, a new structure willbe built to house the History of ArtDepartment while sharing the housing of theArts Library with the Rudolph building. Thesharing of building space will foster connec-tions among the various entities. History ofArt will occupy the upper floors of the newbuilding, the Arts Library the ground floorand basement of both buildings. The existinggallery in the Rudolph building will be accom-panied by two large lecture halls, the VisualResources Collection, and a café/lounge serv-ing both buildings.

The discipline of History of Art was taught by Yale’s former School of Art andArchitecture until 1940 when it became a newdepartment as an outgrowth of the former

graduate program in History, the Arts andLetters. Today the Department offers anundergraduate major along with a doctoralprogram. The broad spectrum of interests ofthe Department’s prominent founders, SumnerCrosby, Charles Seymour, George Kubler,George Heard Hamilton, and Carroll Meeks,is reflected in the array of instruction, includ-ing courses in western and non-western art aswell as in archaeology and architectural histo-ry. Subject matter in art history crosses bound-aries of material and discipline, and thrives atthe hands of a faculty with diverse specializa-tions of field and methodology.Interdisciplinary approaches are additionallyencouraged by the ability of students to enrollin a wide spectrum of courses across theUniversity. Students also benefit from theother arts resources at Yale, namely the muse-ums whose collections serve as teaching tools,and their colleagues who are practicing artistsin the professional schools of the arts.

The History of Art Department, nowlocated in Street Hall, will be brought up-to-date to meet the demands of current digitalimage technology. Students will greatly benefitby learning in the same building complexwhere practitioners of the arts are at work andwhere the Arts Library is housed. The newbuilding will help address the pressing need

By Patrick McCaughey, Director, Yale Center for British Art Malcolm Warner, Curator of Paintings andSculpture, Yale Center for British ArtScott B. Wilcox, Curator of Paintings and Drawings, Yale Center for British Art

By Scott B. Wilcox, Curator of Prints and Drawings, Yale Center for British Art

By Duncan Robinson, Former Director, Yale Center for British Art Photographs by David Finn

By Patrick McCaughey, Director, Yale Center for British Artand Emily M. Weeks

By Malcolm Warner, Curator of Paintings and Sculpture, Yale Center for British Artand Julia Marciari-Alexander, Assistant Curator of Paintings and Sculpture, Yale Center for British Art

By Patrick Noon, FormerCurator of Prints and Drawings,

Yale Center for British Art

Yale Center for British Artwww.yale.edu/cfba

Yale Center for British Art, 1972

Louis I. Kahn, Architect

A sampling of publishedworks by past and present staff members

9

for space for the Arts Library, whose collec-tion of books has more than quadrupled toover 100,000 volumes since its founding.Serving as the working library for the schoolsof Art and Architecture, the History of ArtDepartment, and the Yale University ArtGallery, and as adjunct library for the YaleCenter for British Art, the Arts Library collection includes basic reference works,monographs, exhibition catalogues, historiesof the various arts fields, bound periodicals,and more than 500 current periodicals andmuseum bulletins. At the same time, theLibrary has developed a new service model toprovide off-campus high-efficiency shelving forsignificant portions of its holdings.

Digital Media Center for the Arts (DMCA)The DMCA, now located at 149 York Street, isa multimedia facility created to explore newareas of education and cross-disciplinary interactivity that result when traditional artcollides with the computer age. The Center has been conceived and designed over the past four years by Yale’s leaders in Art,Architecture, Drama, History of Art, FilmStudies, and Music and at the University ArtGallery, the Center for British Art, the ArtsLibrary, and Information Technology Services,working closely with the Offices of the

President and Provost. The Center assists students, faculty, and staff in finding ways toutilize digital technology, especially emergingtechnologies, to make and study art, and cultivates critical inquiry into the implicationsof digital expression, new digital art forms,and modes of transmission and dissemination.As part of the Arts Area Plan, the DMCA willbe relocated to a facility that best suits itsneeds. The York Street building will then berenovated to meet the Drama School’s teach-ing and rehearsal requirements.

The School of Drama The Yale School of Drama, celebrating its75th anniversary in 2000-2001, is widely rec-ognized for the contributions of its faculty andalumni to theater, film, television, and theentertainment industry. The 75-year milestonewas marked in November 2000 at a gala eventheld simultaneously by satellite in New Yorkand Los Angeles and broadcast to theUniversity Theatre at Yale so that studentscould watch for free. Alumni Ed Norton,Oliver Stone, and Julie Harris, and Yaleundergraduate Claire Danes were among thosewho co-chaired the celebration. The produc-tion featured such well-known Yale graduatesas Angela Bassett, Dick Cavett, Chris Durang,Jodie Foster, John Guare, Jane Kaczmarek,

The Arts at Yale

10

Stacy Keach, Meryl Streep, Sam Waterston,Sigourney Weaver, and Henry Winkler. Amongother distinguished former students areFrances McDormand, Paul Newman, andWendy Wasserstein.

The School affords an opportunity for theater professionals and students to worktogether in a conservatory setting. The life ofthe School includes classroom training and avariety of production experiences, rangingfrom readings to performances at the YaleRepertory Theatre. Each department of theSchool develops its own course of studyemphasizing personal attention to the individ-ual student. The Master of Fine Arts degree isoffered in the departments of Acting,Directing, Design, Dramaturgy and DramaCriticism, Playwriting, Technical Design andProduction, Sound Design/Engineering,Theater Management, and Stage Management.In addition, the Doctor of Fine Arts is offeredin Dramaturgy and Drama Criticism. Eachprogram is staffed with nationally respectedscholars and professionals who provide train-ing in the classroom as well as in the School’svarious studios, workshops, and theaters.Each year, students participate in numerousinformal projects and in more than fifty pro-ductions supervised by faculty members. The Repertory Theatre, one of the most

respected regional theater companies in thecountry, occupies a site at the corner ofChapel and York streets. The “Yale Rep” isclosely integrated into the life of the School,providing students the opportunity to observeas well as to participate in all aspects of dra-matic production while working closely withprofessionals. The School conducts its ownseason of fully staged productions at theUniversity Theatre, a York Street facility thatthe School shares with the undergraduatedrama society, the Yale Dramat. School ofDrama students also have performance andproduction opportunities during the busy sea-son of the small-scale Yale Cabaret.

In addition to creating the New Theater inGreen Hall, the Arts Area Plan calls for therenovation of the Yale Repertory Theatre aswell as the University Theatre. The offices,classrooms, workshops, and rehearsal spacesof the School, now dispersed among variousbuildings along York Street, will be consoli-dated in a renovated facility at 149 York, oncethe DMCA has moved to its new site.

Yale University Art Gallery With its collection of some 80,000 objects, thegallery—the first of several museum buildingsdesigned by Louis I. Kahn—is a world-famousresource serving Yale and New Haven. But it

History of Art Departmentwww.yale.edu/arthistory

at right: Street Hall, home of the History of Art Department for many years,

slated to become part of the Yale University Art Gallery.

By Diana E.E. Kleiner, Dunham Professor ofClassics & History of Art

By Vincent J. Scully, Sterling Professor Emeritus of the History of Art

By George Kubler,Former Professor Emeritusof the History of Art

By Anne Coffin Hanson,Professor Emeritus of the History of Art

By Robert Farris Thompson,Colonel John TrumbullProfessor of the History of Art

By Mary Ellen Miller,Vincent J. Scully Professor of the History of Art

By Jerome J. Pollitt, ProfessorEmeritus of the History of Art

A sampling of scholarlypublications by past andpresent members of the History of ArtDepartment

11

faces a shortage of space to house and exhibitits collections, as well as serious structuralproblems. The gallery’s permanent holdingsare tended to by departments of Ancient, Pre-Columbian, African, Asian, American,European, and Contemporary Art, as well as adepartment of Prints, Drawings, andPhotographs. Its American paintings and deco-rative arts form a collection considered one ofthe finest in the world.

As stipulated by the Arts Area Plan, thegallery will expand from its site at 1111Chapel Street through the Old Art Gallerybuilding on Chapel Street and into Street Hallon High Street. These three buildings will becompletely renovated, with space reconfiguredand systems upgraded to contemporary stan-dards of museum design to provide state-of-the-art environmental controls and lighting.When completed, the gallery will feature acontinuous sequence on the second and thirdfloors that will enable patrons to circulateamong the three buildings without retracingtheir steps; a new Yale Art Study Center;object-study classrooms; a teaching gallery co-curated by Yale faculty; and an expandedlobby with extra space for special events andegress to the rear sculpture garden, which willbe restored and given a new access path fromYork Street.

The University also plans to build a newfacility near the gallery to provide ready-accessand limited-access storage areas, includingspace for future growth of the collections; aDecorative Arts Collections study; additionalobject-study classrooms; curatorial workareas; and installation support areas. Alongwith the renovations described, the new facili-ty will enable the Yale University Art Galleryto reaffirm its mission as a teaching museumin which the first-hand study of objects plays aprimary role.

The Yale Center for British ArtIntegral to the refurbishment of the arts atYale, although not under the auspices of theArts Area Plan, are the renovations completedlast year at the Yale Center for British Art, anextraordinary gift of the late Paul Mellon ’29to the University, supported by the PaulMellon Fund. Its holdings of paintings, sculpture, prints, drawings, and rare books,which illustrate British life and culture fromthe sixteenth century to the present, arehoused in an award-winning building designed by Louis I. Kahn.

Public events at the Center for British Artinclude exhibitions, lectures and symposia,talks and tours, concerts, teacher programs,films, and parent and family programs. Inaddition to its approximately 100 sculpturalworks, the permanent collection containssome 1,500 paintings with particular strengthin the period from William Hogarth in theeighteenth century to J. M. W. Turner in thenineteenth century. The prints and drawingscollection consists of more than 20,000 draw-ings and watercolors and over 30,000 prints.The reference collection comprises about20,000 books, over 45 periodicals, and agrowing collection of sales catalogues and dis-sertations on British art. A rare book collec-tion of approximately 20,000 volumes is alsohoused at the Center.

ConclusionIt has been the goal of the University to develop an area plan for the arts that is ambitious and attainable, and that will fosterand perpetuate Yale’s distinction in the arts. Together with the equally ambitious plan toenchance Yale’s facilities for music, the ArtsArea Plan addresses the central issues, bothprogrammatic and structural, of Yale’s multi-ple arts units and provides them with a newfoundation on which to build and interact inthe new millennium.

The Arts at Yale

12

During fiscal 2000, the University’s financialstrength was significantly enhanced throughastute investment policies, responsiblespending, and the enormous generosity of itsdonors. Total assets grew to $12.4 billion, inlarge part due to an astonishing 41.0% rate ofreturn on endowment investments. Significantexpenditures for facilities also contributed tothe increase in total assets, as the Universityspent $191.3 million on disbursements forbuilding projects as part of its long-term planto restore and renew the campus. Liabilitiesgrew to $1.4 billion, as the University issued$50 million in new commercial paper tofinance these ongoing investments in facilities.Total contributions for the year amounted to$321.6 million, the largest amount everreceived by the University in a single year. Net assets increased by a remarkable $2.9billion, reaching over $10.9 billion at June 30, 2000.

For the third year in a row, the Universityachieved a balanced operating budget in fiscal2000, as presented in the SupplementalStatement of Operations. Total operatingrevenue increased by 9.9%, driven by largeincreases in the amount of contributions to beused for current operations and the allocationof endowment spending to operations. Steadygrowth in student income, grant and contractincome, and medical services income also

contributed to the growth in revenue duringthe year. Total operating expenses increased by13.6%. This growth in expenses is largely areflection of vigorous activity in programsthroughout the University, combined withhigher debt service costs related to our facilityand systems programs, higher utility costs, andexpanding student aid expenses.

Financial Results Overview

Five-year trend analysis ($ in billions)

fy97 fy98fy96 fy99 fy00

Net Assets

$10

$8

$6

$4

$2

$0

$12

A scene from the Yale RepertoryTheatre’s 1999 production ofMolière’s The Imaginary Invalid.

13

As shown in the chart below, the Universityderives its operating revenues primarily fromfive main sources: student income, grants andcontracts, medical services, contributions, andinvestments. Additional revenues are receivedfrom a variety of programs. Operatingrevenues from all sources totaled $1.26 billionin 2000.

Student IncomeStudent income, which includes revenue fromtuition, fees, and room and board, increased6.4% during 2000, and amounted to $195.4million, or 15.5% of operating revenues. Ofthe total amount, tuition and fees accountedfor $237.2 million, a 4.5% increase over 1999.Revenue from room and board increased 6.3%to $39.0 million during 2000. In accordancewith generally accepted accounting principles,student income is presented net of certainscholarships and fellowships, which totaled$80.8 million and $79.9 million for 2000 and1999, respectively.

During the 1999-00 academic year, 10,852students were enrolled at the University; 5,340were undergraduate students attendingprograms at Yale College, and 5,512 werepursing their studies at the Graduate School ofArts and Sciences and ten professional schools.(Figures are based on full-time equivalents).

Students enrolled in Yale College paid$24,500 for tuition and $7,440 for room andboard, bringing the total term bill to $31,940for the 1999-00 academic year.

As it has since 1964, the University main-tained its policy of offering Yale Collegeadmission to qualified U.S. and Canadian citi-zens and permanent residents without regardto family financial circumstances. This ‘need-blind’ admission policy is supported with acommitment to meet in full the demonstratedfinancial need of all such students throughouttheir four undergraduate years.

The University continued to improve thedelivery of financial services to students.Throughout the 1999-00 academic year,Student Financial and Administrative Servicesimplemented several organizational andprocessing improvements to complement finan-cial aid program initiatives that had beenintroduced in 1998-99. Through the renova-tion of 246 Church Street, the University wasable to accommodate student service unitssuch as Financial Aid, the Registrar, DiningServices, Student Accounts, and the ID Centerin one location. In addition, this provided anopportunity to create a Student FinancialServices Center where students can receiveassistance with any financial issue from atrained professional in a single location. This isa service delivery environment that exists atonly a few higher education institutions. Itprovides services from a student-centeredperspective and takes advantage of efficienciesderived from and capabilities provided throughthe University’s investment in technology tosupport student administrative functions.

Grant and Contract Income Grant and contract income, the University’slargest source of operating revenues, experi-enced a strong 9.4% rate of growth, from$323.7 million in 1999 to $354.1 million in2000. The Yale School of Medicine, whichreceives approximately 75% of the University’sgrant and contract revenues, reported anincrease of 10.4% for 2000, while theremaining campus sectors had a growth rate of 6.0%.

Approximately $275 million, or 77%, of2000 grant and contract revenues was receivedfrom the federal government in support ofYale’s research and training programs. Thelargest federal sponsor is the NationalInstitutes of Health, providing revenues of$213 million during 2000, an increase of10.4% over the prior year. The University alsoreceives significant research support from theNational Science Foundation, the Departmentof Energy, and the Department of Defense, and

Operating Revenue

Student income,net 15%

Grant & contractincome 28%

Medical servicesincome 16%

Contributions7%

Endowmentincome 22%

Otherincome

8%

Operating Revenue

Other investmentincome 2%

Publicationsincome 2%

14

student aid awards from the Department ofEducation. Non-federal sources, includingfoundations, voluntary health agencies, corpo-rations, and the State of Connecticut, providedan additional $79 million of grant andcontract revenues in 2000 for research,training, and other purposes.

In addition to funding the direct costs ofsponsored programs, grant and contractawards generally include reimbursement for aportion of the costs related to research labora-tories and other facilities, and administrativeand support costs incurred for research andother sponsored activities. These reimburse-ments for facility and administrative costsamounted to $82.9 million during 2000, anincrease of 9.1% over the prior year. Recoveryof facility and administrative costs allocable tofederally sponsored programs is recorded atrates negotiated with the University’s cognizantagency, the Department of Health and HumanServices. The current rate agreement remainsin effect through June 30, 2001.

The primary regulations governing federalgrants and contracts are encompassed in Officeof Management and Budget Circular A-21,

Cost Principles for Educational Institutionsand Circular A-110, Uniform AdministrativeRequirements for Grants and Agreements withInstitutions of Higher Education, Hospitalsand Other Non-Profit Organizations. The A-21 principles were modified several timesduring the 1990’s to impose limits on the typesand amounts of facility and administrativecosts eligible for reimbursements and tomandate more stringent (and in some casesduplicative) Federal Cost AccountingStandards for both grants and contracts.

Medical Services IncomeMedical services income totaled $201 millionin fiscal 2000 and continues to represent theUniversity’s third largest source of operatingrevenues. The largest portion of this incomestream is derived from patient care servicesprovided at the School of Medicine’s FacultyPractice. Other components include incomefrom diagnostic laboratory services andcontracts with affiliated medical centers,including Yale-New Haven Hospital (YNHH).

For thirty-five years, the University andYNHH have operated under a general agree-ment that establishes a framework for theconduct of joint activities in patient care,teaching, and administration at the MedicalCenter. In June 1999, the University enteredinto an affiliation agreement with Yale-NewHaven Health System (“the Health System”)—an entity that serves as the parent of YNHH anda number of other nonprofit health-care enter-prises. The principal purposes of this newaffiliation agreement are to enhance the long-standing, successful relationship between theUniversity and the Health System and to alignthe interests of these institutions to develop theMedical Center into a clinical powerhouse thatis distinguished favorably from its peers. Thisdevelopment will occur through the jointefforts of the Health System, System Affiliates,and the Yale School of Medicine as these enti-ties work together to support and contributeto: (i) the delivery of exemplary, cost-effectiveclinical care; (ii) the provision of exceptionalmedical education and training; and (iii) thedevelopment of new medical knowledgethrough innovative research initiatives. Theagreement includes a new clinical developmentfund that is financed jointly by the Yale Schoolof Medicine and the Health System to supportthe development and implementation of new clinical programs at the Medical Center.

Year 2000 also witnessed another major

Ten-year trend analysis ($ in millions)

fy92 fy93fy91 fy94 fy95 fy96 fy97 fy98 fy99 fy00

Federal-NIH Federal-Other Non-Federal

Grant and Contract Income

$350

$300

$250

$200

$150

$100

$50

$0

$400

15

change for the Yale School of Medicine thatstems from the new affiliation agreement. OnJune 22, 2000, the University transferred itsoperational responsibility for the YalePsychiatric Institute to Y N H H. This transferwas precipitated by a number of factors,including a desire to eliminate duplicate over-head costs through the consolidation ofpsychiatric services at the Medical Center.Moreover, Y N H H has greater access to patientsthrough its hospital-based services and canparticipate in federal programs such asMedicare and Medicaid more fully than a free-standing psychiatric hospital.

Other Investment IncomeEach year, a portion of accumulated endow-ment investment returns is allocated tooperating and physical capital net assets tosupport operational activity. The level ofspending is computed in accordance with theendowment spending policy. Because of thedesign of the spending policy formula, whichhas the effect of smoothing year-to-yearmarket swings, endowment investment returnsallocated to operating income increased by11.0% to $280.8 million. Other investmentincome of $19.7 million represents interest,dividends, and gains on investments heldoutside of the endowment. The performance ofthe endowment investment portfolio and theendowment spending policy are discussed indetail in the endowment section of this report.

ContributionsContributions for operating programs rosesignificantly in 2000, to $82.8 million from$57.5 million last year. Contributions fromprivate (non-governmental) sources continueto grow and provide significant resources forcurrent operations and, in the form of gifts toendowment, for funds that help secure theUniversity’s future financial wellbeing.Historically, Yale’s success in fund raising hasrested on the support of very generous alumni;that continued during fiscal year 2000 asgiving by alumni increased significantly.

Publications and Other IncomePublications income is earned primarilythrough Yale University Press, a separatelyendowed department of the University. ThePress published approximately 300 titles infiscal year 2000 and has 3,000 titles in print,many of them winners of prizes including fourPulitzer Prizes. Its authors are academic andprofessional people from all over the world;approximately 17% are from Yale.

Income from other operating sourcestotaled $105.9 million in 2000, and includesroyalty income and revenue from a variety ofother sources. Royalty income continues to bea significant source of revenue, derived fromintellectual assets such as patentable inventionsand copyrightable works and ideas developedby faculty in the course of fulfilling Yale’seducational mission. Development of theseintellectual assets usually requires partnersoutside the University who have the requisiteresources. The University received $33.4million related to these types of licensingagreements in 2000, up from $30.7 million in 1999.

Operating Revenue

16

17

Operating Expenses

Operating Expenses by Functional Classification

Organizedresearch 19%

Patient care andother relatedservices 18%

Libraries andother academic

support 9%

Student aid andservices 13%

Publicservice 7%

Administration andother institutional

support 7%Instruction anddepartmentalresearch 27%

Operating Expenses by Natural Classification

Employee benefits12%

Materials andsupplies 10%

Student aid 3%

Utilities 3%

Other operatingexpenditures 5%

Services11%

Interest onindebtedness 3%

Depreciationand amortization

expense 7%

Salaries and wages46%

Operating expenses totaled $1.3 billion, repre-senting a 13.6% increase in expenses for theyear. The largest component of expenses, com-pensation and related expense, rose 9.4%.This category of expense represents 58.4% oftotal University operating costs. Other costsincurred in support of University operationsmade up the rest of the $153.6 million

increase in expenses during 2000. Increases inthe level of support received from gifts and theendowment have allowed the University toexpand and enhance programs in instructionand support areas across the University.

Faculty and Staff CompensationThe University employs approximately 3,300faculty, 3,400 managerial and professionalstaff, and 4,100 unionized clerical and techni-cal and service and maintenance personnel.The increase in total salaries and wages wasanticipated due to normal increases for facultyand staff, as well as an increase in the numberof employees necessary to support an increasein instruction and research and patient careprograms, and to support new technology ini-tiatives. Faculty salaries constitute 44.2% oftotal salary expense, and Yale strives to main-tain competitive salary levels to enable suc-cessful recruitment and retention of the mostqualified candidates from among academicinstitutions and private sector organizations.The University has also made it a priority toensure that salary and benefit programs forstaff are equitable and competitive with themarketplace. The cost of providing employeebenefits, including various pension, postretire-ment health, and insurance plans in additionto social security and other statutory benefits,amounted to $148.1 million, an increase of9.5% over 1999.

Other ExpensesExpenses other than compensation reportedby natural classification on the SupplementalStatement of Operations include materials andsupplies, services, utilities, student aid, intereston indebtedness, depreciation and amortiza-tion expense, and other operating expenses.The University is experiencing significantincreases in interest and depreciation expensesas expected due to increased borrowings forconstruction projects and the financial systemsproject. Other operating costs related to mate-rial, services, and other costs are increasingconsistent with increased research and patientcare activity and information technology ini-tiatives.

In accordance with generally acceptedaccounting principles, Yale reports its operat-ing expenses by functional classification on theStatement of Activities. This presentationgroups and categorizes salaries and wages,employee benefit costs, purchases of goodsand services, and all other operating expenses

within the major operational functions, orlines of business, of the University.

Costs associated with the operation andmaintenance of Yale’s physical plant have been allocated to these functional expense categories. These allocated expenses totaled$125.8 million and $123.7 million in 2000and 1999, respectively, having undergone agrowth rate of less than 2%. Depreciationexpense ($81.3 million) and interest onindebtedness ($44.1 million) are allocated tothe functional expense categories in a similarfashion, and have increased significantly overprior years as discussed previously.

The School of ArchitectureGallery illustrates importanttopics in architecture and itsrelated fields in the newly renovated exhibition space on the second floor of theRudolph building. Major exhibitions that were recentlyproduced by the School ofArchitecture’s ExhibitionsProgram, Dean S. Sakamoto,Director, included Re-Connections:The Work of the Eames Office;Representing Modernism:Ezra Stoller’s Photographs ofthe Yale Art & ArchitectureBuilding; The Work Daniel Libeskind:Two Museums and a Garden;andCesar Pelli:Building Designs 1965-2000(pictured below).

Operating Expenses

18

The University continued the momentum of itscapital refurbishment program throughout fiscal year 2000. Yale expended over $191million on capital projects, including buildingrenovation, new construction, and acquisitionof property. The year also saw the completionof a campus planning framework, intendednot as a specific program for development, butas a set of organizing principles to informfuture decisions about individual buildingsand the structure of the campus as a whole.The University was at work in many campusareas (see pie chart), particularly in the resi-dential colleges and the Medical School.

During the year, the comprehensive reno-vation of Berkeley College was completed, therenovation of Branford College neared com-pletion, the renovation of Saybrook Collegewas initiated, and planning for the renovationof Timothy Dwight got under way. Discussionis beginning about the sequencing of renova-tions among the colleges that remain. As withthe first wave of renovations, this will dependon both the physical condition of each collegeand the success of fund-raising efforts. Theresidential “Swing Dorm” building, completedseveral years ago, continues to serve as housing for students whose college is under renovation.

At the Yale School of Medicine, work continues on the new clinical research build-ing, which is the most substantial project everundertaken by the University. The buildingwill contain approximately 450,000 squarefeet of space that will house key research labo-ratory and state-of-the art educational facili-ties. The new building is part of a longer-termUniversity commitment to expand andimprove the School of Medicine facilities,increasing its laboratory space by 25% andexpanding its capacity for biomedicalresearch, one of Yale’s greatest academicstrengths. A substantial portion of the newbuilding will be funded by contributions,including a generous $30 million bequest froma donor. The School of Medicine is also near-ing completion of its renovation of HarknessDormitory, its principal residential facility.

On Science Hill, a major reconstructionprogram has begun with the construction of anew Environmental Sciences Facility. Thisbuilding will rehouse the Peabody Museum’scollections in state-of-the-art facilities, andsurround them with classrooms, laboratories,and offices for faculty drawn from a widerange of disciplines with a common interest inthe environment and the history of life onearth. When this work is completed, togetherwith the new building planned for the Schoolof Forestry and Environmental Studies, thesouthern area of Science Hill will become an“environmental campus.” Work in anotherarea of Science Hill is proceeding to create a“molecular campus,” with plans for a newChemistry building well along and an initialplanning study for the new Biology building.This area will house the departments ofChemistry, Molecular Biophysics andBiochemistry, and Molecular, Cellular, andDevelopmental Biology, along with commonareas for labs, lecture halls, dining, and infor-mal meeting space. Renovations to existingbuildings include reconfiguration of portionsof the Sloane Physics building; the renovationof the Prospect Street wing of OsbornMemorial Laboratory, which is nearing com-pletion; and the initiation of building systemimprovements to Kline Biology Tower.

The University continues to rely heavily on the generosity of its alumni and friends in pursuing its aggressive facilities program.Total contributions received for physical capital during the year were more than threetimes the amount received in the prior year:$76.6 million in fiscal year 2000 compared

Physical Capital

Residential24%

Medicine22%

Law10%

Science& Technology

10%

Other10%

Capital Spending by Campus Area

Arts9%

Utilities7%

Athletics5%

Library3%

19

to $21.7 million in fiscal year 1999. As men-tioned, gift targets were established for theresidential colleges, and the University hasbeen successful in raising $20 million or morefor each of Berkeley, Branford, and Saybrook.Significant portions of the cost of theEnvironmental Sciences building, the DivinitySchool’s adaptive reuse construction, and theArt School building are funded through gifts.Gifts are essential to the University’s facilityimprovement plans. Without them, improve-ments must necessarily slip further into thefuture, increasing cost and delaying neededrepairs.

Yale also believes that true financial equi-librium must annually recognize the cost ofconsuming or using its buildings during theyear. Consequently it has established a pro-gram of allocating from the operating budgetan increasing amount for this purpose. In fiscal year 2000, the amount so allocated was $23.9 million.

Yale’s third major source of cash for itsbuilding program is debt. As of year end, the total facility debt outstanding was $1.0billion. Of this, approximately $723 millionwas in tax-exempt bonds, with the remainderin taxable debt, primarily remaining from the

period between 1986 and 1997 when the University did not have access to the tax-exempt market. The proportion of variable-rate debt to total debt is slightly over 60%,after taking into consideration the $170million in swaps the University has issued toachieve a synthetic fixed rate. Although theUniversity relies on the liquidity of its ownportfolio to fund any return of variable-ratebonds, it has entered into various revolvingcredit agreements totaling $500 million toserve as a backup liquidity facility. With theexception of its commercial paper program,which can be retired at will, and certain smallborrowings, all of the University’s debt is inthe form of bullet maturities due between2027 and 2096; that is, the debt matures in asingle or a few years at the end of its life. The University annually expenses deprecia-tion/amortization, a non-cash expense thateffectively builds a reserve for future repay-ment.

The University continues to enjoy the highest bond ratings available: AAA fromStandard and Poor’s and Aaa from Moody’s.Only a few other institutions have this rating.

Physical Capital

The Library Court in the Yale Center for British Art. The paintings of George Stubbsare displayed on the lowest section of the three walls.

20

21

June 30, 2000, the endowment reached arecord high market value of more than $10billion, after providing $281 million to theoperating budget for the year.

Investment PerformanceFor the year ended June 30, 2000, the endow-ment achieved a 41% investment return, gen-erating investment income and gains of morethan $3 billion. During the past decade, theendowment earned an annualized 17.5%return, net of fees, outperforming the meanreturns of its peer group and exceeding medi-an results of institutional fund managers.Yale’s disciplined and diversified asset alloca-tion policies, combined with strong activemanagement, added substantial value to theendowment.

Over the ten years ended June 30, 2000,Yale’s superior investment returns added $4.2billion relative to the University’s compositebenchmark, and an estimated $2.8 billion rela-tive to the mean return of a broad universe ofcolleges and universities.

Endowment SpendingThe endowment spending policy, the means bywhich endowment earnings are allocated tooperations, balances the competing objectivesof providing a stable flow of income to theoperating budget and protecting the real valueof the endowment over time. The spendingpolicy attempts to achieve these two objectivesby using a long-term spending rate target com-bined with a smoothing rule, which adjustsspending gradually to changes in endowmentmarket value. The target spending rateapproved by the Yale Corporation is currently5.0%. The smoothing rule, along with thediversified nature of the endowment, isdesigned to mitigate the impact of short-termmarket volatility.

Through the spending policy, the endow-ment provided $280.8 million to operatingrevenue in 2000, representing 22.2% of theUniversity’s operating revenues for the year.Ten years ago, endowment distributions contributed approximately $85 million, or11.8% of the operating budget. Over the pastdecade, endowment distributions have grownat an annualized rate of 12.7%.

Asset AllocationAsset allocation is the key to successfulendowment performance. Yale’s asset allocation policy combines tested theory and

The role of the endowment is to support bothcurrent and future academic programs of theUniversity. To balance these current and futureneeds, Yale has adopted investment andspending policies designed to preserve endow-ment asset values while providing a substantialflow of income to the operating budget. At

Endowment

Acquisitionsfor librariesand other

collections 3%

Otherrestricted

30%

Unrestricted23%

Professorships,lectureships, and

teaching 23%

Maintenance4%

Endowment Restrictions and Designations

Scholarships,fellowships,and prizes

17%

FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98$0

$2

$4

Bill

ions

Yale Endowment vs. Composite Benchmark1990 – 2000

Estimated growth in Endowment using benchmark returns

Actual Endowment growth

$6

FY99

$4

$8

FY00

$10

$5.9 Billion ➔

$10.1 Billion➔

informed market judgment to balance invest-ment risks with the need for high returns.

The need to provide resources for currentoperations as well as preserve the purchasingpower of assets dictates investing for highreturns, causing the endowment to be biasedtoward equity. In addition, the endowment’svulnerability to inflation directs the Universityaway from fixed income and toward equityinstruments. Hence, nearly 85% of the endow-ment is invested in some form of equity,through domestic and international securities,real assets, private equity, and absolute returnvehicles.

Over the past decade, Yale has significantlyreduced the endowment’s exposure to tradi-tional domestic marketable securities, reallo-cating assets to nontraditional asset classes. In 1990, more than 70% of the endowmentwas committed to U.S. stocks, bonds, andcash. Today, this percentage is approximately30%. Foreign equity, private equity, absolutereturn strategies, and real assets now representclose to 70% of the endowment.

The heavy allocation to nontraditionalasset classes stems from the diversifying powerthey provide relative to the portfolio as awhole. Alternative assets, by their very nature,

tend to be less efficiently priced than tradition-al marketable securities, providing an oppor-tunity to exploit market inefficiencies throughactive management. Today’s actual and targetportfolios have significantly higher expectedreturns and lower volatility than 1990’s port-folio.

In June 1999, the Investment Committeeapproved a change to the endowment’s assetallocation policy, establishing a 17.5% allocation to real assets. This new asset classincludes real estate as well as natural resourceinvestments previously classified as privateequity.

June CurrentAsset Class 2000 Target

Domestic Equity 14.2% 15.0%Fixed Income 9.4% 10.0%Absolute Return 19.5% 22.5%Foreign Equity 9.0% 10.0%Private Equity 25.0% 25.0%Real Assets 14.9% 17.5%Cash 8.0% 00.0%

Total 100.0% 100.0%

BenchmarksDomestic EquityWilshire 5000Absolute ReturnUniversity Inflation plus 8%Fixed IncomeLehman Brothers Government Bond IndexForeign EquityComposite BenchmarkReal AssetsUniversity Inflation plus 6%Private EquityUniversity Inflation plus 10%

* Real assets included only realestate before June 30, 1999.

35%

30%

25%

20%

15%

10%

5%

0%

Yale EndowmentAsset Classes versus bench-marks: Annualized returnsnet of fees for ten yearsended June 30, 2000

Yale Asset Class Benchmark

DomesticEquity

AbsoluteReturn

FixedIncome

ForeignEquity

RealAssets*

PrivateEquity

Endowment

22

REPORT OF INDEPENDENT ACCOUNTANTS

To the President and Fellows ofYale University:

In our opinion, the accompanying statement of financial position and the related statements ofactivities and cash flows present fairly, in all material respects, the financial position of YaleUniversity (the “University) as of June 30, 2000, and the changes in its net assets and its cashflows for the year then ended, in conformity with accounting principles generally accepted in theUnited States of America. The supplemental statement of operations is presented for purposes ofadditional analysis and is not required part of the basic financial statements. Such informationhas been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basicfinancial statements taken as a whole. These financial statements are the responsibility of theUniversity’s management; our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has beenderived from the University’s 1999 financial statements and, in our report dated September 29,1999, we expressed an unqualified opinion on those financial statements. We conducted ouraudit of these statements in accordance with auditing standards generally accepted in the UnitedStates of America which, require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements, assessing the accounting principles used and significant estimates made bymanagement, and evaluating the overall financial statement presentation. We believe that ouraudit provides a reasonable basis for our opinion.

October 6, 2000

PricewaterhouseCoopers L.L.P.100 Pearl StreetHartford CT 06103-4508Telephone (860) 241 7000Facsimile (860) 241 7590

23

Yale University Statements of Financial PositionJune 30, 2000 and 1999 ($ in thousands)

2000 1999

Assets:Cash and cash equivalents $0,1107,033 $0,150,490Accounts receivable, net 112,241 97,838Contributions receivable, net 110,118 78,795Student notes receivable, net 83,794 87,423Investments, at market value 10,491,441 7,624,742Other assets 112,909 110,731Land, buildings and equipment, net

of accumulated depreciation 1,352,502 1,197,422

Total assets $12,370,038 $9,347,441

Liabilities:Accounts payable and accrued liabilities $0,1141,719 $0,129,540Advances under grants and contracts and other deposits 53,573 46,498Accrued employee benefit liabilities 35,243 31,769Liabilities under split-interest agreements 80,277 62,622Bonds and notes payable 1,073,944 1,035,460Advances from Federal government for student loans 31,462 30,772

Total liabilities 1,416,218 1,336,661

Net assets:Unrestricted 5,976,480 4,611,384Temporarily restricted 3,786,119 2,369,658Permanently restricted 1,191,221 1,029,738

Total net assets 10,953,820 8,010,780

Total liabilities and net assets $12,370,038 $9,347,411

Detail of net assets:Temporarily Permanently

Unrestricted Restricted Restricted 2000 1999

Endowment and student loan $3,422,065 $3,385,304 $1,191,221 $07,998,590 $5,611,880Funds functioning as endowment 1,993,352 79,721 – 2,073,073 1,589,398Physical capital investment 428,742 199,096 – 627,838 541,337Operating:Accumulated general budget deficit (70,933) – – (70,933) (70,933)Designated and restricted for specific purposes 203,254 121,998 – 325,252 339,098

$5,976,480 $3,786,119 $1,191,221 $10,953,820 $8,010,780

The accompanying notes are an integral part of the financial statements.

24

Yale University Statement of Activitiesfor the year ended June 30, 2000 with summarized information for the year ended June 30, 1999($ in thousands)

Temporarily PermanentlyUnrestricted Restricted Restricted 2000 1999

OperatingRevenues and reclassifications:

Student income, net $0,195,440 $ – $ – $0,195,440 $0,183,743Grant and contract income, primarily for research

and training 354,125 – – 354,125 323,654Medical services income 200,979 – – 200,979 181,822Contributions 14,751 68,058 – 82,809 57,474Allocation of endowment spending from financial capital 96,285 184,532 – 280,817 252,951Other investment income 19,657 – – 19,657 20,549Publications income 23,905 – – 23,905 22,437Other income 105,928 – – 105,928 106,898

Total revenues and gains 1,011,070 252,590 – 1,263,660 1,149,528Net assets released from restrictions 244,096 (244,096) – – –

Total revenues and reclassifications 1,255,166 8,494 – 1,263,660 1,149,528

Expenses:Instruction and departmental research 349,371 – – 349,371 316,910Organized research 238,763 – – 238,763 216,753Patient care and other related services 225,974 – – 225,974 204,327Libraries and other academic support 117,295 – – 117,295 95,045Student aid and services 170,370 – – 170,370 139,329Public service 87,085 – – 87,085 79,737Administration and other institutional support 94,675 – – 94,675 77,800

Total expenses 1,283,533 – – 1,283,533 1,129,901

Increase (decrease) in net assets from operating activities (28,367) 8,494 – (19,873) 19,627

CapitalPhysical capital:

Contributions – 76,615 – 76,615 21,675Allocation of endowment spending from financial capital 3,980 – – 3,980 3,667Other investment income 3,170 – – 3,170 1,961Other increases (decreases) (2,130) – – (2,130) 493Net assets released from restrictions 33,792 (33,792) – – –

Increase in net assets from physical capital activities 38,812 42,823 – 81,635 27,796

Financial capital:Contributions 1,291 7,296 153,550 162,137 59,465Investment income 58,428 115,287 222 173,937 146,079Gains on investments, net of investment management fees 961,191 1,882,691 4,264 2,848,146 638,089Other increases (decreases) (14,737) (6,855) 3,447 (18,145) (11,262)Allocation of endowment spending to operating

and physical capital (100,265) (184,532) – (284,797) (256,618)Net assets released from restrictions 448,743 (448,743) – – –

Increase in net assets from financial capital activities 1,354,651 1,365,144 161,483 2,881,278 575,753

Total increase in net assets 1,365,096 1,416,461 161,483 2,943,040 623,176Net assets, beginning of year 4,611,384 2,369,658 1,029,738 8,010,780 7,387,604

Net assets, end of year $5,976,480 $3,786,119 $1,191,221 $10,953,820 $8,010,780

The accompanying notes are an integral part of the financial statements.

25

Yale University Supplemental Statement of Operationsfor the year ended June 30, 2000 with summarized information for the year ended June 30, 1999($ in thousands)

Unrestricted

General DesignatedOperating for Specific Temporarily

Budget Purposes Totals Restricted 2000 1999

Revenues and reclassifications:Student income, net $192,046 $003,394 $0,195,440 $ – $0,195,440 $0,183,743Grant and contract income,

primarily for research and training 83,228 270,897 354,125 – 354,125 323,654Medical services income – 200,979 200,979 – 200,979 181,822Contributions 14,751 – 14,751 68,058 82,809 57,474Allocation of endowment spending

from financial capital 66,026 30,259 96,285 184,532 280,817 252,951Other investment income 21,521 (1,864) 19,657 – 19,657 20,549Publications income – 23,905 23,905 – 23,905 22,437Other income and transfers 93,421 12,507 105,928 – 105,928 106,898

Total revenues and gains 470,993 540,077 1,011,070 252,590 1,263,660 1,149,528Net assets released from

restrictions and designations 99,613 144,483 244,096 (244,096) – –

Total revenues and reclassifications 570,606 684,560 1,255,166 8,494 1,263,660 1,149,528

Operating expenses and other decreases:Salaries and wages 274,607 327,389 601,996 – 601,996 550,642Employee benefits 60,976 87,122 148,098 – 148,098 135,210Materials and supplies 54,553 68,294 122,847 – 122,847 105,247Services 56,866 78,932 135,798 – 135,798 120,815Utilities 32,046 337 32,383 – 32,383 25,875Student aid 9,674 28,106 37,780 – 37,780 32,528Other operating expenditures 2,415 67,784 70,199 – 70,199 53,851Interest on indebtedness 43,902 243 44,145 – 44,145 30,664Depreciation and amortization expense 35,567 54,720 90,287 – 90,287 75,069

Total operating expenses 570,606 712,927 1,283,533 – 1,283,533 1,129,901

Increase (decrease) in net assetsfrom operating activities $ — $ (28,367) $ (28,367) $ 8,494 $ (19,873) $ 19,627

The accompanying notes are an integral part of the financial statements.

26

Yale University Statements of Cash Flowsfor the years ended June 30, 2000 and 1999 ($ in thousands)

2000 1999

Operating activities:Change in net assets $2,943,040 $0,623,176Adjustments to reconcile change in net assets to net cash used in operating activities:

Depreciation and amortization 90,287 75,069Net realized and unrealized gains on investments (2,848,146) (638,089)Contributions restricted for physical and financial capital (204,518) (88,613)Other adjustments 12,161 6,047Changes in assets and liabilities that provide (use) cash:

(Increase) decrease in accounts receivable (14,403) 3,068(Increase) decrease in contributions receivable (31,323) 14,836(Increase) decrease in other operating assets (3,718) (820)Increase (decrease) in accounts payable, accrued liabilities and deposits and advances 22,728 (4,134)

Net cash used in operating activities (33,892) (9,460)

Investing activities:Student loans repaid 7,211 7,163Proceeds from sale of student loans 16,920 13,436Student loans granted (22,243) (24,382)Purchases related to capitalized software costs and other assets (7,452) (41,281)Proceeds from sale of investments 5,701,427 2,533,138Purchases of investments (5,719,980) (2,488,562)Purchases of land, buildings and equipment, net (239,458) (202,425)

Net cash used in investing activities (263,575) (202,913)

Financing activities:Contributions restricted for physical and financial capital 204,518 88,613Contributions received for split-interest agreements 15,999 7,497Payments made under split-interest agreements (6,954) (6,884)Proceeds from long-term debt 50,000 265,000Repayments of long-term debt (11,516) (26,204)Interest earned and advances from Federal government for student loans 1,963 2,092

Net cash provided by financing activities 254,010 330,114

Net increase (decrease) in cash and cash equivalents (43,457) 117,741Cash and cash equivalents at beginning of year 150,490 32,749

Cash and cash equivalents at end of year $0,107,033 $0,150,490

The accompanying notes are an integral part of the financial statements.

27

Yale Unive r s i t yNotes to Financial Statements

1. Significant Accounting Policies

a. GeneralYale University (“the University”) is a private, not-for-profit institution of higher education located in NewHaven, Connecticut. The University provides educa-tional services primarily for students and trainees at theundergraduate, graduate and postdoctoral levels, andperforms research, training and other services undergrants, contracts and other similar agreements withagencies of the Federal government and other spon-soring organizations. The University’s academicorganization includes Yale College, the Graduate Schoolof Arts and Sciences, ten professional schools and avariety of research institutions and museums. The largestprofessional school is the Yale School of Medicine,which conducts various medical services in support of itsteaching and research missions.

b. Basis of PresentationThe financial statements of Yale University include theaccounts of all academic and administrative departmentsof the University, and certain affiliated organizations,including the Yale University Press, that are controlledby the University.

Financial statements of private, not-for-profit organiza-tions measure aggregate net assets based on the absenceor existence of donor-imposed restrictions. Three cate-gories of net assets serve as the foundation of theaccompanying financial statements. These classes arelabeled unrestricted, temporarily restricted and perma-nently restricted net assets. Brief definitions of the threenet asset classes are presented below:

Unrestricted Net Assets — Net assets derived fromtuition and other institutional resources that are notsubject to explicit donor-imposed restrictions.Unrestricted net assets also include a portion of theappreciation on endowment investments as described insubsequent paragraphs of this note.

Temporarily Restricted Net Assets — Net assets that aresubject to explicit donor-imposed restrictions on theexpenditure of contributions or income and gains oncontributed assets. The temporary restrictions mayexpire due to the passage of time or the incurrence ofexpenditures that fulfill the donor-imposed restrictions.Temporarily restricted net assets are generally estab-lished in support of schools or departments of theUniversity, often for specific purposes such as professor-ships, research, faculty support, scholarships andfellowships, library and art museums, building construc-tion and other specific purposes.

Permanently Restricted Net Assets — Net assets that aresubject to explicit donor-imposed stipulations that theybe maintained permanently by the University. Generally,the donors of these assets permit the University to usethe returns on the related investments over time forgeneral or specific purposes.

The University’s measure of operations as presented inthe Statement of Activities includes income from tuitionand fees, grants and contracts, medical services, contri-butions for operating programs, the allocation ofendowment spending and other revenues. Operatingexpenses are reported on the Statement of Activities byfunctional categories, after allocating costs for operationand maintenance of plant, interest on indebtedness anddepreciation expense. Certain of these functional cate-gories represent expenses incurred in support of theUniversity’s primary lines of business (as described inNote 1a) that have not been allocated on the Statementof Activities.

The University presents non-operating activity withinthe physical and financial capital sections of theStatement of Activities. The physical capital sectionincludes contributions and other activities related toland, buildings and equipment that are not included inthe University’s measure of operations. Similarly, thefinancial capital section includes contributions, invest-ment returns and other activities related to endowmentand student loan net assets utilized for long-term invest-ment purposes. Financial capital also encompassesexpendable contributions and the related accumulatedappreciation that have been designated to function asendowment (i.e., funds functioning as endowment) bythe Yale Corporation.

Administration of the University’s endowment is subjectto the general provisions of the Uniform Management ofInstitutional Funds Act (umifa or “the Act”). Under theprovisions of this State law, a governing board mayappropriate for expenditure, for the uses and purposesfor which an endowment fund is established, so much ofthe net appreciation as is deemed prudent based on stan-dards established by the Act. While a governing boardmust exercise ordinary business care in the appropria-tion of such appreciation, the general provisions ofumifa do not mandate that institutions retain endow-ment gains permanently. Generally accepted accountingprinciples require institutions that are subject to generalumifa provisions to report gains on endowment assetsas increases in unrestricted net assets or temporarilyrestricted net assets based on the absence or existence ofdonor-imposed restrictions.

28

The Supplemental Statement of Operations, which is notrequired by generally accepted accounting principles,provides additional detail of the University’s operatingresults by segregating activities that are an integral partof the University’s general operating budget from otheractivities that are internally designated for specificpurposes or uses. Expenses are reported by naturalclassification on the Supplemental Statement ofOperations for informational purposes.

c. Cash and Cash EquivalentsCash and cash equivalents are recorded at fair valueand include institutional money market funds andsimilar temporary investments with maturities of threemonths or less. Cash and cash equivalents representinginvestments purchased with endowment net assets arereported as investments.

d. InvestmentsThe University’s investments are re c o rded in the financialstatements at fair value. The value of publicly tradedfixed income and equity securities is based upon quotedmarket prices and exchange rates, if applicable. The fairvalue of significant direct real estate investments is deter-mined from periodic valuations prepared by independentappraisers.

Fair values for certain private equity and real estateinvestments held through limited partnerships orcommingled funds are estimated by the respectiveexternal investment managers if market values are notreadily ascertainable. These valuations necessarilyinvolve assumptions and methods that are reviewed bythe University’s Investments Office.

Derivative financial instruments held for investmentpurposes, primarily in the endowment investment port-folio, are re c o rded at fair value with the resulting gains orlosses recognized in investment earnings. The net interestpaid or received pursuant to interest rate swap agree-ments undertaken in connection with Yale’s variable-ratedebt portfolio is recorded as interest expense. TheUniversity records the cost of managing its endowmentportfolio as a decrease in financial capital within theappropriate net asset class in the Statement of Activities.

The University invests its endowment investment port-folio and allocates the related earnings for expenditurein accordance with the total return concept. A distribu-tion of endowment return that is independent of thecash yield and appreciation of investments earned duringthe year is provided for program support. The Universityhas adopted an endowment spending policy designedspecifically to stabilize annual spending levels and topreserve the real value of the endowment portfolio overtime. The spending policy attempts to achieve these twoobjectives by using a long-term targeted spending ratecombined with a smoothing rule, which adjusts spendinggradually to changes in the endowment market value.The Yale Corporation approved a long-term targeted

spending rate of 5.0 percent effective beginning in fiscal1996. The actual rate of spending for both 2000 and1999, when measured against the previous year’s marketvalue, was 3.9 percent. Actual rates have been lowerthan long-term targets in recent years due to stronginvestment returns.

e. Land, Buildings and EquipmentLand, buildings and equipment are generally stated atcost and are presented net of accumulated depreciation.Annual depreciation is calculated on a straight-line basisover useful lives ranging from 15 to 50 years for build-ings and improvements and 4 to 12 years for furnishingsand equipment.

f. Other AssetsCapitalized software and bond issuance costs are cate-gorized within other assets in the financial statements.Bond issuance costs are amortized over the term of therelated debt and capitalized software costs are amortizedover the estimated useful lives of the software, rangingfrom 5 to 10 years.

g. CollectionsCollections at Yale include works of art, literary works,historical treasures and artifacts that are maintained inthe University’s museums and libraries. These collectionsare protected and preserved for public exhibition, educa-tion, research and the furtherance of public service.Purchases of such collections are recorded as operatingexpenses in the period in which the items are acquired.

h. Split-Interest AgreementsThe University’s split-interest agreements with donorsconsist primarily of charitable gift annuities, pooledincome funds and irrevocable charitable remaindertrusts for which the University serves as trustee. Assetsare invested and payments are made to donors and/orother beneficiaries in accordance with the respectiveagreements.

Contribution revenues for charitable gift annuities andcharitable remainder trusts are recognized at the datesthe agreements are established. In addition, the presentvalues of the estimated future payments to be made tothe beneficiaries under these agreements are recordedas liabilities. For pooled income funds, contributionrevenue is recognized upon establishment of the agree-ment at the fair value of the estimated future receipts,discounted for the estimated time period until culmina-tion of the agreement.

29

i. Tuition and FeesTuition and fees revenue, which is included in studentincome on the Statement of Activities, is generated froman enrolled student population of approximately10,900. The undergraduate population of 5,340 is adiverse group attracted from across the United Statesand from many foreign countries. Foreign studentsaccount for approximately 9 percent of the undergrad-uate population. Tuition revenue from undergraduateenrollment represents approximately 55 percent of nettuition revenue.

The University maintains a policy of offering qualifiedapplicants admission to Yale College without re g a rd tofinancial circumstance as well as meeting in full thedemonstrated financial need of those admitted. Studentneed in all programs throughout the University is gener-ally fulfilled through a combination of scholarships andfellowships, loans and employment during the academicy e a r. Tuition and fees have been reduced by certain schol-arships and fellowships in the amounts of $8 0.8 m i l l i o nand $7 9.9 million in 2 0 0 0 and 1 9 9 9, re s p e c t i v e l y.

j. ContributionsUnconditional promises to give that are expected to becollected within one year are recorded at their net realiz-able value. Amounts expected to be collected in futureyears are recorded at the present value of estimatedfuture cash flows. The discounts on those contributionsare computed using a risk-free interest rate applicable tothe year in which the promise is received. Amortizationof the discount is included in contribution revenue.Conditional promises to give are not included as supportuntil such time as the conditions are substantially met.A facilities and administrative charge is assessed againstcurrent use gifts when received.

k. Grant and Contract IncomeThe University receives grant and contract income fromgovernmental and private sources. In 2000 and 1999,grant and contract income received from the Federalgovernment totaled $274.6 million and $254.0 million,respectively. The University recognizes revenue associ-ated with the direct costs of sponsored programs as therelated costs are incurred. Recovery of facilities andadministrative costs of Federally sponsored programsis at cost reimbursement rates negotiated with theUniversity’s cognizant agency, the Department of Healthand Human Services. The University and the Federalgovernment are currently operating under an agreementthat establishes facilities and administrative cost ratesunder Federal grants and contracts through June 3 0, 2 0 0 1.

l. Medical Services IncomeThe University has agreements with third-partypayors, including health maintenance organizations,that provide payment for medical services at amountsdifferent from standard rates established by theUniversity. Medical services income is reported netof contractual allowances from third-party payorsand others for services rendered, and further adjustedfor estimates of uncollectible amounts.

m. Net Assets Released from RestrictionsReclassification of net assets is based upon the satisfac-tion of the purpose for which the net assets wererestricted or the completion of a time stipulation.Restricted contributions and net investment returnsearned are reported as temporarily restricted supportand reclassified to unrestricted when any donor-imposedrestrictions are satisfied. Restricted net assets associatedwith physical capital assets are reclassified to unre s t r i c t e dnet assets when the capital asset is placed in service.

n. Use of EstimatesThe preparation of financial statements in conformitywith generally accepted accounting principles requiresmanagement to make estimates and judgments thataffect the reported amounts of assets and liabilities anddisclosures of contingencies at the date of the financialstatements and of revenues and expenses recognizedduring the reporting period. Actual results could differfrom those estimates.

o. 1999 Financial Statement PresentationComparative summarized information for the yearended June 30, 1999 presented in the Statement ofActivities does not include sufficient detail by net assetclass to constitute a presentation in conformity withgenerally accepted accounting principles. In addition,certain amounts have been reclassified to conform tothe current-year presentation.

30

2. Investments

As described in Note 1d, investments are generallyshown in the financial statements at market or appraisedvalue. The market values of the University’s investments(excluding cash and cash equivalents as describedin Note 1c) are presented below, as of June 30, inthousands of dollars:

2000 1999

Endowment:Domestic equities $01,402,329 $1,127,336Absolute return 1,960,647 1,547,238Private equities 2,570,188 1,656,253Fixed-income 1,711,803 775,619Real assets 1,493,753 1,279,911International equities 906,672 793,852

10,045,392 7,180,209

Assets held in trust: 46,862 41,478

Other investments:Fixed-income 347,184 356,900Other 52,003 46,155

399,187 403,055

Total investments $10,491,441 $7,624,742

The University’s split-interest assets as described infootnote 1h and included in investments comprise thefollowing components, in thousands of dollars:

2000 1999

Charitable gift annuities $115,872 $ 81,422Pooled income funds 30,512 30,970Charitable remainder trusts 46,862 41,478

$193,246 $153,870

The University has developed a diversified endowmentinvestment portfolio with a strong orientation to equityinvestments and to strategies designed to take advantageof market inefficiencies. The University’s investmentobjectives are guided by its asset allocation policy andare achieved in partnership with external investmentmanagers operating through a variety of vehicles,including separate accounts, limited partnerships andcommingled funds. During the year, the University’s assetallocation categories were modified to include the realassets class, which combines endowment real estate andnatural resource investments.

The University may employ derivatives and other strate-gies to (1) hedge against market risks, (2) arbitragemispricings of related securities and (3) replicate longor short positions more cost effectively. Accordingly,derivatives in the investment portfolio may includecurrency forward contracts, interest rate and currencyswaps, call and put options, debt and equity futures

contracts, equity swaps and other vehicles that may beappropriate in certain circumstances. Since Yale doesnot strive for higher returns through market timing orby making leveraged market bets, derivatives are notused for speculation. At June 30, 2000, the Universitydirectly held equity swaps with a notional value of$242.9 million and has recognized approximately$3 million in investment gains during the year relatingto equity swaps. Derivatives held by limited partnershipsand commingled investment trusts in which Yale investspose no off-balance sheet risk to the University due tothe limited liability structure of the investments.

In connection with certain hedged investment strategies,the University is re q u i red to maintain collateral balancesat various financial institutions. Collateral balancesamounted to $1.5 billion and $5 7 0 million at June 3 0,2 0 0 0 and 1 9 9 9, re s p e c t i v e l y, and are primarily classifiedas fixed-income investments.

Certain investment transactions, including derivativefinancial instruments, necessarily involve counterpartycredit exposure. Such exposure is monitored regularly bythe University’s Investments Office in accordance withestablished credit policies and other relevant criteria.

At June 30, 2000, approximately 69 percent of theUniversity’s endowment investments were invested inlimited partnerships or limited liability corporations.Under the terms of certain limited partnership agree-ments for private equity and real estate investments, theUniversity is obligated to remit additional funding peri-odically as capital calls are exercised. At June 30, 2000,the University had uncalled commitments of approxi-mately $1.6 billion. Such commitments are generallycalled over a period of years and contain fixed expira-tion dates or other termination clauses.

A summary of the University’s total investment returnas reported in the Statement of Activities is presentedbelow, in thousands of dollars:

2000 1999

Investment income $0173,937 $146,079Realized and unrealized gains,net of investmentmanagement fees 2,848,146 638,089

Return on the endowment 3,022,083 784,168Other investment income 22,827 22,510

Total return on investments $3,044,910 $806,678

Endowment investment returns totaling $284.8 millionand $256.6 million were allocated to operating andphysical capital activities in 2000 and 1999, respectively,using the spending policy described in Note 1d.

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3. Accounts Receivable

Accounts receivable from the following sources wereoutstanding at June 30, in thousands of dollars:

2000 1999

Medical services $ 51,709 $ 57,849Grants and contracts 35,578 22,960Investment income receivable 16,145 10,870Affiliated organizations 11,919 9,962Yale University Press receivables 8,141 6,446Other 15,867 14,754

139,359 122,841Less: Allowance for doubtful accounts (27,118) (25,003)

$112,241 $097,838

Medical services receivables are net of an allowance forcontractual reserves in the amount of $29.7 million and$33.8 million at June 30, 2000 and 1999, respectively.

The University and Yale-New Haven Hospital (“theHospital”) are parties to an affiliation agreement thatestablishes guidelines for the operation of activitiesbetween these two separate organizations. These guide-lines set forth each organization’s responsibility underthe common goal of delivering comprehensive patientcare services. Under the terms of the arrangement, theHospital is responsible for providing a clinical settingand clinical support for the University to carry out itsteaching and research missions. The University providesprofessional services from faculty of the Yale Schoolof Medicine and a variety of other administrative andclinical services.

The net receivable from the Hospital amounted to $6.3million and $3.3 million at June 30, 2000 and 1999,respectively. Balances are settled in the ordinary courseof business.

During the year, the University transferred the opera-tions of Yale Psychiatric Institute (ypi) to the Hospital.Revenue and expense included in the University’sfinancial statements for ypi for fiscal years ended June30, 2000 and 1999 are as follows, in thousands ofdollars:

2000 1999

Medical services income $(14,803 $(16,718Patient care services (26,358) (20,211)

Decrease in unrestricted operatingnet assets $(11,555) $(3,493)

As part of the agreement, the University and theHospital have entered into a lease of the existing ypifacility. The Hospital will lease the ypi facility from theUniversity for an initial term of 5 years, with extensionsavailable up to 40 years. Lease payments are calculatedbased on a percentage of the expenses incurred by theUniversity to operate the facility.

4. Contributions Receivable

Contributions receivable consisted of the followingunconditional promises to give as of June 30, inthousands of dollars:

2000 1999

Purpose:Endowment $044,136 $036,514Capital purposes 54,410 24,271Operating programs 51,846 44,408

Gross unconditional promises to give 150,392 105,193Less: Discount (21,415) (11,304)Less: Allowance for uncollectibleLess: accounts (18,859) (15,094)

Net unconditional promises to give $110,118 $078,795

Amounts due in:Less than one year $036,740 $040,526One to five years 75,842 58,458More than five years 37,810 6,209

$150,392 $105,193

Discount rates used to calculate the present value ofcontributions receivable at June 30, 2000 and 1999ranged from 5.46 percent to 6.60 percent.

5. Student Notes Receivable

Student notes and interest receivable at June 30, inthousands of dollars, include:

2000 1999

Stafford Loan Program $29,972 $31,890Perkins Loan Program 32,835 32,097Other student loan notes 21,380 20,155Tuition Postponement and Contingent

Repayment Option plans 2,012 5,650

86,199 89,792Less: Allowance for doubtful accounts (2,405) (2,369)

$83,794 $87,423

During the 1999 fiscal year the University decided tomodify the terms of repayment for certain participantsin the Tuition Postponement Option and ContingentRepayment Option loan programs offered by theUniversity, including the acceleration of the terminationof the programs from December 31, 2008 to December31, 2001. The programs’ receivable balances have beenreduced accordingly to reflect these program changes.A liability was recorded to refund individuals whotook advantage of early termination provisions of theprograms.

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Student notes receivable include donor-restricted andFederally sponsored student loans with mandatedinterest rates and repayment terms subject to significantrestrictions as to their transfer and disposition. The fairvalue of these instruments could not be determinedwithout incurring excessive costs.

Amounts received from the Federal government to fund ap o rtion of the Perkins student loans are ultimately re f u n d-able to the Federal government and have been re p o rted asrefundable advances in the Statements of Financial Position.

6. Other Assets

Other assets at June 30, in thousands of dollars, include:

2000 1999

Software costs, net ofaccumulated amortization $079,600 $079,802

Inventories 14,481 12,781Bond issue costs, net of

accumulated amortization 7,358 7,631Other notes receivable 6,000 5,912Deferred expenses 5,470 4,605

$112,909 $110,731

Amortization expense included in operating expensesamounted to $9.0 million and $3.2 million in 2000 and1999, respectively.

The University is engaged in an entity-wide initiative toimprove information systems and enhance administra-tive functions. The most significant project encompassedby this initiative was the human resource and financialsystems project.

Additional costs were incurred during 2000 for thepurchase of software and other costs related to theimplementation of such software for the enhancementand increased functionality of the new systems.

7. Land, Buildings and Equipment

Land, buildings and equipment at June 3 0, less accumu-lated depreciation, in thousands of dollars, are as follows:

2000 1999

Land and real estate improvements $1,171,750 $1,171,750Buildings 1,682,852 1,491,364Equipment 357,271 345,138

2,111,873 1,908,252Less: Accumulated depreciation (759,371) (710,830)

$1,352,502 $1,197,422

Depreciation expense included in operating expensesamounted to $81.3 million and $71.9 million in 2000and 1999, respectively.

8. Bonds and Notes Payable

Bonds and notes payable of the University at June 30, inthousands of dollars, consist of:

2000 1999

Facilities financing $1,028,286 $1,989,888Student loan financing 45,383 45,297Other 275 275

$1,073,944 $1,035,460

Total interest expense incurred on indebtedness was $5 1.7million and $4 0.7 million in 2 0 0 0 and 1 9 9 9, re s p e c t i v e l y.I n t e rest capitalized to land, buildings and equipmenttotaled $4.8 million in 2 0 0 0 and $7.2 million in 1 9 9 9.

a. FacilitiesThe University has entered into various agreements tofinance its facilities additions, renovations and improve-ments. Bonds and notes payable outstanding for suchpurposes at June 30, in thousands of dollars, include:

E ff e c t i v e P r i n c i p a lI n t e rest Rate Year of O u t s t a n d i n g

2 0 0 0 M a t u r i t y 2 0 0 0 1 9 9 9

Connecticut Healthand EducationalFacilities Authority(c h e fa) tax-exempt bonds:

Series Q and R 5.9 1% 2 0 3 0 $0,08 7,6 0 0 $ 8 7,6 0 0Series S 3.6 2% 2 0 2 7 $0,1 3 5,8 6 5 1 3 5,8 6 5Series T 3.5 6% 2 0 2 9 $0,2 5 0,0 0 0 2 5 0,0 0 0Series U 3.6 6% 2 0 3 3 $0,2 5 0,0 0 0 2 5 0,0 0 0

Total c h e fa b o n d s $0,7 2 3,4 6 5 7 2 3,4 6 5M e d i u m - t e rm notes 7.3 8% 2 0 9 6 $0,1 1 3,3 5 9 1 2 4,4 5 8Taxable commerc i a l

p a p e r 5.8 4% 2 0 0 0 $0,1 8 5,3 1 9 1 3 5,2 4 6Other notes

p a y a b l e 3.0 0% –8.2 0% 2 0 0 0–2 0 0 5 $0,0 06,1 4 3 6,7 1 9

$1 , 0 2 8,2 8 6 $9 8 9,8 8 8

chefa Series T and Series U bonds currently bearinterest at a weekly rate. The bonds may be convertedfrom the weekly rate period to other variable-rate modesor to a fixed-rate mode at the discretion of theUniversity. In the current weekly mode, bonds may betendered for purchase on any business day not fewerthan seven days prior to the date of purchase.

chefa Series S bonds currently bear interest at a moneymarket municipal rate and are outstanding for varyinginterest rate periods of 270 days or less. The bondsmay be converted from the money market mode toother variable-rate modes or to a fixed-rate mode atthe discretion of the University. In the current moneymarket mode, bonds may be tendered for purchase atthe end of each rate period.

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The Series Q and R bonds are subject to redemptionin annual amounts ranging from $2.8 million to $10.1million, commencing in 2022. These bonds pay interestto two groups of bondholders at variable and inverse-variable rates, providing the University with an aggre g a t efixed rate of approximately 6 percent for the durationof the borrowing. The Series Q and R bonds areoutstanding for successive periods of approximately 3 5days and are remarketed through a formal auctionp rocess set forth in the Trust indenture .

Medium-term notes in the amount of $113.4 million arerecorded net of a discount at June 30, 2000. The notesmature in the year 2096, with a call provision in theyear 2026. The bonds bear interest at a fixed rate of7.38 percent.

During the current year, the University issued an addi-tional $50 million of commercial paper. Commercialpaper consists of notes issued in the short-term taxablemarket, and is sold at a discount from par. The maturi-ties of individual notes are issued in ranges from one dayto no more than one year, and fall on average in a rangeof sixty to ninety days.

Scheduled maturities of the facilities bonds and notespayable for the next five fiscal years, in thousands ofdollars, are as follows:

2001 $1,8982002 8382003 7612004 7572005 642

C o m m e rcial paper borrowings have no scheduledmaturities. The University may choose to re t i re some orall of the outstanding commercial paper over the nextfive years.

During fiscal year 2 0 0 0, the University entered intoseveral 3 6 4-day revolving credit agreements totaling$5 0 0 million to support the University’s weekly vari-able-rate demand notes, c h e fa Series T and U. Therevolving credit agreements support Ya l e ’s short - t e rmdebt in the unlikely event of a failed remarketing orother event of default.

b. Student LoanCommercial paper utilized to finance student loan notesand interest receivable for fiscal years 2000 and 1999was $45.4 million and $45.3 million respectively, with aneffective interest rate of 5.48 percent and 5.31 percent,respectively.

c. Interest Rate SwapsThe University has entered into various interest rateswap agreements to manage the interest cost andrisk associated with its variable-rate debt portfolios.Under the terms of these agreements, the Universitypays fixed rates, ranging from 6.0 percent to 7.7 percent,determined at inception, and receives the 3-monthlibor on the respective notional principal amounts.The following schedule presents the notional principalamounts of the University’s interest rate swaps at June30, 2000 and the net interest expense incurred during2000 and 1999, in thousands of dollars:

Notional Net Interest Expense ExpirationAmount 2000 1999 Date

Facilities $170,000 $1,979 $1,695 2002–2009Student loan 10,000 27 91 2003Endowment 20,000 195 334 2002

$200,000 $1,201 $2,120

These financial instruments involve counterparty creditexposure. The counterparties for these swap transactionsare major financial institutions that meet the University’scriteria for financial stability and credit-worthiness.

d. Fair ValueThe fair value of the University’s fixed-rate bonds,$200.4 million at June 30, 2000, is estimated based onquoted market prices for the same or similar issues. Thecarrying value of commercial paper and variable-ratebonds and notes payable, which reflects varying interestrate periods, on average 90 days, approximates fairvalue because of the short-term maturity of these instru-ments. The fair value of other notes payable of $6.4million represents the present value of future cash flowsthrough the year 2006.

The fair value of interest rate swaps is the estimatedamount that the University would receive or pay toterminate the agreements taking into account currentinterest rates and the credit-worthiness of the swapcounterparties. At June 30, 2000, the University wouldreceive approximately $6.5 million, including accruedinterest, in the event that it terminated these agreements.The total notional amount of $200 million is notrecorded on the University’s financial statements becausethere is no exchange of principal.

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The following table sets forth the Pension andPostretirement medical benefit plans’ funded status andprovides a reconciliation to the accrued liability reportedin the Statements of Financial Position at June 30, inthousands of dollars:

Pension PostretirementBenefits Benefits

Plans’ Funded Status 2000 1999 2000 1999

Change in benefit obligation:Benefit obligation,beginning of year $244,724 $230,174 $144,657 $141,500

– Service cost, net of expenses 7,215 7,422 5,120 4,817

– Interest cost 16,845 15,864 9,985 9,309– Benefit payments (10,632) (10,076) (6,948) (6,235)– Assumption changes (14,815) – 14,906 –– Amendments – 1,028 – –– (Gain)/loss 1,425 312 3,827 (4,734)

Benefit obligation,end of year $244,762 $244,724 $171,547 $144,657

Change in plan assets:Market value,beginning of year $284,808 $257,169 $069,491 $459,610

– Actual returnon plan assets 108,311 33,833 6,283 4,095

– Universitycontributions 5,288 4,158 13,021 12,106

– Benefits andexpenses paid (10,764) (10,352) (7,021) (6,320)

Market value,end of year $387,643 $284,808 $(81,774 $69,491

Funded status $142,881 $040,084 $(89,773) $(75,166)Unrecognized

transition obligation 1,690 2,277 51,683 55,659Benefit payments advanced – – 1,394 1,625Unrecognized net(gain)/loss (148,784) (49,913) 36,307 17,479

Unrecognized priorservice cost 4,432 5,117 – –

Prepaid (accrued)benefit costincluded in theStatements ofFinancial Position $00,219 $ (2,435) $ (389) $ (403)

For the year ended June 30, 2000 the change in theweighted-average discount rate from 7 percent to7.5 percent for the Pension and Postretirement medicalbenefit plans and a change in the year the ultimate trendrate is achieved resulted in a decrease of $14.8 millionto the benefit obligation of the Pension Plan and anincrease of $14.9 million to the benefit obligation of thePostretirement Plan.

During the year ended June 30, 1999 the Universitypolice force negotiated a pension benefit increase to2 p e rcent of final pay for each year of service. Thischange is reflected in expense from July 1, 1 9 9 8 f o rw a rd .

9. Pension Plans — Defined Contribution

The University maintains the Yale University Retire m e n tAnnuity Plan as a contributory plan for faculty andc e rtain staff employees. Participants may direct employeeand employer contributions to the Teachers’ Insuranceand Annuity Association (t i a a) and College Retire m e n tEquities Fund (c r e f), as well as other investmentoptions. Pension expense for this plan was $3 6.1 m i l l i o nand $3 2.5 million in 2 0 0 0 and 1 9 9 9, re s p e c t i v e l y.

10. Pension and Postretirement Plans —Defined Benefit

The University has a noncontributory, defined benefitpension plan for staff employees. Benefits are basedon years of participation and the employee’s highestannual rate of earnings during the last five years ofemployment. Annual contributions to the plan are madeby the University based upon calculations prepared bythe plan’s actuary.

In addition to providing pension benefits, the Universityprovides comprehensive health care benefits for retiredemployees and their eligible dependents. While theUniversity’s subsidy of these costs differs among retireegroups, substantially all employees who meet minimumage and service requirements and retire from theUniversity are eligible for these benefits.

The University has created a trust to provide for thefunding of postretirement medical benefits. Annualcontributions are determined by the University and aredeposited to the trust quarterly. The designated fundingamounts for 2000 and 1999 were $13.3 million and$12.1 million, respectively.

Net periodic benefit cost for defined benefit plansincludes the following components, in thousands ofdollars:

Net periodic Pension Postretirementbenefit cost for the Benefits Benefitsfiscal year ended 2000 1999 2000 1999

Service cost $(07,415 $(07,422 $05,220 $ 4,817Interest cost 16,845 15,864 9,985 9,309Expected return onplan assets (22,897) (20,066) (6,724) (5,557)

Net amortization–Unrecognized transitionobligation 587 587 3,976 3,976

– Unrecognized priorservice cost 684 684

– Unrecognized net loss – – 320 309

Net periodicbenefit cost $(02,634 $(04,491 $12,777 $12,854

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Assumptions used in determining the obligation and netperiodic costs of the Pension and Postretirement medicalbenefit plans were:

Assumptions 2000 1999

Weighted-average discount rate 7.50% 7.00%Increase in future compensation levels 4.50% 4.50%Expected long-term rate of return 9.25% 9.25%Projected health care cost trend rate 6.00% 6.00%Ultimate trend rate 5.00% 5.00%Year ultimate trend rate is achieved 2004 2000

The health care cost trend rate assumption has a signifi-cant effect on the amounts re p o rted. For 2 0 0 0, a 1 p e rc e n tchange in the health care cost trend rate stru c t u re wouldcause the Postre t i rement plan’s benefit obligation at June3 0, 2 0 0 0 to change by approximately 1 0 p e rcent andwould cause the sum of the service cost and interest costcomponents of postre t i rement expense to change bya p p roximately 1 1 p e rc e n t .

11. Commitments and Contingencies

The University is involved in various legal actions arisingin the normal course of activities and is subject to peri-odic audits and inquiries by various regulatory agencies.Although the ultimate outcome is not determinable atthis time, management, after taking into considerationadvice of legal counsel, believes that the resolution ofthese pending matters will not have a materially adverseeffect, individually or in the aggregate, upon theUniversity’s financial statements.

In the normal course of business, the University leasesfacilities under non-cancellable operating leases.Minimum lease payments under these agreements overthe next five years, in thousands of dollars, are asfollows:

2001 $6,3422002 5,7342003 4,8242004 3,8162005 3,238

The University has entered into certain agreements toguarantee the debt of others. Under these agreements ifthe original debt holder defaults on the debt the Universitymay be re q u i red to satisfy all or part of the re m a i n i n gobligation. The total amount of these guarantees isa p p roximately $1 1.8 million at June 3 0, 2 0 0 0.

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PresidentRichard Charles Levin, b.a.,b.litt., ph.d.

FellowsHis Excellency the Governorof Connecticut, ex officio.

Her Honor the Lieutenant Governorof Connecticut, ex officio.

George Leonard Baker, Jr., b.a., m.b.a.Palo Alto, California

Frances Beinecke, b.a., m.f.s.New York, New York

Roland Whitney Betts, b.a., j.d.New York, New York

Benjamin Solomon Carson, Sr., b.a., m.d.West Friendship, Maryland

Gerhard Casper, l.l.m., ph.d.Atherton, California

Susan Crown, b.a., m.a.Chicago, Illinois

The Officersof Yale Unive r s ity

PresidentRichard Charles Levin, b.a.,b.litt., ph.d.

ProvostAlison Fettes Richard, b.a., m.a., ph.d.

Vice President and SecretaryLinda Koch Lorimer, b.a., j.d.

Acting Vice President for Finance and AdministrationKemel Winston Dawkins, B.A.

Vice President and Director,New Haven and State AffairsBruce Donald Alexander, b.a., j.d.

Vice President for DevelopmentCharles J. Pagnam, b.a.

Vice President and General CounselDorothy Kathryn Robinson, b.a., j.d.

Charles Daniel Ellis, b.a., m.b.a., ph.d.Greenwich, Connecticut

David Richmond Gergen, b.a., ll.b.McLean, Virginia

Holcombe Tucker Green, Jr., b.a., ll.b.Atlanta, Georgia

Linda Anne Mason., b.a., m.p.p.m.Belmont, Massachusetts

Victoria Matthews, b.a., m.div., th.m.Edmonton, Alberta, Canada

Barrington Daniel Parker, Jr., b.a., ll.b.Stamford, Connecticut

John Ennis Pepper, Jr., b.a., m.a.Cincinnati, Ohio

Kurt Lidell Schmoke, b.a., j.d.Baltimore, Maryland

Jaime Serra, b.a., ph.d.Mexico City, Mexico

Janet Louise Yellen, b.a., m.a., ph.d.Berkeley, California

The President and Fellows of Yale Unive r s i t y

Design: Strong Cohen / L. Feherpage 10 by Ken Lovell, D M C A

Printing supervision: Yale Printing and Graphic Services

Photo credits: page 13 T. Charles Erickson,page 18 Joseph Szaszfai and Carl Kaufman page 20 Norman McGrath

Front Cover

Top: A detail from ‘Turf,’ with Jockey Upby George Stubbs, from the Yale Center for British Art, Paul Mellon Collection.(Photo: Richard Caspole)Middle: Students from the Yale School of Music in performance.Bottom: A view of the Twentieth-Centurygallery in the Yale Art Gallery.

Back Cover

Top: A Yale College student’s paint palette in Holcombe T. Green Jr. Hall.Middle: A close-up of the south face of the Rudolph building.Bottom: A scene from The Caucasian Chalk Circle by Bertolt Brecht, performed by School of Drama students in 2000.(Photo: T. Charles Erickson)

The designers would like to thank the following individuals for their assistance in obtaining the illustrations used in the report:

Howard el-Yasin, Yale Art GalleryJohn Jacobson, School of ArchitectureLizabeth O’Conner, Yale Center for British ArtVincent Oneppo, School of MusicDean Sakamoto, School of ArchitectureBarbara Shanley, School of ArtBil Shroeder, School of Drama