Fiscal year 2020, which ended on June 30, was a year of crisis and courage and many financial ups and downs. As seen in the accompanying charts, operating revenues totaled nearly $810 million, an increase of $5 million compared with the prior year. Notably, the School’s endowment income grew by $6 million to $196 million, offsetting slight reductions in other program revenues. Total operating expenses increased by $13 million, from
$753 million to $766 million.
Putting these financial figures into perspective, this apparent surplus of revenues over expenses, as reported according to generally accepted accounting principles (GAAP), includes targeted philanthropic contributions received in FY20 that will be invested over the coming years. Most notable among these was an installment of the Blavatnik Family Foundation gift. Drawing finer attention to our balance of unrestricted cash flows, however, provides a more nuanced view of the financial challenges we have faced and will continue to confront due to COVID-19.
Before the pandemic, HMS was poised to reach a cash flow break-even point in FY20 and the first truly balanced budget in a decade. Unfortunately, the coronavirus crisis exacted a heavy toll on school finances in many of the same ways it has devastated the global economy. Revenues at our affiliated hospitals plummeted to an even greater extent, as most clinical operations were halted to meet the onslaught of patients with COVID-19. As a gesture of shared sacrifice, HMS waived the annual financial contributions the affiliates provide to HMS to support operations.
In the dark days of March, April and May, HMS was facing a projected $59 million deficit. However, the HMS community responded with deferred discretionary spending, delayed renovations and capital projects, and reduced hiring. As a consequence of judicious cost reductions and public-spirited self-sacrifice, coupled with increases in grant submissions, growth in master’s and external education programs, and generous support from donors, our losses were not as deep as originally expected.
HMS closed FY20 with a $34 million cash flow deficit in its un- restricted accounts, a remarkable achievement when considering that $30 million of that shortfall resulted from our waiving the hospital affiliates’ annual contributions. We will remain vigilant and continue to navigate the uncertain future and the economic consequences that come with it.
I am immensely grateful to every staff member, administrator, student, trainee and faculty member who responded to this pandemic with resolve and com- passion for fellow members of our community, thereby enabling HMS to remain strong and continue to deliver on our mission of research, education and clinical care.
—George Q. Daley
FY 2020 Operating Revenue
Research grants and contracts: $308,660,119 (38%)
Endowment distribution for operations $196,464,337 (24%)
Other revenues* $124,340,306 (15%)
Gifts for current use $103,225,189 (13%)
Rental income $45,047,603 (6%)
Tuition (net) $32,005,395 (4%)
*Includes continuing medical education, publications, service income, and royalties
FY 2020 Operating Expenses
Personnel costs $316,763,812 (41%)
Supplies and other expenses $225,739,497 (30%)
Research subcontracts and affiliates $98,909,594 (13%)
Plant operations and interest $75,882,614 (10%)
Depreciation $48,611,408 (6%)