Johns Hopkins University Consolidated Financial Statements ..., Exams of Financial Statement Analysis

Download Johns Hopkins University Consolidated Financial Statements ... and more Exams Financial Statement Analysis in PDF only on Docsity! THE JOHNS HOPKINS UNIVERSITY Consolidated Financial Statements June 30, 2021 and 2020 (With Independent Auditors’ Report Thereon) Independent Auditors’ Report The Board of Trustees The Johns Hopkins University: We have audited the accompanying consolidated financial statements of The Johns Hopkins University, which comprise the consolidated balance sheets as of June 30, 2021 and 2020, the related consolidated statements of activities and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Johns Hopkins University as of June 30, 2021 and 2020, and the changes in its net assets and its cash flows for the years then ended in accordance with U.S. generally accepted accounting principles. Baltimore, Maryland October 4, 2021 KPMG LLP 750 East Pratt Street, 18th Floor Baltimore, MD 21202 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. THE JOHNS HOPKINS UNIVERSITY Consolidated Statements of Activities Years ended June 30, 2021 and 2020 (Dollars in thousands) 2021 2020 Other changes in net assets without donor restrictions: Investment return in excess of (less than) endowment payout $ 337,185 (5,908) Change in benefit plans funded status, excluding benefit cost 227,516 (126,094) Other net periodic benefit (cost) credit (3,712) 2,281 Change in fair value of interest rate swap agreements 9,474 (10,918) Gain on asset disposal 57,644 — Other, net 6,431 21,353 Net assets released from restrictions 16,411 880 Other changes in net assets without donor restrictions 650,949 (118,406) Total changes in net assets without donor restrictions 863,553 (43,747) Changes in net assets with donor restrictions: Contributions 550,854 1,057,242 Investment return in excess of (less than) endowment payout 2,128,414 (9,624) Net assets released from restrictions (115,804) (100,098) Other, net 385 — Total changes in net assets with donor restrictions 2,563,849 947,520 Total change in net assets 3,427,402 903,773 Net assets at beginning of year 10,100,834 9,197,061 Net assets at end of year $ 13,528,236 10,100,834 See accompanying notes to consolidated financial statements. 4 THE JOHNS HOPKINS UNIVERSITY Consolidated Statements of Cash Flows Years ended June 30, 2021 and 2020 (Dollars in thousands) 2021 2020 Cash flows from operating activities: Total change in net assets $ 3,427,402 903,773 Adjustments to reconcile total change in net assets to net cash provided by operating activities: Depreciation, amortization, and other adjustments 223,025 205,664 Noncash gift of investments (448) (377,977) Contributions restricted for long-term investment (360,895) (616,688) Net realized and unrealized gains from investments (2,738,858) (236,532) Net unrealized (gains) losses from swaps (9,474) 10,918 Earnings from joint ventures (32,964) (13,965) Change in benefit plans funded status (233,319) 121,962 Gain on asset disposal (57,644) — Changes in operating assets and liabilities: Sponsored research and accounts receivable, net (16,834) 27,143 Contributions receivable, net (8,210) 89,856 Prepaid expenses and deferred charges (15,723) 12,790 Operating lease right-of-use assets, net of operating lease liabilities (269) 20,543 Other assets (4,830) (23,318) Accounts payable and accrued expenses 106,393 6,987 Sponsored research, other deferred revenues and other long-term liabilities 74,629 21,242 Interests and liabilities related to trusts and split-interest agreements 15,677 6,321 Net cash provided by operating activities 367,658 158,719 Cash flows from investing activities: Purchases of investments (7,005,006) (5,621,926) Proceeds from sales and maturities of investments 6,869,444 5,198,946 Purchases of property and equipment (399,634) (646,096) Proceeds from asset disposal 78,599 — Repayments of student loans, net of disbursements 2,224 3,831 Loans to affiliates (8,964) (8,720) Repayments of loans to affiliates 7,368 7,063 Dividends from (capital contributions to) joint ventures, net 19,751 (3,775) Change in endowment and similar funds held for others (26,115) (26,264) Net cash used in investing activities (462,333) (1,096,941) Cash flows from financing activities: Contributions restricted for long-term investment 360,895 616,688 Proceeds from borrowings — 682,047 Early retirement and refinancings of debt (211,169) (153,150) Scheduled debt and finance lease payments (15,832) (22,416) Net cash provided by financing activities 133,894 1,123,169 Net increase in cash and cash equivalents 39,219 184,947 Cash and cash equivalents at beginning of year 531,954 347,007 Cash and cash equivalents at end of year $ 571,173 531,954 See accompanying notes to consolidated financial statements. 5 THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 6 (Continued) (1) Basis of Presentation and Summary of Significant Accounting Policies (a) General The Johns Hopkins University (the University) is a premier, privately endowed institution that provides education and related services to students and others, research and related services to sponsoring organizations, and professional medical services to patients. The University is based in Baltimore, Maryland, but also maintains facilities and operates education programs elsewhere in Maryland, in Washington, D.C., and in certain foreign locations. The University is internationally recognized as a leader in research, teaching, and medical care. Education and related services (e.g., room, board, etc.) are provided to approximately 29,000 students, including 15,000 full-time students and 14,000 part-time students, and on a net basis provided approximately 10% and 11% of the University’s operating revenues in fiscal 2021 and fiscal 2020, respectively. Approximately 61% of the full-time students are graduate level (including postdoctoral) and 39% are undergraduate level. Students are drawn from a broad geographic area, including most of the states in the United States and numerous foreign countries. The majority of the part-time students are graduate level students from the Baltimore-Washington, D.C. area. Research and related services (e.g., research training) are provided through approximately 2,200 government and private sponsors. Sponsored research revenues provided approximately 56% of the University’s operating revenues in fiscal years 2021 and 2020. Approximately 88% and 87% of those revenues were from departments and agencies of the United States government in fiscal 2021 and 2020, respectively. Major government sponsors include the Department of Health and Human Services, the Department of Defense, the National Aeronautics and Space Administration, and the Agency for International Development. Professional clinical services are provided by members of the University’s faculty to patients at The Johns Hopkins Hospital (the Hospital) and other hospitals and outpatient care facilities in the Baltimore area and produced approximately 12% and 11% of the University’s operating revenues in fiscal 2021 and fiscal 2020, respectively. Services are predominantly provided to patients in the Baltimore area, other parts of Maryland, or surrounding states. (b) Basis of Presentation and Use of Estimates The consolidated financial statements include the accounts of the various academic and support divisions, the Applied Physics Laboratory (APL), 63019 Holdings, LLC, Johns Hopkins University Press, and certain other controlled affiliated organizations, including Jhpiego Corporation and Peabody Institute of the City of Baltimore (collectively, the consolidated financial statements). All significant inter-entity activities and balances are eliminated for financial reporting purposes. Investments in organizations that the University does not control, including Dome Corporation, FSK Land Corporation, Johns Hopkins Healthcare LLC, Johns Hopkins Home Care Group, Inc., Johns Hopkins Medical Institutions Utilities LLC (JHMI Utilities LLC), Johns Hopkins Medicine International LLC, and other affiliated entities, are accounted for using the equity method. The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and judgments that affect the reported THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 9 (Continued) Unrealized gains and losses of operating investments and nonpooled endowment funds, any difference between the total return recognized and the payout for pooled endowment and similar funds, and income and realized gains restricted by donors are reported as nonoperating activities. (f) Fair Value Measurements Assets and liabilities that are reported at fair value on a recurring basis are categorized into a fair value hierarchy. As described further in the notes to the consolidated financial statements, such assets include investments, deferred compensation assets, and interests in trusts and endowment funds held by others, and such liabilities include interest rate swaps, obligations under deferred compensation arrangements, and endowment and similar funds held for others. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three levels of the fair value hierarchy are as follows: • Level 1: Quoted prices in active markets for identical assets or liabilities. • Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liabilities. When observable prices are not available, certain real asset investments are valued using one or more of the following valuation techniques: market approach – this approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities; income approach – this approach determines a valuation by discounting future cash flows; or cost approach – this approach is based on the principle of substitution and the concept that a market participant would not pay more than the amount that would currently be required to replace the asset. These valuation techniques may include inputs such as price information, operating statistics, specific and broad credit data, recent transactions, earnings forecasts, discount rates, reserve reports, and other factors. (g) Split-Interest Agreements and Interests in Trusts The University’s split-interest agreements with donors consist primarily of irrevocable charitable remainder trusts and charitable gift annuity agreements for which the University serves as trustee. Assets held under these arrangements are included in investments and are recorded at fair value. Contribution revenues are recognized at the date the trusts or agreements are established after recording liabilities for the present value of the estimated future payments to be made to the donors and/or other beneficiaries. The liabilities are adjusted during the terms of the trusts for changes in the values of the assets, accretion of the discounts, and other changes in estimates of future benefits. As of June 30, 2021 and 2020, assets under the University’s charitable gift annuity agreements were $68,321 and $58,944, respectively, and are classified in investments, and liabilities were $34,949 and $40,750, respectively, and are classified in liabilities under split-interest agreements. THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 10 (Continued) (h) Property and Equipment Property and equipment are stated at cost if purchased, or at estimated fair value at the date of gift if donated, less accumulated depreciation and amortization. Depreciation of buildings, equipment, and library collections and amortization of leasehold improvements are computed using the straight-line method over the estimated useful lives of the assets or lease term, if shorter. Land and certain historic buildings are not subject to depreciation. Title to certain equipment purchased using funds provided by government sponsors is vested in the University and is included in property and equipment on the consolidated balance sheets. Certain equipment used by the APL in connection with its performance under agreements with the United States government is owned by the government. These facilities and equipment are not included in the consolidated balance sheets; however, the University is accountable to the government for them. Repairs and maintenance costs are expensed as incurred. Costs of purchased software are capitalized along with internal and external costs incurred during the application development stage (i.e., from the time the software is selected until it is ready for use). Capitalized costs are amortized on a straight-line basis over the expected life of the software. Computer and software maintenance costs are expensed as incurred. Costs relating to retirement, disposal, or abandonment of assets for which the University has a legal obligation to perform certain activities are accrued using either site-specific surveys or square foot estimates, as appropriate. (i) Tuition and Fees, Net of Financial Aid Student tuition and fees are recorded as revenue in the year the related academic services are rendered, which generally aligns with the University’s fiscal year. Tuition and fees received in advance of services provided are reported in other deferred revenues and amounted to $94,896 and $78,171 at June 30, 2021 and 2020, respectively. The University provides institutional financial aid to eligible students, generally in an “aid package” that may also include loans, compensation under work-study programs, and/or grant and scholarship awards. The loans are provided primarily through programs of the United States government (including direct and guaranteed loan programs) under which the University is responsible only for certain administrative duties. The institutional grants and scholarships include awards provided from gifts and grants from private donors, income earned on endowment funds restricted for student aid, and University funds. The composition of tuition and fees, net revenue was as follows for the years ended June 30, 2021 and 2020: 2021 2020 Undergraduate programs $ 157,940 179,152 Graduate programs 473,990 450,369 Other programs 47,270 73,839 $ 679,200 703,360 THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 11 (Continued) Other programs include the University’s Center for Talented Youth (a gifted education program for school-age children), continuing medical education, health services, and various nondegree programs. (j) Grants, Contracts, and Similar Agreements Grants, contracts, and similar agreements are funded by various federal and private sponsors. The vast majority of such agreements are considered nonexchange transactions and restricted by sponsors for specific research or other program purposes. Revenues are recognized within net assets without donor restrictions as conditions are met, (i.e., generally as qualifying expenditures are incurred). These revenues include recoveries of facilities and administrative costs, which are generally determined as a negotiated or agreed-upon percentage of direct costs, with certain exclusions. Payments received from sponsors in advance of conditions being met are reported as sponsored research deferred revenues. Of the $373,847 in sponsored research deferred revenues as of June 30, 2021, $301,457 relates to nonexchange transactions and $72,390 relates to exchange transactions. Approximately 77% and 73% of receivables related to reimbursement of costs incurred under grants and contracts as of June 30, 2021 and 2020, respectively, were from agencies or departments of the United States government. There is no assurance that sponsored research activities can and will continue to be made at current levels as awards are subject to the availability of and annual appropriation of funds. The University estimates that conditional awards outstanding as of June 30, 2021 approximate or exceed its recent annual sponsored program activity. (k) Clinical Services, Net Clinical services revenues are recognized in the period in which services are rendered based on gross charges less negotiated fixed discounts (explicit price concessions) which include contractual adjustments specific to the third party payer contracts, less amounts for “implicit price concessions”. Fixed discounts are generally determined based on regulatory authorities, determined by legislative statute (Medicare and Medicaid), or negotiated in the case of commercial payers. Implicit price concessions are estimated based on the historical collection experience using a portfolio approach as a practical expedient. The composition of clinical services revenue by primary payer for the years ended June 30, 2021 and 2020 was as follows: 2021 2020 Commercial third parties $ 351,581 45.3 % 316,099 44.8 % Medicare 156,344 20.1 136,505 19.4 Medicaid 72,992 9.4 67,084 9.5 Blue Cross/Blue Shield 63,596 8.2 56,280 8.0 Patients 69,447 8.9 59,581 8.4 All other clinical 62,604 8.1 69,558 9.9 $ 776,564 100.0 % 705,107 100.0 % THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 14 (Continued) instruments are measured at fair value and recognized in the consolidated balance sheets as assets or liabilities, with changes in fair value recognized in the consolidated statements of activities. (t) Deferred Compensation Plans The University maintains deferred compensation plans for certain employees. As of June 30, 2021 and 2020, other investments, included in other assets on the consolidated balance sheets, represent investments held by the University under these deferred compensation agreements. Such amounts approximate the University’s related liability to the employees and are included in other long-term liabilities. The assets and liabilities of the deferred compensation plans are categorized in Level 1 of the fair value hierarchy. The fair value of deferred compensation plan assets as of June 30, 2021 and 2020 is $182,869 and $153,719, respectively. (u) Statement of Cash Flows Supplemental Information Property and equipment additions included in accounts payable and accrued expenses increased $501 and $5,210 as of June 30, 2021 and 2020, respectively. (v) Reclassifications Certain 2020 amounts have been reclassified in order to conform to the 2021 information presentation. (2) Applied Physics Laboratory The Applied Physics Laboratory (APL), located in Howard County, Maryland, was established during World War II with funding from the United States government. APL functions as a research facility and conducts research and development primarily in national defense and space sciences. The University owns and operates the facility and conducts research under a multiple task order contract with the United States Navy (the Navy Contract) and separate contracts with other government agencies. APL is organized as a Limited Liability Company (LLC), wholly owned by the University, and operates as a division of the University. In accordance with an agreement between the United States government and the University, APL has been designated a national resource. Under the agreement, if the University determines that it can no longer sponsor APL or the Secretary of the Navy determines that the Navy can no longer contract with the University with respect to APL on mutually satisfactory terms, the University is required to establish a charitable trust to provide for the continued availability of the APL. The trust would be administered by five trustees and the corpus would consist of the University’s interest in the APL facilities, including land to the extent necessary, and the balances in the University’s APL stabilization, contingency, and research fund on the date the trust is established, less certain costs. Upon termination of the trust, the corpus, in whole or in part, as determined by the trustees, would be returned to and held and used by the University for such educational or research purposes and in such manner as the trustees and University agree. The University works under an omnibus contract with the U.S. Navy. The most recent contract provides for a five-year initial term ending in September 2017, plus a five-year renewal option, which was exercised in February 2017 and subsequently amended in May 2019 to increase the aggregate purchase limit to $7,117,558 over the ten-year contract ordering period ending September 2022. Funding and work can continue up until September 2023 based on program requirements. THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 15 (Continued) Approximately 73% and 71% of APL’s revenues in fiscal years 2021 and 2020 were from the Department of Defense and 19% and 21% were from the National Aeronautics and Space Administration, respectively. Contract work includes evaluation and design of various types of missile systems and command, control, and communication systems, assessment of submarine technologies, design of space systems for precision tracking, location and navigation, and conduct of space experiments. The contracts define costs for which reimbursements may be received and provide a management fee to the University. The Navy Contract requires that a portion of the fees earned under the Navy Contract be retained and used for various purposes, including, among other things, working capital, capital projects, and reserves. APL principally provides services under cost plus fixed-fee contracts for which revenue is recognized in the period that costs are incurred. Contract accounts receivable are recorded at invoiced amounts. The allowance for doubtful accounts is estimated based on historical trends of past-due accounts, and specific identification and review of past-due accounts. Revenue from contracts with customers is recognized when control of the promised goods or services is transferred in an amount that reflects the consideration to which the University expects to be entitled in exchange for those goods or services (i.e., the transaction price). Contracts awarded by federal and other sponsors, which are considered exchange transactions, are recognized as revenue as performance obligations are satisfied, which is generally as qualifying expenditures are incurred. Total revenue from contracts was $1,866,570 and $1,815,791 for the years ended June 30, 2021 and 2020, respectively. Total revenue from nonexchange transactions was $26,389 and $28,519 for the years ended June 30, 2021 and 2020, respectively. (3) Accounts Receivable Accounts receivable, net are summarized as follows as of June 30, 2021 and 2020: 2021 2020 Affiliated institutions, primarily the Hospital (note 11) $ 26,957 93,505 Students 30,589 25,900 Others 65,693 54,255 Total, net of allowances of $9,767 in 2021 and $10,018 in 2020 123,239 173,660 Receivables for clinical professional fees, net of explicit and implicit price concessions of $179,290 in 2021 and $133,181 in 2020 84,567 70,580 $ 207,806 244,240 The mix of gross accounts receivable for clinical professional fees from patients and third-party payors consisted of the following as of June 30, 2021 and 2020: commercial third parties 42% and 39% THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 16 (Continued) respectively; Medicare 22% and 20%, respectively; Medicaid 15% and 17%, respectively; Blue Cross/Blue Shield 5% and 6%, respectively; and patients 16% and 18%, respectively. (4) Contributions Receivable Contributions receivable, net are summarized as follows as of June 30, 2021 and 2020: 2021 2020 Unconditional promises scheduled to be collected in: Less than one year $ 65,350 79,535 One year to five years 166,444 179,010 Over five years 67,525 35,950 299,319 294,495 Less unamortized discount (interest rates ranging from 0.3% to 2.73%) and allowances for uncollectible contributions 21,420 24,807 $ 277,899 269,688 As of June 30, 2021 and 2020, 58% and 53%, respectively, of the gross contributions receivable were due from ten donors. Approximately 68% and 78% of contribution revenues for fiscal 2021 and 2020, respectively, were from ten donors. As of June 30, 2021, the University had also been informed of bequest intentions and conditional promises to give aggregating in excess of $1,590,000 which have not been recognized as assets or revenues. Such gifts will generally be restricted for specific purposes stipulated by the donors, primarily endowments for faculty support, scholarships, or general operating support of a particular department or division of the University. (5) Investments and Investment Return The overall investment objective of the University is to invest its assets in a prudent manner that will achieve a long-term rate of return sufficient to fund a portion of its annual operating activities and increase investment value after inflation. The University diversifies its investments among various asset classes incorporating multiple strategies and managers. The Committee on Investments of the Board of Trustees oversees the University’s investment program in accordance with established guidelines, which cover asset allocation and performance objectives and impose various restrictions and limitations on the managers. These restrictions and limitations are specific to each asset classification and cover concentrations of market risk (at both the individual issuer and industry group levels), credit quality of fixed-income and short-term investments, use of derivatives, investments in foreign securities, and various other matters. The managers may make use of exchange-traded interest rate futures contracts, forward currency contracts, and other derivative instruments. THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 19 (Continued) (f) Marketable Alternatives This includes multi-strategy, credit and distressed debt, relative value, and event-driven funds in hedge fund and drawdown formats. Hedge funds have various redemption periods as summarized in the table above, with notice requirements ranging from 25 to 90 days. Drawdown funds are limited partnerships where distributions are made to investors through the liquidation of the underlying assets. It is expected to fully distribute these drawdown funds over a 15-year period. Investment return is classified in the consolidated statements of activities as follows for the years ended June 30, 2021 and 2020: 2021 2020 Without donor restrictions: Operating, including endowment payout $ 335,613 314,574 Nonoperating 337,185 (5,908) With donor restrictions 2,128,414 (9,624) $ 2,801,212 299,042 THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 20 (Continued) (6) Fair Value Measurements The following table presents investments that are measured at fair value on a recurring basis as of June 30, 2021: Fair value as of Funds at June 30, 2021 Level 1 Level 2 Level 3 NAV Operating investments: United States government and agency obligations $ 1,670,897 1,670,897 — — — Debt securities 414,558 196,042 218,516 — — Total operating investments 2,085,455 1,866,939 218,516 — — Investments, at fair value: Cash and cash equivalents 192,347 192,347 — — — United States government and agency obligations 537,110 511,619 25,491 — — Debt securities 24,802 24,202 — 600 — United States equities 1,932,051 945,398 1,726 340 984,587 International equities 847,510 218,301 — — 629,209 Private equity and venture capital 2,378,710 2,647 — 55,413 2,320,650 Real estate 595,081 23,846 — 254,956 316,279 Natural resources 510,518 — — 34,081 476,437 Marketable alternatives 3,425,470 — — — 3,425,470 Total investments, at fair value 10,443,599 1,918,360 27,217 345,390 8,152,632 Total investments $ 12,529,054 3,785,299 245,733 345,390 8,152,632 The following table presents investments that are measured at fair value on a recurring basis as of June 30, 2020: Fair value as of Funds at June 30, 2020 Level 1 Level 2 Level 3 NAV Operating investments: United States government and agency obligations $ 1,410,682 1,410,682 — — — Debt securities 409,736 220,584 189,152 — — Total operating investments $ 1,820,418 1,631,266 189,152 — — THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 21 (Continued) Fair value as of Funds at June 30, 2020 Level 1 Level 2 Level 3 NAV Investments, at fair value: Cash and cash equivalents $ 142,438 142,438 — — — United States government and agency obligations 398,938 375,601 23,337 — — Debt securities 22,035 17,967 828 3,240 — United States equities 1,381,650 737,966 6 332 643,346 International equities 599,236 148,727 — — 450,509 Private equity and venture capital 1,411,264 — 20,990 43,732 1,346,542 Real estate 556,008 19,179 — 78,300 458,529 Natural resources 421,382 6,121 — 25,937 389,324 Marketable alternatives 2,710,777 — — — 2,710,777 Total investments, at fair value 7,643,728 1,447,999 45,161 151,541 5,999,027 Total investments $ 9,464,146 3,079,265 234,313 151,541 5,999,027 The methods and assumptions used to estimate the fair value of investments are defined in note 1(f). The following table presents the University’s activity for Level 3 investments measured at fair value on a recurring basis for the years ended June 30, 2021 and 2020: Private equity and Debt U.S. venture Real Natural securities equities capital estate resources Total Balance as of June 30, 2019 $ 3,008 — 42,977 78,300 38,295 162,580 Transfers betw een levels 100 — (9,611) — — (9,511) Net realized and unrealized loss (10) (1) 645 — (10,765) (10,131) Sales and distributions — — (1,548) — (1,593) (3,141) Purchases and contributions 142 333 11,269 — — 11,744 Balance as of June 30, 2020 3,240 332 43,732 78,300 25,937 151,541 Transfers betw een levels — — (9,114) 179,256 — 170,142 Net realized and unrealized loss 108 — 13,392 (2,600) 8,458 19,358 Sales and distributions (3,202) — (8,319) — (993) (12,514) Purchases and contributions 454 8 15,722 — 679 16,863 Balance as of June 30, 2021 $ 600 340 55,413 254,956 34,081 345,390 For the year ended June 30, 2021 private equity assets totaling $9,114 moved from Level 3 to Level 1 due to public market events. For the year ended June 30, 2020 private equity assets totaling $7,392 and $2,219 moved from Level 3 to Level 2 and NAV, respectively. Debt security assets moved from Level 2 to Level 3. Transfers resulted from changes in the inputs used to value the investments. THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 24 (Continued) (b) Notes Payable – Taxable Notes payable – taxable consist of the following as of June 30, 2021 and 2020: 2021 2020 Note, 2.74%, due November 2023 $ 25,000 25,000 Note, 2.89%, due November 2024 22,000 23,030 Note, 2.90%, due November 2024 22,456 23,202 Note, 2.94%, due November 2027 25,000 25,000 Note, 3.83%, due October 2028 25,000 25,000 Note, 3.92%, due November 2028 49,055 50,000 Notes, 4.16%, due May 2048 50,000 50,000 Note, 4.50%, due November 2049 50,000 50,000 $ 268,511 271,232 The notes due November 2023 through November 2049 are unsecured general obligations of the University. (c) Commercial Paper Under the commercial paper program, the University may have commercial paper outstanding of up to $400,000. The notes are unsecured, bear interest at rates that are fixed at the date of issue and may have maturities up to 270 days from the date of issue. The taxable notes outstanding as of June 30, 2021 bear interest at a weighted average rate of 0.16%. The tax-exempt commercial paper revenue notes were issued by MHHEFA to finance and refinance the costs of qualified assets. The tax-exempt revenue notes were refinanced with taxable commercial paper in March 2021. (d) Other Credit Agreements The University maintains standby liquidity and line of credit agreements with several commercial banks as follows: Amount Maturity Purpose $ 100,000 March 2022 Revolving line of credit 100,000 September 2021 Standby liquidity agreement 100,000 September 2023 Standby liquidity agreement 50,000 December 2025 Standby liquidity agreement 50,000 July 2022 Line of credit 100,000 March 2023 Line of credit 50,000 September 2023 Line of credit THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 25 (Continued) The University may borrow up to $100,000 under a revolving line of credit designated for working capital purposes at APL. Advances under the revolving line of credit are unsecured, due on demand, and bear interest at a rate that varies based on certain market indices. There were no borrowings on the revolving line of credit as of June 30, 2021 and 2020. To support liquidity under the bond and commercial paper revenue notes programs, the University has three standby liquidity agreements with commercial banks. These agreements are intended to enable the University to fund the purchase of variable rate demand bonds, in the event they are unable to be tendered and not remarketed, and to pay the maturing principal of and interest on commercial paper notes in the event they cannot be remarketed. Advances under these agreements are unsecured, bear interest at a rate that varies based on certain market indices, and are due by the stated expiration date unless extended by a term loan. There were no borrowings under any of the University’s standby credit facilities during fiscal 2021 and 2020. Advances aggregating $100,000 were drawn on the three lines of credit for liquidity purposes in June 2020 and repaid in March 2021. (e) Interest Rate Swap Agreements Under interest rate swap agreements, the University and the counterparties agree to exchange the difference between fixed rate and variable rate interest amounts calculated by reference to specified notional principal amounts during the agreement period. Notional principal amounts are used to express the volume of these transactions, but the cash requirements and amounts subject to credit risk are substantially less. The following table summarizes the general terms of the University’s fixed payor swap agreements as of June 30, 2021: Notional Termination Interest Interest Effective date amount date rate paid rate received June 2005 $ 69,265 July 2036 3.87 % SIFMA, 0.03% as of June 30, 2021 July 2007 5,965 July 2027 3.45 67% of 1-month LIBOR, 0.06% as of June 30, 2021 Total $ 75,230 Parties to interest rate swap agreements are subject to market risk for changes in interest rates and risk of credit loss in the event of nonperformance by the counterparty. The fair value of each swap is the estimated amount the University would receive or pay to terminate the swap agreement at the reporting date considering current interest rates and creditworthiness of the swap counterparties. A swap with a 3.43% paid fixed interest rate and a notional amount of $14,130 as THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 26 (Continued) of June 30, 2020 matured in July 2020. The aggregate fair value of the University’s interest rate swap agreements as of June 30, 2021 and 2020 was a liability of $25,415 and $34,889, respectively, excluding accrued interest for the swap due July 2036, and is reported as other long-term liabilities. Changes in the fair value of the interest rate swap agreements are reported as nonoperating activities. The change in fair value was a gain of $9,474 and a loss of $10,918 in fiscal 2021 and 2020, respectively. The University is required to post collateral under these agreements when certain thresholds are exceeded. As of June 30, 2021 and 2020, the required collateral was $800 and $9,900, respectively, which is included in cash and cash equivalents. (f) Annual Principal Payments The following table summarizes the aggregate annual maturities of bonds payable, notes payable, as well as taxable commercial paper, for the five fiscal years subsequent to June 30, 2021: Bonds Notes Commercial Fiscal year payable payable paper notes Total 2022 $ 8,595 2,763 — 11,358 2023 8,595 3,823 — 12,418 2024 — 30,567 — 30,567 2025 — 43,093 — 43,093 2026 — 4,280 — 4,280 Thereafter 1,109,515 183,985 70,000 1,363,500 $ 1,126,705 268,511 70,000 1,465,216 Due to requirements to pay the trustee in advance of the payment due date, scheduled maturities in the table above are reflected in the fiscal year that they will be paid to the trustee. (g) Interest Costs Total interest costs incurred and paid were $54,431 in 2021 and $51,631 in 2020, of which $7,775 in 2021 and $5,610 in 2020 were capitalized. (9) Net Assets Net assets without donor restrictions consists of the following as of June 30, 2021 and 2020: 2021 2020 Net investment in plant $ 1,271,368 1,093,984 Board designated endowments 1,326,013 969,640 Undesignated 1,300,102 970,306 $ 3,897,483 3,033,930 THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 29 (Continued) Changes in endowment net assets for the years ended June 30, 2021 and 2020 are as follows: Without donor With donor restrictions restrictions Total Endowment net assets, June 30, 2019 $ 973,320 5,302,619 6,275,939 Investment return 28,197 196,235 224,432 Contributions and designations 13,788 560,245 574,033 Appropriation for expenditure (45,665) (278,647) (324,312) Endowment net assets, June 30, 2020 969,640 5,780,452 6,750,092 Investment return 365,314 2,328,256 2,693,570 Contributions and designations 40,121 176,151 216,272 Appropriation for expenditure (49,062) (295,593) (344,655) Endowment net assets, June 30, 2021 $ 1,326,013 7,989,266 9,315,279 Appropriation for expenditure with donor restrictions for the years ended June 30, 2021 and 2020 includes $45,614 and $67,904, respectively, not used in current year operations but is intended for future use. Endowments are to be utilized for the following purposes as of June 30, 2021: Without donor With donor restrictions restrictions Total Faculty support $ 388,507 2,896,835 3,285,342 Scholarship support 222,720 3,657,018 3,879,738 Program support 538,866 687,977 1,226,843 Research 175,920 747,436 923,356 $ 1,326,013 7,989,266 9,315,279 Endowments are to be utilized for the following purposes as of June 30, 2020: Without donor With donor restrictions restrictions Total Faculty support $ 291,530 2,118,623 2,410,153 Scholarship support 167,025 2,639,849 2,806,874 Program support 393,218 469,721 862,939 Research 117,867 552,259 670,126 $ 969,640 5,780,452 6,750,092 THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 30 (Continued) (11) Affiliated Institutions Reimbursements from affiliated institutions consist of the following for the years ended June 30, 2021 and 2020: 2021 2020 Johns Hopkins Health System $ 42,757 50,210 Johns Hopkins Hospital 328,014 357,808 Johns Hopkins Bayview Medical Center 89,995 84,370 Other Johns Hopkins entities 140,655 131,746 Other affiliated medical institutions 21,843 32,784 $ 623,264 656,918 (a) The Johns Hopkins Health System (JHHS) JHHS is incorporated and governed separately from the University and is the parent entity of an academically based health system, which includes the Hospital, Johns Hopkins Bayview Medical Center, Howard County General Hospital, Suburban Hospital, Sibley Memorial Hospital, All Children’s Hospital, and other related organizations. The University and JHHS have established a Board of Johns Hopkins Medicine (JHM) to direct, integrate, and coordinate the clinical activities of the two organizations. JHM does not have the authority to incur debt or issue guarantees and its annual budgets require the approval of the Boards of Trustees of both the University and JHHS. Reimbursements from JHHS relate primarily to contractual services for clinical and nonclinical operations. In fiscal 2021, JHHS provided an unconditional pledge of $66,000 to support the recruitment of clinical faculty at the School of Medicine, which was reported in the consolidated statement of activities as contributions in changes in net assets with donor restrictions. (b) The Hospital The Hospital is a member of JHHS and serves as the primary teaching facility of the University’s School of Medicine. Because of the closely related nature of their operations, the University and the Hospital share facilities and provide services to each other to fulfill their purposes more effectively. The sharing of facilities and services is negotiated annually and set forth in a Joint Administrative Agreement (JAA). Charges to the Hospital under the JAA, related primarily to the provision of professional medical services from the University, aggregated $249,894 in fiscal 2021 and $238,466 in fiscal 2020. Charges to the University under the JAA, related primarily to contractual services, aggregated $49,523 in fiscal 2021 and $49,443 in fiscal 2020, and are included in operating expenses in the consolidated statements of activities. THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 31 (Continued) (c) Johns Hopkins Bayview Medical Center (JHBMC) JHBMC is a community-based teaching hospital and long-term care facility. The University and JHBMC also share facilities and provide services to each other and negotiate the costs annually under a JAA. Charges to JHBMC under the JAA, related primarily to the provision of professional medical services from the University, aggregated $81,321 in fiscal 2021 and $78,550 in fiscal 2020. (d) The Johns Hopkins Hospital Endowment Fund Incorporated (JHHEFI) In July 2007, the University and JHHEFI entered into an agreement whereby JHHEFI transferred approximately $381,000 to the University to invest in the University’s Endowment Investment Pool (EIP) and have the University manage these assets on JHHEFI’s behalf. The funds were invested with other University assets in the University’s name and title, and in accordance with the University’s EIP investment policies and objectives. JHHEFI receives payouts as determined by their Board of Trustees and may terminate the agreement upon 180 days’ written notice with liquidations to be made over a three-year period as specified in the agreement. The assets are included in investments in the consolidated balance sheets, and a corresponding liability of $661,513 and $496,651 is included in endowment and similar funds held for others as of June 30, 2021 and 2020, respectively. The corresponding liability has a fair value measurement of Level 3. JHHEFI’s assets represent approximately 9.4% of the combined investment pool of $7,051,858 as of June 30, 2021. (e) Jointly Owned Entities As of June 30, 2021 and 2020, the University and JHHS and its affiliates jointly own several entities that are accounted for on the equity method. The University’s aggregate investments in and advances to these joint ventures was approximately $331,372 and $317,121 as of June 30, 2021 and 2020, respectively. Equity in operating earnings of affiliates aggregated approximately $34,905 in fiscal 2021 and $16,097 in fiscal 2020. In 2005, one of these entities, JHMI Utilities LLC, was formed to provide utility services for the East Baltimore campus. The University and Hospital, each owning 50% of JHMI Utilities LLC, provide all of its funding, including debt service, through payments for services received. Utility and telecommunications services provided to the University in fiscal 2021 and 2020 were approximately $30,331 and $30,420, respectively. JHMI Utilities LLC has an agreement with the University to finance a portion of the costs of installation of, and subsequent upgrades to, an enterprise information technology system that provides integrated patient care information and service across JHM. The project has been successfully implemented with the total project cost at approximately $311,900 as of June 30, 2021. The cost of implementing the enterprise information technology strategy was financed through a combination of loans from, or guarantees by, the University and JHHS. The University committed to funding up to $36,800 of the project. As of June 30, 2021 and 2020, $13,900 and $17,400, respectively, was outstanding on the loan. In addition, the University has agreed to guarantee a pooled loan of up to $11,300. Although the University’s ownership interest in each of the jointly owned entities is generally 50%, the University and JHHS have entered into separate agreements whereby certain activities or lines of business within these entities are not shared equally. THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 34 (Continued) The table below reflects the net pension and postretirement benefit cost reported in operating as benefits expense and nonoperating as other net periodic benefit cost for the years ended June 30, 2021 and 2020: Pension plan Postretirement plans 2021 2020 2021 2020 Operating: Service cost $ 17,125 15,246 8,949 7,855 Total operating, included in benefits expense 17,125 15,246 8,949 7,855 Nonoperating: Interest cost on accumulated benefit obligation 24,035 26,873 7,122 8,790 Amortization of prior service (credit) cost (167) (167) 505 350 Expected return on plan assets (33,151) (31,759) (21,975) (21,428) Amortization of actuarial loss (gain) 27,219 15,074 124 (14) Total nonoperating 17,936 10,021 (14,224) (12,302) Total net pension and postretirement benefit cost (credit) $ 35,061 25,267 (5,275) (4,447) The table below reflects the changes in plan assets and benefits obligations recognized as nonoperating items for the years ended June 30, 2021 and 2020: Pension plan Postretirement plans 2021 2020 2021 2020 New prior service cost $ 5,949 — — — Net (gain) loss for the year (117,346) 116,445 (88,438) 23,632 New unrecognized prior service cost — — — 1,260 Amortization of prior service credit (cost) 167 167 (505) (350) Amortization of net (gain) loss (27,219) (15,074) (124) 14 Net (gain) loss recognized in nonoperating activities $ (138,449) 101,538 (89,067) 24,556 THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 35 (Continued) The table below reflects the amortization of amounts expected to be recognized as components of net periodic benefit expense in nonoperating activities during fiscal 2022: Postretirement Pension plan plans Net (loss) gain $ (9,716) 3,760 Prior service (cost) amortization (531) (505) $ (10,247) 3,255 The weighted average assumptions used to determine benefit obligations and net periodic benefit costs are as follows: Pension plan Postretirement plans 2021 2020 2021 2020 Weighted average assumptions used to determine benefit obligations at June 30: Discount rate 2.72 % 2.66 % 2.60%–2.79% 2.54%–2.73% Average rate of compensation increase 2.90 2.90 N/A N/A Rate of increase in healthcare costs for next year N/A N/A 5.90 5.90 Weighted average assumptions used to determine net periodic benefit cost: Discount rate 2.66 % 3.50 % 2.54%–2.73% 3.42%–3.56% Expected rate of return on plan assets 6.75 6.75 7.00 7.00 Rate of compensation increase 2.90 2.90 N/A N/A Rate of increase in healthcare costs N/A N/A 6.10 6.30 The expected long-term rate of return for the assets of the plans is based on historical and expected long-term future asset class returns. The rate is reviewed annually and adjusted as appropriate to reflect changes in projected market performance or in the targeted asset allocations. THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 36 (Continued) The rate of increase in healthcare costs was assumed to begin with an initial rate of 6.1% in 2021 and decrease to 4.0% in 2044 and to remain at that level thereafter. Assumed healthcare cost trend rates have a significant effect on the reported postretirement benefit cost and obligation. A one-percentage-point change in the assumed rates used at June 30, 2021 would have the following effects: Increase Decrease Total service and interest cost components $ 90 (79) Postretirement benefit obligation 3,450 (3,102) (a) Plans’ Assets The purpose of the pension and postretirement plans is to meet the retirement benefit obligations of eligible University employees. The plans’ assets are invested with the objective of meeting these obligations under the rules stipulated by the Employee Retirement Income Security Act. An asset allocation has been established, which endeavors to adequately cover the liability stream posed by the beneficiaries of the plans and minimize the frequency and amount of the plans’ contributions by the University. The intended benefits of this diversification are reduced risk and improved investment returns. (b) Pension Plan The following table presents the fair value and categorization within the fair value hierarchy of the assets of the defined benefit pension plan as of June 30, 2021 and 2020: 2021 2020 Funds at Funds at Total Level 1 NAV Total Level 1 NAV Cash and cash equivalents $ 1,987 1,987 — 10,529 10,529 — Fixed income securities 234,582 227,485 7,097 207,805 199,287 8,518 United States equities and international equities 462,958 413,376 49,582 312,631 281,266 31,365 Marketable alternatives 31,596 — 31,596 49,663 — 49,663 Total $ 731,123 642,848 88,275 580,628 491,082 89,546 THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 39 (Continued) Costs related to the operation and maintenance of property, including depreciation of property and equipment and interest on related debt, are allocated to program and supporting activities based upon periodic inventories of facilities. Other net periodic benefit cost (credit) recorded in nonoperating expense was $3,712 and $(2,281) for the years ended June 30, 2021 and 2020, respectively. (14) Liquidity and Availability The University regularly monitors liquidity required to meet its operating needs and other contractual commitments, while also striving to maximize the investment of its available funds. As of June 30, the following assets could readily be available within one year to meet general expenditures: 2021 2020 Cash and cash equivalents $ 545,452 531,954 Operating investments 1,134,652 1,126,073 Sponsored research accounts receivable, net 500,393 447,125 Accounts receivable, net 207,806 244,240 Contributions receivable, net 34,336 35,806 Approved endowment payout for upcoming fiscal year 365,430 343,646 Investments in and loans to affiliates 5,511 7,434 Payout from interests in trusts and endowment funds held for others 4,469 4,267 Financial assets available to meet general expenditures over the next year $ 2,798,049 2,740,545 The University has various sources of liquidity at its disposal, including cash and cash equivalents, marketable debt securities, lines of credit, and a commercial paper facility. The University’s cash flows have seasonal variations during the year attributable to tuition billings, patient service billings and concentration of contributions received at calendar and fiscal year-end. Operating investments have been reduced for an estimate of expenditures that will occur on grants and gifts beyond one year, as well as, cash received for capital contributions. Principal and interest on student loans are not included as those amounts are used solely to make new loans and are, therefore, not available to meet current operating needs. Based on historical experience, only the portion of contributions receivable for operations expected to be received within one year is considered liquid. Investments in and loans to affiliates include only the loan principal payments due from affiliates in the next year. (15) Leases The University leases facilities used in its academic and research operations under long-term operating and finance leases, including certain facilities from the Hospital under a renewable one year lease. This lease provides for a rent equal to the cost to the Hospital for maintaining the facilities and has been renewed for the year ending June 30, 2022. THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 40 (Continued) For the years ended June 30, 2021 and 2020, the components of lease expense are as follows: 2021 2020 Lease cost: Finance lease expense: Amortization of right-of-use assets $ 4,452 4,452 Interest on lease obligations 3,528 3,797 Operating lease expense 53,493 56,694 Variable lease expense 46,135 44,227 Short-term lease expense 4,797 4,657 Total lease expense $ 112,405 113,827 Other information: Operating lease right-of-use assets obtained in exchange for new operating lease liabilities $ 53,826 5,972 Weighted-average remaining lease term: Finance leases 7.75 yrs. 8.74 yrs. Operating leases 7.03 yrs. 6.79 yrs. Weighted-average discount rate: Finance leases 6.45 % 6.50 % Operating leases 2.38 2.40 Payments due include options, where reasonably certain, to extend operating leases through fiscal year 2033 and are summarized below as of June 30, 2021: Affiliates Others Total 2022 $ 14,044 38,329 52,373 2023 9,642 36,391 46,033 2024 7,335 35,660 42,995 2025 6,367 25,965 32,332 2026 5,291 19,243 24,534 After 2026 8,614 71,147 79,761 51,293 226,735 278,028 Less amounts representing interest 3,746 20,144 23,890 Total operating lease liabilities $ 47,547 206,591 254,138 THE JOHNS HOPKINS UNIVERSITY Notes to Consolidated Financial Statements June 30, 2021 and 2020 (Dollars in thousands) 41 (Continued) Payments due for finance leases through fiscal year 2031 are summarized below as of June 30, 2021: 2022 $ 8,283 2023 8,524 2024 8,772 2025 9,027 2026 9,289 After 2026 24,500 68,395 Less amounts representing interest 14,004 Total finance lease liabilities $ 54,391 As of June 30, 2021, the gross amount of finance right of use assets and accumulated depreciation thereon are reflected in property and equipment and amounted to $95,149 and $60,645, respectively. The following presents supplemental cash flow information for the year ended June 30, 2021 and 2020 as it relates to cash paid for amounts included in the measurement of lease liabilities: 2021 2020 Operating cash flows for operating leases $ 52,171 52,820 Operating cash flows for finance leases 4,521 4,190 Financing cash flows for finance leases 3,528 3,797 In June 2021, the University signed a 40-year lease agreement with the Hospital for approximately 65% of the space in a research facility scheduled to be completed by the end of 2025. The first of three wings in the facility is expected to be available for use before the end of fiscal 2024. The University will be responsible for approximately 65% of the total core and shell costs, which are estimated to range from $300,000 to $320,000, and will fund its share of these costs as prepayments under the lease on a monthly basis during the construction and renovation period. In addition, the University will fund its own tenant improvements during this period. (16) Risks and Uncertainties In March 2020, the World Health Organization declared the novel coronavirus (COVID-19) a pandemic, which continues. As a result of the suspension of in-person education, lost revenues resulting from the deferral of clinical elective procedures, a decrease in sponsored activities, the refunding of a portion of student housing and dining revenues, and other uncertainties related to the pandemic, the University took action to temporarily suspend employer 403(b) contributions beginning July 1, 2020. Virtual learning continued through the fall semester of fiscal 2021, with some in-person education resuming in the spring semester of fiscal 2021. While the University experienced a reduction in revenues, primarily related to education and student related activities, and incurred certain incremental costs mainly related to COVID