Budget Update 2018-19

January 3, 2019

Dear Colleagues,

We write to you today with our customary annual update on Yale’s financial state.

The fiscal year ending June 30, 2018, was not quite as strong as the previous one, but still a very good year. Our university-wide operating results, on a budget of $3.8 billion, showed a surplus of $91 million. This total reflects a small surplus in the central campus, with the remainder accounted for by the professional schools. Notably, the medical school posted a surplus of $45 million, driven largely by increases in revenues from medical services and sponsored research. We also continue to benefit from the outstanding work of our world-class investment office: returns of 12.3 percent this year brought the endowment’s value to $29.4 billion.

Our academic strategies for the years ahead will strengthen the university and serve Yale’s mission to improve the world. These are ambitious plans, and they will come at significant expense. Our financial planning must be aligned toward safeguarding and marshaling the resources needed to ensure their success.

The main danger facing our financial outlook is our reliance on strong endowment returns every year. The U.S. economy just completed an unprecedented ninety-eighth consecutive month of employment growth, but many people predict that the decade ahead will be weaker than the last. You will recall that our planning estimates are based on an assumption of 8.25 percent annual endowment returns, the rate required to hold spending from the endowment steady and keep up with inflation. Yale is in good shape to weather a short downturn in the market, but a decade of lower endowment returns—e.g., 4 percent per year, which is not unrealistic—would put tremendous strain on the university. We have asked every budgetary unit to go through the exercise of anticipating how they would respond to this scenario, so that we can be prepared for sustained periods of financial challenge.

Our comprehensive website about Yale’s budget and endowment is updated with the latest data and reports, links to relevant resources, a series of educational videos, and answers to questions. We invite you to visit it for more information.

Thank you for your collective commitment to Yale’s success.


Peter Salovey
Chris Argyris Professor of Psychology

Ben Polak
William C. Brainard Professor of Economics

Jack Callahan
Senior Vice President for Operations

Stephen Murphy
Vice President for Finance & Chief Financial Officer