An alphabetized list of some of our most common budget terminology

Academic Budget:  The Operating Budget for the entire University, excluding the Health System Budget (see Health System, University of Pennsylvania).  Also referred to as the Academic Component.

Administrative Service Centers (ASCs):  The President’s Office, the Provost’s Office, the Executive Vice President’s Office, and those administrative units that report directly to one of those offices.

Allocated Cost & Space Charges: What Schools and centers pay to fund central units and the cost of their space.  Units funded by allocated costs include the administrative service centers, the University Library, and the central development office.

Associated Investments Fund (AIF):  A pooled fund in which most of the University’s long-term investment funds are managed.

Business Services:  Self-sustaining units that charge for the goods and services they provide to the University community and other customers.  Major units include Residential and Hospitality Services, the Computer Connection and Bookstore, and Parking and Transportation Services.  Other auxiliary activities of business services include the operations of Sheraton University City Hotel and the Hilton Inn at Penn.

Capital Transactions:  An expense category in the RCM financial statement that includes debt service, equipment purchases, and capital funding transfers.

Clinical Fee: This mandatory fee is assessed to all students and supports Penn Wellness services, including Campus Health, Counseling and Psychological Services, the Student Health Service, and the Office of Alcohol and Other Drug Programs. In 2020-2021, the fee also funds public health efforts essential for protecting the Penn community against the spread of COVID-19, including contact tracing.

Consolidated University Budget:  The academic budget plus the Health System budget.

Direct Revenues:  The portion of revenues that a responsibility center generates through its own activities.  Direct revenues are total revenues before resource transfers, subvention, University Bank transactions, and funding from allocated costs.

Employee Benefit Rate:  The rate per salary dollar that each responsibility center must contribute to the University’s central employee benefits pool to cover the cost of employee benefits.  The FY2020 rate is 29.5% for full-time employees and 9.0% for part-time employees.  Each center is also assessed a separate dependent tuition charge that is 2.2% of salary expense to finance the University’s dependent tuition assistance benefit.

Endowment Funds:  Funds invested for the long-term, and for which the principal is non-expendable except in the case of quasi-endowments.  For funds invested in the AIF, only the income distributed under the University’s spending rule (see Spending Rule) may be spent, provided any donor-imposed restrictions have been met.

Facilities & Administration (F&A) Rate:  See Indirect Cost Recovery (ICR).

Facilities Renewal Fund:  A fund administered by Facilities and Real Estate Services that extends the useful life of Penn’s buildings and infrastructure by making strategic investments in the preservation and enhancement of building systems and building exteriors.

Financial Aid Discount:  An assessment against undergraduate tuition to cover the expenses of the undergraduate aid pool.  The financial aid discount will be 38.0% in FY2020.

Fiscal Year (FY):  The twelve-month period utilized for budgeting, financial planning, and reporting.  Penn’s fiscal year begins on July 1 and ends on June 30.

FTE:  Full-time equivalent.  A full-time faculty or staff member is counted as 1 FTE and a part-time faculty or staff member is counted as 1/3 FTE.  Similarly, a full-time student is counted as 1 FTE, while a part-time student is counted as 1/3 FTE. 

Funding from Allocated Costs (FFAC):  The primary source of revenue for most administrative service centers and the University Libraries.  FFAC is derived from the allocated cost charges assessed on schools and other responsibility centers.

General Fee: A fee assessed to all undergraduate, graduate, and professional students that directly funds Penn’s non-instructional student support services. The General Fee for full-time students provides them with full access to a wide variety of services and resources, including counseling and wellness, multicultural resource centers, student activities, recreation and fitness, career services, learning support, and much more.

General University:  The responsibility center where the University’s central pools reside, including the pools for subvention, student aid, allocated cost and space charges, funding from allocated costs, debt service, insurance, and employee benefits.

Gift Funds:  Separate accounts that record gifts to a responsibility center that have been restricted in some way in their use by an external donor.  The University receives both operating gifts and capital gifts.

Grants and Contracts:  See Sponsored Programs.

Health System, University of Pennsylvania (UPHS):  All components of PENN Medicine, except the Perelman School of Medicine.

Independent Operations:  Separately organized operations owned or controlled by an institution unrelated to, or independent of, the institution’s missions.  Penn’s major Independent Operations include the Hilton Inn at Penn, the Sheraton University City Hotel, University City Associates, the Penn Club of New York, the University of Pennsylvania Press, and the Penn Wharton China Center.

Indirect Cost Recovery (ICR):  A portion of the funding associated with a grant or contract that pays for the overhead costs associated with the research activity or other activity that is directly funded under that grant or contract.  ICR is usually defined as a fixed percentage of a grant or contract’s direct expenditures.  The University’s federal ICR rate, also known as the “Facilities & Administration” (F&A) rate will be 62.0% in FY2020.  The distribution of ICR is as follows:  88.5% to the school or center that is the grant recipient; 10.5% to the Subvention Pool; and 1.0% to the Research Facilities Development Fund (RFDF).

Net Direct Expenditures:  What a responsibility center spends directly on its operations net of expense recovery. It includes compensation, current expense, and capital transactions (RCM), but does not include allocated cost and space charges.

Net Tuition and Fees: Total tuition and fees less student aid contra-revenue for the GAAP accounting framework.

Other Income: A category of revenue that includes student room and board charges, non-UPHS clinical care revenues, technology transfer income, and the revenue of the independent operations of the University.

Penn Center for Innovation (PCI):  An office that facilitates technology development connections between the University and the private sector.  It merges together the areas of the University focused on sponsored research, corporate relations, licensing, and entrepreneurship with a focus on alliance building.  

Penn Compact 2022:  The University’s strategic plan which is aimed at maximizing Penn’s inclusion, innovation, and impact with bold next steps to increase access to Penn’s exceptional intellectual resources; integrate knowledge across academic disciplines with a strong emphasis on innovation; and engage locally, nationally, and globally to bring the benefits of Penn’s research, teaching, and service to individuals and communities at home and around the world.

Penn Connects:  The University’s comprehensive campus development plan.

Penn First Plus: A Penn program that promotes the educational excellence and engagement of first- generation and low-income undergraduates.

Penn Integrates Knowledge (PIK):  A University-wide initiative to recruit faculty members to Penn whose research and teaching exemplify the integration of knowledge across disciplines.

Penn Medicine:  A coordinated network of institutions dedicated to the advancement of medical research, training, and treatment that includes the Perelman School of Medicine and the component units of the University of Pennsylvania Health System, including the Hospital of the University of Pennsylvania, the Clinical Practices of the University of Pennsylvania, the Penn Presbyterian Medical Center, Pennsylvania Hospital, Chester County Hospital, Lancaster General Hospital, Princeton Health, and Clinical Care Associates.

Pennovation Works: A unique blend of offices, labs, and production space being developed to bridge the intellectual and entrepreneurial initiatives for advancing knowledge and generating economic development.  Pennovation Works is anchored by the Pennovation Center, a business incubator and accelerator providing lab space and a hub for collaboration, creativity, and the exchange of ideas for innovators from all disciplines.

Power of Penn: The University’s$4.1 billion fundraising campaign, which publicly launched in April 2018, and is helping to advance Penn Compact 2022’s three pillars of inclusion, innovation, and impact.   

RCM Surplus/(Deficit):  How financial performance is measured at the responsibility center level at Penn.  A surplus means that funds have been set aside for use in future years, while deficits represent the use of prior period balances.

Resource Center:  A responsibility center category that includes the University Libraries, the Division of Recreation and Intercollegiate Athletics, the Annenberg Center for the Performing Arts, the University of Pennsylvania Museum, the Morris Arboretum, the Institute of Contemporary Art, Penn Global, and Interdisciplinary Programs within the Provost’s Office.

Resource Transfers From/(To) Other Centers:  The transfer of moneys from one responsibility center to another. 

Responsibility Center:  An organizational unit at Penn that is expected to develop and adhere to a balanced budget.  In Penn’s budgeting system, there are four types of responsibility centers:  schools, resource centers, business services, and administrative service centers.

Responsibility Center Management (RCM) Budgeting:  The type of budgeting system used at Penn since the 1970s, which allows schools, resource centers, and business services to retain most of the revenues they generate, and also requires them to fund out of these self-generated revenues both the direct cost of their own operations and their share of central overhead costs (see Allocated Cost Charges and Space Charges) while maintaining internal budget balance.

Service Center:  A financial unit used to account for costs and reimbursements for institutional services provided to researchers, including animal care facilities and commonly shared equipment.  Service centers are self-balancing, charging only enough to recover their costs.

Spending Rule:  The rule that governs the amount of the AIF that is available to be spent in a particular year. The formula bases 70% of next year’s spending on the current year’s projected spendable income plus an inflation factor, and 30% on the year-end endowment market value, lagged by one year, multiplied by the target spending rate.  The target spending rate is currently 5.0%.

Sponsored Programs:  Awards from external sponsors covering both direct and indirect expenditures (see Indirect Cost Recovery) for research programs and other contractual obligations undertaken by University faculty.  Also referred to as Grants and Contracts.

Student Aid Contra-Revenue:  A GAAP financial statement category that includes all student aid that can be considered tuition remission and does not have a service requirement.  Net tuition and fees is tuition and fees less student aid contra-revenue.

Student Aid Expense: For GAAP, includes only aid for which there is a service requirement while for RCM it also includes aid that does not have a service requirement (and which is classified as student aid contra-revenue in GAAP).  RCM and GAAP also differ in the treatment of payments to pre-doctoral trainees and educational fellows, with the former classifying them as compensation and the latter classifying them as student aid expense.

Subvention:  An annual operating subsidy provided primarily to schools and resource centers by the Provost.  Subvention can be provided on a recurring or a one-time basis and is used for a number of different purposes.  It is used to fund ongoing operations or to invest in strategically important initiatives.  Subvention also includes support for graduate student aid.

Subvention Pool:  The source of funding for subvention.  The largest funding source for the Subvention Pool comes from the retention of 20% of all undergraduate tuition dollars, and the same percentage of non-PhD graduate tuition dollars.  Other major subvention funding sources include a portion of the interest earned by the Temporary Investment Fund (TIF) and 10.5% of the ICR realized on grants.

Technology Fee: The Technology Fee is used to cover a broad group of technology-driven services, including online learning resources, data and network security, technology support, email services and support, technology-enabled spaces, provided software, electronic research tools, and other related costs.

Temporary Investment Fund (TIF):  The fund where the University’s current cash is consolidated and the University’s short-term investments reside.  Because of the extraordinarily low Treasury bill rates in recent years, the Office of the Treasurer established a floor on both the actual borrowing rates and earnings rates; actual borrowing rates will in no event be lower than 2.0% and actual earning rates will not be negative.

Tuition:  Charges levied by the University and its schools for courses and degree-granting programs.  Undergraduate tuition rates are set by the Trustees, and the PhD rate is set by the Provost in consultation with the graduate deans; all other tuition rates are set by the schools.  Most tuition is apportioned as follows:  20% goes to the Subvention Pool, with the remainder split 75% based on course units and 25% based on the student’s “home school.”  The exception is PhD tuition, which is retained 100% by the schools. 

Undergraduate Total Charges:  Includes tuition, room and board, and all mandatory fees, which consist of the General Fee, the Clinical Fee, and the Technology Fee.