Washington University
Consolidated Financial Statements
June 30, 2021 and 2020
Washington University
Index
June 30, 2021 and 2020
Page(s)
Report of Independent Auditors ..................................................................................................... 1
Consolidated Financial Statements
Consolidated Statements of Financial Position ...................................................................................... 2
Consolidated Statements of Activities ................................................................................................ 3–4
Consolidated Statements of Cash Flows ................................................................................................. 5
Notes to Financial Statements .......................................................................................................... 6–32
PricewaterhouseCoopers LLP, 6 Cardinal Way, Suite 1100, St. Louis, MO 63102
T: (314) 206 8500, www.pwc.com/us
Report of Independent Auditors
To the Board of Trustees of Washington University
We have audited the accompanying consolidated financial statements of Washington University and its
affiliates (the “University”), which comprise the consolidated statements of financial position as of June
30, 2021 and 2020, and the related consolidated statements of activities and of cash flows for the years
then ended.
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in the United States of America;
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 the 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 our 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, we consider internal control relevant to the
University'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 University'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 Washington University and its affiliates as of June 30, 2021 and 2020,
and the changes in their net assets and their cash flows for the years then ended in accordance with
accounting principles generally accepted in the United States of America.
St. Louis, Missouri
October 4, 2021
Washington University
Consolidated Statements of Financial Position
June 30, 2021 and 2020
The accompanying notes are an integral part of these consolidated financial statements.
2
(thousands of dollars) 2021 2020
Assets
Cash and cash equivalents 263,944$ 31 6,246$
Investments 16,461,152 10,616,526
Accounts and notes receivable, net 646,996 552,592
Pledges receivable, net 407 ,232 441,909
Right-of-use assets 88,698
Other assets 327,370 273,473
Fixed assets, net 3,017 ,355 2,902,823
Total assets 21,212,7 47$ 15,103,569$
Liabilities
Accounts payable and accrued expenses 623,047$ 57 5,332$
Deposits, advances and other 34,280 33,388
Lease liability 99,666
Professional liability 95,7 93 91,493
Deferred revenue and contract liabilities 161,045 158,348
Liabilities under split-interest agreements 40,883 38,690
Government supported student loans 17 ,550 22,67 1
Notes and bonds payable 2,390,37 8 2,415,342
Total liabilities 3,462,642 3,335,264
Net Assets
Without donor restrictions 8,37 1,599 5,885,7 28
With donor restrictions 9,37 8,506 5,882,57 7
Total net assets 17,750,105 11,768,305
Total liabilities and net assets 21,212,7 47$ 15,103,569$
Washington University
Consolidated Statements of Activities
Year Ended June 30, 2021
The accompanying notes are an integral part of these consolidated financial statements.
3
Without Donor With Donor
(thousands of dollars) Restrictions Restrictions Total
Revenues and other support
Tuition and fees 433,334$ $ 433,334$
Endowment spending distribution 354,542 11,237 365,779
Investment return 10,933 184 11,117
Gifts 76,625 81,829 158,454
Grants and contracts revenues
Direct costs recovered 507,306 507,306
Facilities and administrative costs recovered 194,793 194,793
Patient services, net 1,667,815 1,667,815
Auxiliary enterprises - sales and services 90,249 90,249
Educational activities - sales and services 215,868 215,868
Affiliated hospital revenues 154,448 154,448
Other revenue 38,492 2 38,494
Net assets released from restrictions 107,829 (107,829) -
Total Revenues and other support 3,852,234 (14,577) 3,837,657
Expenses:
Compensation expense 2,252,936 2,252,936
Supplies, services, and other 1,124,898 1,124,898
Depreciation expense 213,825 213,825
Interest expense 71,485 71,485
Total expenses 3,663,144 - 3,663,144
Net operating results 189,090 (14,577) 174,513
Non-operating revenues and (expenses):
Investment returns net of endowment spending 2,323,518 3,417,121 5,740,639
Permanently restricted gifts 71,323 71,323
Other non-operating (26,737) 22,062 (4,675)
Non-operating, net 2,296,781 3,510,506 5,807,287
Change in net assets 2,485,871 3,495,929 5,981,800
Net Assets, Beginning of the Year 5,885,728 5,882,577 11,768,305
Net Assets, End of the Year 8,371,599$ 9,378,506$ 17,750,105$
Washington University
Consolidated Statements of Activities
Year Ended June 30, 2020
The accompanying notes are an integral part of these consolidated financial statements.
4
Without Donor With Donor
(thousands of dollars) Restrictions Restrictions T otal
Revenues and other support
Tuition and fees 451,500$ $ 451,500$
Endowment spending distribution 351,383 10,489 361,87 2
Investment return 19,990 1,182 21,172
Gifts 101,843 142,845 244,688
Grants and contracts revenues
Direct costs recovered 483,265 483,265
Facilities and administrative costs recovered 17 7 ,421 17 7 ,421
Patient services, net 1,482,562 1,482,562
Auxiliary enterprises - sales and services 102,434 102,434
Educational activities - sales and services 183,97 4 183,97 4
Affiliated hospital revenues 146,460 146,460
Other revenue 94,352 2 94,354
Net assets released from restrictions 123,17 3 (123,17 3) -
Total Revenues and other support 3,718,357 31,345 3,749,702
Expenses:
Compensation expense 2,183,944 2,183,944
Supplies, services, and other 1,103,911 1,103,911
Depreciation expense 201,97 3 201,973
Interest expense 70,200 7 0,200
Total expenses 3,560,028 - 3,560,028
Net operating results 158,329 31,345 189,67 4
Non-operating rev enues and (expenses):
Investment returns net of endowment spending 307 ,030 17 1,445 47 8,47 5
Permanently restricted gifts 80,184 80,184
Other non-operating (56,517) 27,557 (28,960)
Non-operating, net 250,513 27 9,186 529,699
Change in net assets 408,842 310,531 719,373
Net Assets, Beginning of the Y ear 5,47 6,886 5,57 2,046 11,048,932
Net Assets, End of the Year 5,885,7 28$ 5,882,577$ 11,7 68,305$
Washington University
Consolidated Statements of Cash Flows
Years Ended June 30, 2021 and 2020
The accompanying notes are an integral part of these consolidated financial statements.
5
(thousands of dollars) 2021 2020
Cash flows from operating activities
Change in net assets 5,981,800$ 719,373$
Adjustments to reconcile change in net assets to cash
provided by operating activities
Realized and unrealized net gains on investments (6,177,960) (899,464)
Depreciation expense 213,825 201,973
Permanently restricted gifts (71,323) (80,184)
Investments received as gifts - not permanently restricted (12,173) (11,070)
Proceeds from sales of investments received as gifts 12,173 11,070
Debt extinguishment costs 9,635
Operating leases 10,968
Other non-cash adjustments 29,908 59,127
Changes in assets and liabilities
Accounts and notes receivable, net (67,005) 47,113
Pledges receivable, net 30,454 (49,691)
Accounts payable and accrued expenses 46,248 (6,907)
Other assets and liabilities (52,379) 18,984
Net cash (used)/provided by operating activities (55,464) 19,959
Cash flows from investing activities
Proceeds from sales and maturities of investments 6,909,906 5,805,217
Purchases of investments (6,612,196) (5,925,802)
Purchases of fixed assets (345,458) (397,220)
Student loans disbursed (14,376) (15,516)
Student loan payments received 20,565 20,459
Other 45
Net cash used in investing activities (41,559) (512,817)
Cash flows from financing activities
Principal payments of debt (185,011) (150,436)
Proceeds from long-term debt issuance 159,486 509,037
Contributions restricted for long-term investment 65,002 55,465
Proceeds from sales of investments received as gifts 10,400 19,152
Debt extinguishment costs (9,635)
Other (5,156) (14,579)
Net cash provided by financing activities 44,721 409,004
Net decrease in cash (52,302) (83,854)
Cash and cash equivalents
Beginning of year 316,246 400,100
End of year 263,944$ 316,246$
Supplemental data
Interest paid in cash 71,662$ 66,566$
Noncash activities
Contributions of securities and other noncash assets 23,103 36,211
Net change in accounts payable for investments 1,470 (114,118)
Right-of-use assets obtained in exchange for lease liabilities 686
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
6
1. Summary of Significant Accounting Policies
Organization
Washington University in St. Louis (the “university”), is an institution of higher education
that, in furtherance of its role as a charitable and educational institution, engages in various
activities, including instruction, research and provision of medical care.
Basis of Presentation and Use of Estimates
The consolidated financial statements have been prepared on the accrual basis of accounting.
The consolidated financial statements are consolidated to include the accounts of the
university and its affiliates. Significant consolidated affiliates include The Barnard Free Skin
and Cancer Hospital, Parallel Properties LLC including its affiliates, Washington University
Clinical Associates, LLC and associated physician practices, and Washington University
Physicians in Illinois, Inc.
The preparation of consolidated financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Such estimates include, but are not limited to, the
estimated useful lives of buildings and equipment, the fair value of certain investments (see
footnote 2), the degree of precision in calculation of self-insurance reserves and adequacy of
allowances for doubtful accounts. Actual results could differ from those estimates.
Net Assets
Resources are recorded based on the absence or existence of donor-imposed restrictions.
Descriptions of the net asset categories follow:
Net assets without donor restrictions are free of donor-imposed restrictions. Board-
designated endowment funds are also included within net assets without donor
restrictions.
Net assets with donor restrictions represent net assets that consist of gifts and related
earnings that are subject to donor-imposed restrictions or legal stipulations that have not
yet been met by actions of the university and/or passage of time as well as gifts and trusts
which, by donor restriction, are required to be held in perpetuity. Net assets required to
be held in perpetuity at June 30, 2021 and 2020, are $2,442,688 and $2,365,401,
respectively.
Revenues from sources other than contributions and investment returns are reported as
increases in net assets without donor restrictions. Contributions are reported as increases in
the appropriate category of net assets, except that contributions which impose donor
restrictions that are met in the same fiscal year they are received are included in revenues
without donor restrictions. Gains and investment income that are limited to specific uses by
donor-imposed restrictions are reported as increases in net assets without donor restrictions if
the restrictions are met in the same reporting period as the gains and income are recognized,
except for gains and investment income earned by investment of donor-restricted
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
7
endowments. Such amounts remain in net assets with donor restrictions until appropriated
for expenditure. When a donor restriction expires due to the passage of time or the
university’s fulfillment of donor stipulated purpose, net assets with donor restrictions are
reclassified to net assets without donor restrictions and reported in the consolidated
statements of activities as net assets released from restrictions. Donor restricted gifts that are
to be held in perpetuity are reported in the non-operating section of the consolidated
statements of activities. Gifts of long-lived assets with explicit restrictions that specify how the
assets are to be used and gifts of cash or other assets that must be used to acquire long-lived
assets are reported as restricted support. Absent explicit donor stipulations about how long
those long-lived assets must be maintained, the university reports expirations of donor
restrictions when the donated or acquired long-lived assets are placed in service. Expenses are
reported as decreases in net assets without donor restrictions.
The university’s net assets as of June 30, 2021 consist of the following:
Without donor With donor
restrictions restrictions
Donor-restricted endowment funds $ 8,268,427$ 8,268,427$
Board-designated endowment funds 4,7 53,833 645,821 5,399,654
Investment in plant, net 790,380 790,380
Pledges 407 ,232 407 ,232
Other donor-restricted 57 ,026 57 ,026
Operating and other reserves 2,827 ,386 2,827 ,386
8,37 1,599$ 9,37 8,506$ 17 ,750,105$
Total
The university’s net assets as of June 30, 2020 consist of the following:
Without donor With donor
restrictions restrictions
Donor-restricted endowment funds $ 5,103,500$ 5,103,500$
Board-designated endowment funds 3,085,820 299,97 4 3,385,7 94
Investment in plant, net 7 62,165 7 62,165
Pledges 441,909 441,909
Other donor-restricted 37 ,194 37 ,194
Operating and other reserves 2,037 ,7 43 2,037 ,7 43
5,885,728$ 5,882,57 7$ 11,768,305$
Total
Investments
Investment gains (losses) in excess of endowment spending distribution and the unrealized
appreciation (depreciation) on investments are reported in the non-operating section of the
consolidated statements of activities. Investments acquired by gift or bequest are initially
recorded at market or appraised value at the date so acquired.
At June 30, 2021 and 2020, investments include $163,403 and $274,683, respectively,
purchased with unexpended proceeds from the Series 2017 A Missouri Health and Educational
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
8
Facilities Authority (MOHEFA) revenue bonds issued July 6, 2017 and the Series 2020A
taxable revenue bonds issued April 3, 2020. The 2017A MOHEFA funds and the 2020A bond
funds may be utilized for the purposes set forth in the relevant bond documents.
Fixed Assets
Fixed assets are stated at cost or at fair market values if received as a gift, less accumulated
depreciation, computed on a straight-line basis over the estimated useful lives of the assets.
Fixed assets include equipment and other assets acquired through sponsored programs during
which title is retained by the resource provider. It is probable the university will be permitted
to keep the assets when the program terminates. The cost and accumulated depreciation of
fixed assets are removed from the records at the time of disposal. Fixed assets by classification
at June 30, 2021 and 2020 consist of the following:
2021 2020
Construction in progress 320,7 01$ 311 ,806$
Land and improvements to land 190,825 17 8,356
Buildings 4,7 43,990 4,502,505
Equipment 663,409 619,921
Total cost 5,918,925 5,612,588
Accumulated depreciation (2,901,570) (2,709,765)
Total fixed assets, net 3,017 ,355$ 2,902,823$
Collections
In addition to the Mildred Lane Kemper Art Museum, the university archives rare book
collections, works of art, literary works, historical treasures and artifacts. These collections are
protected and preserved for public exhibition, education, research and the furtherance of
public service. They are neither disposed of for financial gain nor encumbered in any manner.
Accordingly, such collections are not recognized or capitalized for financial statement
purposes.
Leases
The university determines if an arrangement is or contains a lease at inception based on
whether the contract conveys the right to control the use of identified property, plant, or
equipment in exchange for consideration. The university has both leases under which it is
obligated as a lessee and leases for which it is the lessor. Operating leases in which the
university is a lessee are included in right-of-use (ROU) assets and lease liabilities on the
consolidated statements of financial position. The university has elected the short-term lease
exception under ASC 842 for all leases, and therefore, leases with an initial term of 12 months
or less are not included on the consolidated statements of financial position. ROU assets
represent the right to use an underlying asset for the lease term, and lease liabilities represent
the obligation to make lease payments arising from the lease, measured on a discounted basis.
The interest rate implicit in lease contracts is typically not readily determinable, and as such,
the university uses its collateralized borrowing rate using a period comparable with the lease
term in determining the present value of lease payments. The lease term may, at the
university’s discretion, include options to extend or to terminate the lease that the university is
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
9
reasonably certain to exercise. Lease expense for lease payments is recognized on a straight-
line basis over the lease term within the supplies, services and other line of the consolidated
statement of activities. Variable lease payments based on an index or rate, such as the
consumer price index, are initially measured using the index or rate in effect at lease
commencement. The university has lease agreements with non-lease components that relate
to the lease components. The university elected the practical expedient to account for non-
lease components and the lease components to which they relate as a single lease component
for all leases. Leasing arrangements for which the university is the lessor are not material to
the consolidated financial statements.
Financing Receivables
Financing receivables are principally loans made to students or their parents utilizing gifts,
endowment payout, and university resources designated for that purpose and from funds
provided by the United States government under the Federal Perkins and Health Professional
Student Loan programs. Loan funds are reported at estimated realizable value, as it is not
practical to determine the fair value of loan fund receivables, which include a large component
of federally sponsored student loans. Federally sponsored student loans have significant
government restrictions as to marketability, interest rates, and repayment terms. Federal
funds are ultimately refundable to the government and are recognized as a liability in the
consolidated statements of financial position.
The university’s loan portfolio includes over 5,800 individual loans and is geographically
diverse. Loans are considered past due if the minimum payment is not received within thirty-
one days past the due date. At June 30, 2021 and 2020, respectively 95% and 94% of the
parent loans and 73% and 74% of the institutional student loans were considered current.
Income earned on financing receivables is recorded on an accrual basis.
Deferred Revenue and Contract Liabilities
Deferred revenue is recognized on an accrual basis when payments for services are received in
advance of performance by the university. The principle components of deferred revenue are
clinical trial receipts, grants and contracts, and prepaid tuition and housing.
Tuition and Fees
Tuition and fee revenue, net of scholarships and other implicit price concessions, is recognized
over-time using the output method of measuring progress in the fiscal year in which the
educational programs are conducted. Students are invoiced at the commencement of each
academic period. Payment is due when invoiced. The performance obligation, delivery of
educational services, is satisfied as services are rendered. If delivery of the performance
obligation is not complete as of fiscal year-end, a contractual liability is recorded. The deferred
contract liability at June 30, 2021 and 2020 was $50,657 and $45,962, respectively, and is
reported as deferred revenue and contract liabilities on the consolidated statement of financial
position.
Demonstrated financial need is the major criteria for undergraduate students to receive
financial aid. Graduate students often receive tuition support in connection with research
assistant, teaching assistant and fellowship appointments. Total financial aid granted to
students by the university, including aid provided to employees and their dependents, for the
years ended June 30, 2021 and 2020, respectively, was $423,790 and $413,029.
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
10
The table below identifies student aid by type. Scholarships are reported net against tuition in
the consolidated statements of activities. Other amounts are reported as expenses.
2021 2020
Scholarships from unrestricted sources 227 ,169$ 221,068$
Scholarship support from gifts, endowment
and other restricted sources 7 7 ,632 7 4,081
Total scholarships 304,801 295,149
Employee and dependent tuition benefits 38,198 38,446
Stipends 7 9,221 7 7 ,326
Wo rk study 1 ,5 7 0 2,1 0 8
Total 423,7 90$ 413,029$
Gifts
Gifts, including unconditional promises to give, are recognized as revenues in the period the
gift or promise is received. Gifts received for permanent endowments or perpetual trusts are
reported as non-operating revenues. Gifts of assets other than cash are recorded at their
estimated fair value at the date of gift and, unless instructed otherwise by the donor, are
liquidated upon receipt or as soon as practical thereafter.
Conditional gifts and promises to give are not recognized until the conditions on which they
depend are substantially met. Gifts, in the form of unconditional promises to give, to be
received after one year are discounted at credit-adjusted tax exempt borrowing rates in
accordance with fair value accounting. Pledges outstanding are discounted with rates ranging
from 0.20% to 2.04%. Amortization of the discount is recorded as gift revenue. The university
has received gifts which are recorded as gift revenue in the period the gift was made but are
payable over a specified payment schedule of up to 10 years or more. During the gift payment
term, the university is exposed to credit risk for the entity or individual that has made the gift.
An allowance is made for uncollectible unconditional promises to give based upon
management’s judgment, past collections experience and other relevant factors.
A summary of pledges receivable is as follows:
2021 2020
In one year or less 152,990$ 165,399$
Between two and five years 145,37 1 153,459
Over five years 125,702 144,145
424,063 463,003
Less:
Disc o unt (8,1 32 ) (1 2 ,5 40 )
Allowance for uncollectible amounts (8,699) (8,554)
Total 407 ,232$ 441 ,909$
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
11
Grants and Contracts
The university receives grant and contract revenue from governmental and private sources.
Revenue associated with the direct costs of sponsored programs is generally recognized as the
related costs are incurred. At contract inception, the university determines whether the goods
or services to be provided are to be accounted for as a single performance obligation or as
multiple performance obligations. If multiple performance obligations are identified, the
university generally uses the cost plus a margin approach to determine the relative standalone
selling price of each performance obligation. Revenue from these contracts is earned over-
time. Invoicing of the customer, if required, will generally be in accordance with terms of the
contract with payment due when invoiced. Generally, the time between the receipt of payment
and the transfer of goods and service under these contracts is less than one year.
The university records revenue without donor restrictions upon its recovery of direct and
indirect costs applicable to those sponsored programs that provide for the full or partial
reimbursement of such costs. Most grants awarded to the university by government agencies
are conditional contributions. The principle condition attached to these awards is that the
university must incur costs in accordance with the Office of Management and Budget’s
uniform guidance before costs can be reimbursed. Total amounts promised under these grants
for which conditions have not yet been fulfilled are approximately $889,722 and $879,544 at
June 30, 2021 and June 30, 2020, respectively. The recovery of indirect costs, also referred to
as facilities and administrative costs is based on negotiated rates and represents recoveries of
facilities and administrative costs incurred under grants and contracts agreements. Recovery
of facilities and administrative costs of federally sponsored programs is at rates negotiated
with the Department of Health and Human Services.
In some cases, the sponsor will prepay amounts in anticipation of costs to be incurred. In
those cases, amounts received in excess of costs incurred are recorded as contract liabilities.
Patient Services Revenue
Net patient service revenue is reported at the amount that reflects the consideration to which
the university expects to be entitled in exchange for providing patient care. These amounts are
due from patients, third-party payers (including health insurers and government programs),
and others. Generally, the university bills the patient and third-party payers several days after
the services are performed. Revenue is recognized as performance obligations are satisfied.
Revenue for performance obligations satisfied over time is recognized based on actual charges
incurred in relation to total expected or actual charges which provides a faithful depiction of
the transfer of services over the term of the performance obligation based on the inputs needed
to satisfy the obligation.
Because the majority of its performance obligations relate to contracts with a duration of less
than one year, the university has elected to apply the practical expedient provided in FASB
ASC 606-10-50-14a, and therefore is not required to disclose the aggregate amounts of the
transaction price allocated to performance obligations that are unsatisfied or partially
unsatisfied at the end of the reporting period.
Generally patients who are covered by third-party payers are responsible for related
deductibles and coinsurance, which vary in amount. The university also provides services to
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
12
uninsured patients. The transaction price for both uninsured patients, as well as insured
patients with deductibles and coinsurance, is estimated based on historical experience and
current market conditions. The initial estimate of the transaction price is determined by
reducing the standard charge by any contractual adjustments, discounts and implicit price
concessions. The university determines its estimates of contractual adjustments and discounts
based on contractual agreements, its discount policies and historical experience. The
university determines its estimate of implicit price concessions based on historical collection
experience with these classes of patients using a portfolio approach as a practical expedient.
The portfolio approach is being used as there are a large volume of similar contracts with
similar classes of customers. Management’s judgment to group the contracts by portfolio is
based on the payment behavior expected in each portfolio category. The effect of applying a
portfolio approach to a group of contracts would not differ materially from considering each
contract separately. Contractual adjustments to patient service revenue were $2.13 billion and
$1.84 billion for the years ended June 30, 2021 and 2020, respectively.
The university has elected the practical expedient allowed under FASB ASC 606-10-32-18 and
does not adjust the promised amount of consideration from patients and third-party payors for
the effects of a significant financing component due to the expectation that the period between
the time the service is provided to a patient and the time that the patient or a third-party payor
pays for that service will be one year or less. In certain instances, the university may enter into
payment agreements with patients that allow payments in excess of one year. For those cases,
the financing component is not deemed to be significant to the contract. The university
reported net accounts receivable for patient services of $175,945 and $144,755, at June 30,
2021 and 2020, respectively.
Auxiliary Enterprises – Sales and Services
Auxiliary enterprises sales and services revenue is primarily earned over-time utilizing the
output method of measuring progress. Auxiliary enterprise sales and services contracts will
generally constitute a single performance obligation as there is a single promise. This revenue
is composed primarily of on and off campus housing charges, dining services, and parking and
transportation fees with separate contracts for each type of service. Housing, dining services
and parking fees are invoiced to undergraduate students at the beginning of each academic
period. Payment is due upon invoice issuance. Graduate students and undergraduates who
live off campus sign rental agreements providing for monthly rent payments. Each contract
for services in this category has a duration of one year or less. A contract liability is recorded
for the delivery of performance obligations that is not completed prior to the fiscal year end.
Educational Activities – Sales and Services
Clinical trial revenue is earned over-time as the university provides services. The transaction
price is negotiated with the customer and is usually based on standard rates for clinical
services and the expected cost to complete the contract. Payment terms under these contracts
vary but generally provide for the right to invoice the customer as work progresses, either
based on units performed or the achievement of billing milestones. The university has
determined that an input method using costs incurred as a basis to estimate revenue earned
best depicts the pattern of transfer of control to the customer. In those limited cases where
prepayments are significant, revenue is deferred until earned and a contract liability is
recorded. The contract liabilities at June 30, 2021 and 2020 are $50,800 and $56,325,
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
13
respectively, and are reported as deferred revenue and contract liabilities on the consolidated
statement of financial position.
Contracts in other educational sales and services cover a broad range of activities including
physician services to affiliated and unaffiliated hospitals, executive education program fees
and royalties. Revenue from the contracts in this category is earned over time as services are
rendered. The measure of progress varies according to the nature of the services provided.
Invoicing to customers is performed in the cadence required under the contracts and amounts
invoiced generally are considered due upon receipt. Accruals for services provided but not yet
invoiced are recorded at year end. Amounts receivable under service contracts are $64,239
and $72,635 at June 30, 2021 and 2020, respectively. Fees for executive education programs
are often received in advance of the program and represent a contract liability. Such amounts
are reported as deferred revenue and contract liabilities in the consolidated statement of
financial position.
Affiliated Hospital Revenues
Affiliated hospital revenue is earned over-time as the various services are provided as an
integrated performance obligation as more fully described in footnote 13. The measure of
progress towards completion of those obligations is based on the day-to-day operations of the
university’s School of Medicine and the affiliated hospitals. Payments are received under the
agreement semiannually. Amounts receivable under the agreement are $74,708 and $68,577
at June 30, 2021 and 2020 respectively.
Operating Results
The university’s measure of operations as presented in the consolidated statements of
activities includes income from tuition and fees, grants and contracts, medical services,
contributions for operating programs, the endowment spending distribution and other
revenues. Operating expenses are reported on the consolidated statements of activities as
incurred for employee compensation, depreciation, interest and supplies, services and other.
Operating results exclude investment gains (losses) except for the portion of gains utilized for
the endowment spending distribution, contributions to be held in perpetuity, and other non-
operating amounts.
Split-Interest Agreements
The university’s split-interest agreements with donors consist primarily of charitable gift
annuities and irrevocable charitable remainder trusts for which the university serves as
trustee. Assets are invested and payments are made to donors and/or other beneficiaries in
accordance with the respective agreements. Contribution revenues for charitable gift annuities
and charitable remainder trusts are recognized after recording liabilities for the present value
of the estimated future payments to be made to the respective donors and/or other
beneficiaries. The discount rate used is a credit-adjusted rate in existence at the date of the
gift. The rates used range from 0.53% to 1.98% for 2021 and 1.37% to 2.31% for fiscal year
2020. Annually, the university records the change in value of split-interest agreements by
recording at fair value the assets that are associated with each trust and recalculating the
liability for the present value of the estimated future payments to be made to the donors
and/or other beneficiaries. For the years ending June 30, 2021 and 2020, the change in fair
value was an increase of $1,661 and a decrease of $2,964, respectively. As of June 30, 2021
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
14
and 2020, the university’s liability under charitable gift annuities was $18,248 and $19,710,
respectively.
Cash and Cash Equivalents
The university considers cash on hand and in banks and all highly liquid financial instruments
with an original maturity of 90 days or less, except those amounts assigned to and invested by
its investment managers, which amounts are classified as investments, to be cash and
cash equivalents.
Income Taxes
The university is exempt from federal income taxes under Section 501 (c)(3) of the Internal
Revenue Code except to the extent the university has unrelated business income, or
consolidated for-profit affiliates incur taxes. The Tax Cuts and Jobs Act (the “Act”) was
enacted on December 22, 2017. The Act impacts the university in several ways, including new
excise taxes on executive compensation and net investment income, increases to unrelated
business taxable income (UBTI) , changes to the net operating loss rules, repeal of the
alternative minimum tax (AMT), and the computation of UBTI separately for each unrelated
trade or business. Further, the Act reduces the U.S. federal corporate tax rate and federal
corporate unrelated business income tax rate from 35% to 21%.
As of June 30, 2021, the university has made a reasonable estimate of the determinable effects
of the enactment of the Act on existing deferred tax balances. These amounts are provisional,
subject to change and not material to the university’s consolidated financial statements.
Management believes the university has no uncertain tax positions that result in material
unrecognized tax expense/benefits.
Effects of the Pandemic
The outbreak of COVID -19 has caused domestic and global disruption in operations for
institutions of higher education. The impact (i) may affect the cost of operations and (ii) may
materially affect financial markets and consequently the returns on and value of the
university’s investments. Other adverse consequences of COVID-19 or any other similar
outbreaks in the future may include, but are not limited to, decline in enrollment, decline in
demand for university housing and decline in demand for university programs that involve
travel or have international connections. The full impact of COVID-19 or any other similar
outbreaks in the future and the scope of any adverse impact on the university’s finances and
operations cannot be fully determined at this time.
The university received funding from the federal Coronavirus Aid, Relief and Economic
Security (“CARES”) Act Provider Relief Fund, recognized as a portion of “Other Revenues” in
the consolidated statement of activities as of June 30, 2020, to be retained and used only for
reimbursement of eligible expenses and lost revenues in accordance with laws, regulations and
guidance issued by the U.S. Department of Health and Human Services.
Recent Accounting Pronouncements
During fiscal 2016, the FASB issued ASU 2016-02, Leases, along with subsequently issued
supplemental ASUs (collectively, ASC 842). This guidance requires lessees to recognize a lease
liability and a ROU asset on a discounted basis, for substantially all leases, as well as provide
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
15
additional disclosures regarding leasing arrangements (refer to footnote 8). The university
adopted this standard as of July 1, 2020, the effective date, and applied the guidance to each
lease that existed as of that date. As a result, prior comparative periods were not adjusted.
The university elected the package of practical expedients under the new standard, which
permits entities to not reassess lease classification, lease identification or initial direct costs for
existing or expired leases prior to the effective date. The university capitalized ROU assets and
lease liabilities of $104,504 and $117,989, respectively, on the balance sheet at July 1, 2020
with the excess of lease liabilities over ROU assets charged to net assets without donor
restrictions. Upon adoption, there was no material change to the consolidated net assets,
statements of activities, or cash flows.
ASU2016-13, Measurement of Credit Losses on Financial Instruments, was issued by the
FASB during June 2016 and was adopted by the university during fiscal year 2021. ASU 2016-
13 requires financial assets measured at amortized cost to be presented at the net amount
expected to be collected. This is a shift from the previous probable loss model to an expected
loss model which requires an estimate of the future collectability of cash flows. The
amendments in this update broaden the information an entity must consider when developing
its expected credit loss estimate such as past events, historical loss, experience with similar
assets, and current market and economic conditions. There was no significant impact to the
university’s financial statements or footnote disclosures upon adoption.
In August 2018, the FASB issued ASU 2018-13, Changes to the Disclosure Requirements for
Fair Value Measurement, which was adopted by the university as of July 1, 2020 (see footnote
2). The standard removes the requirements to disclose transfers between Level 1 and Level 2
of the fair value hierarchy and the changes in unrealized gains and losses for recurring Level 3
fair value measurements, among other disclosures. The standard modifies other disclosure
requirements regarding transfers into and out of Level 3 of the fair value hierarchy and
investments in entities that calculate net asset value. Finally, the standard adds requirements
for disclosures for information surrounding the unobservable input used to develop Level 3
fair value measurements.
ASU 2020-07, Presentation and Disclosure by Not-for-Profit Entities for Contributed
Nonfinancial Assets, was issued by the FASB in September 2020 in order to address
stakeholders’ concerns regarding lack of transparency in the measurement of contributed
nonfinancial assets as well as the amount of those contributions used in the university’s
programs and other activities. Under this ASU, nonprofit entities should present contributed
nonfinancial assets as a separate line item in the consolidated statement of activities and also
quantitatively disclose the disaggregation of such assets by type. In addition, an entity should
disclose various qualitative information regarding the assets such as valuation techniques, how
the assets were used, restrictions on use, etc. While the ASU adds presentation and disclosure
requirements, it does not change the recognition and measurement requirements for
contributed nonfinancial assets. The ASU is effective for annual periods beginning after June
15, 2021, however, the university has chosen to early adopt this guidance during the current
fiscal year. Contributed nonfinancial assets are not material to the university’s financial
statements and, therefore, line-item presentation and disclosure requirements have been
omitted.
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
16
2. Fair Value
The university follows FASB guidance for fair value measurements. This guidance defines fair
value, establishes a framework for measuring fair value under generally accepted accounting
principles and enhances disclosures about fair value measurements. Fair value is defined as
the exchange price that would be received for an asset or paid to transfer a liability (an exit
price) in the principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date.
The FASB guidance establishes a hierarchy of valuation inputs based on the extent to which
the inputs are observable in the marketplace. Observable inputs reflect market data obtained
from sources independent of the university and unobservable inputs reflect the university’s
assumptions about how market participants would value an asset or liability based on the best
information available. Valuation techniques used to measure fair value maximize the use of
observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is
based on three levels of inputs, of which the first two are considered observable and the last
unobservable, that may be used to measure fair value.
The following describes the hierarchy of inputs used to measure fair value and the primary
valuation methodologies used by the university for financial instruments measured at fair
value on a recurring basis. The three levels of inputs are as follows:
Level 1 Quoted prices in active markets for identical assets or liabilities, such as exchange
traded equity securities.
Level 2 Inputs other than Level 1 that are observable, either directly or indirectly, 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 same term of the assets or liabilities. Examples of
Level 2 include U.S. Treasury securities and corporate bonds.
Level 3 Unobservable inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest
level of input that is significant to the fair value measurement.
The following table presents the financial instruments carried at fair value as of June 30, 2021,
on the consolidated statements of financial position by caption and by the valuation hierarchy
defined above. Amounts measured at net asset value are reported using the practical
expedient under ASC topic 820 and excluded from the fair value hierarchy. Included as Level
2 fixed income are U.S. Treasury securities of approximately $774,142.
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
17
Quoted Significant
Prices in Other Significant
Active Observable Unobservable Measured Balance
Markets Inputs Inputs at Net Asset June 30,
(Level 1) (Level 2) (Level 3) Value 2021
Investments
Public equity
Do m e stic 290 , 6 1 1$ $ $ 1,625,359$ 1,915,97 0$
International 61,800 2,948,440 3,010,240
Fixed income - Nominal 1,07 6,289 1,07 6,289
Absolute return 1,027 ,832 1,027 ,832
Private capital 254,301 7 ,7 41,398 7 ,995,699
Short-term investments 348,033 11,7 56 359,7 89
Real assets 749 715,436 716,185
Other investments 210,017 7 49 68,022 36,946 315,7 34
Total investments at
fair value 910,461 1,088,7 94 323,07 2 14,095,411 16,417 ,7 38
Investments not
reported at fair value
Affiliates - Equity basis 40,87 6
Accrued investment income 2,538
Total investments 91 0,461$ 1 ,088,7 94$ 323,072$ 14,095,41 1$ 16,461,152$
The following table presents the financial instruments carried at fair value as of June 30,
2020, on the consolidated statements of financial position by caption and by the valuation
hierarchy defined above. Amounts measured at net asset value are reported using the practical
expedient under ASC topic 820 and excluded from the fair value hierarchy. Included as Level
2 fixed income are U.S. Treasury securities of approximately $656,460.
Quoted Significant
Prices in Other Significant
Active Observable Unobservable Measured Balance
Markets Inputs Inputs at Net Asset June 30,
(Level 1) (Level 2) (Level 3) Value 2020
Investments
Public equity
Domestic 134,100$ 27$ $ 938,834$ 1,07 2,961$
International 96,17 3 2,098,450 2,194,623
Fixed income - Nominal 820,224 820,224
Absolute return 1,015,840 1,015,840
Private capital 158,996 4,224,57 9 4,383,57 5
Short-term investments 137 ,437 3,824 141,261
Real assets 2,128 534,686 536,814
Other investments 314,57 4 (650) 69,7 24 31,241 414,889
Total investments at
fair v alue 682,284 823,425 230,848 8,843,630 10,580,187
Investments not
reported at fair value
Affiliates - Equity basis 33,561
Accrued investment income 2,77 8
Total investments 682,284$ 823,425$ 230,848$ 8,843,630$ 10,616,526$
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
18
Beneficial interests in perpetual trusts held by third parties are valued at the present value of
the future distributions expected to be received over the term of the agreement.
Following is a description of the university’s valuation methodologies for assets and liabilities
measured at fair value. The methods described below may produce a fair value calculation that
may not be indicative of net realizable value or reflective of future fair values. Furthermore,
while the university believes its valuation methods are appropriate and consistent with other
market participants, the use of different methodologies or assumptions to determine the fair
value of certain financial instruments could result in a different estimate of fair value at the
reporting date.
Fair value for Level 1 is based upon quoted prices in active markets that the university has the
ability to access for identical assets and liabilities. Market price data is generally obtained
from exchange or dealer markets. The university does not adjust the quoted price for such
assets and liabilities.
Fair value for Level 2 is based on quoted prices for similar instruments in active markets,
quoted prices for identical or similar instruments in markets that are not active and model-
based valuation techniques for which all significant assumptions are observable in the market
or can be corroborated by observable market data for substantially the full term of the assets.
Inputs are obtained from various sources including market participants, dealers, and brokers.
Fair value for Level 3 is based on valuation techniques that use significant inputs that are
unobservable as they trade infrequently or not at all. Trustees determine the valuation for
beneficial interest trusts and split-interest agreements. Strategic real estate is valued at
historical cost and is evaluated annually for impairment.
Investments measured at net asset value primarily consist of the university’s ownership in
alternative investments (principally limited partnership interests in absolute return, private
capital investments, real assets, and other similar funds). The fair values (Net Asset Value
(“NAV”) or partner’s capital per share) of the securities held by limited partnerships that do
not have readily determinable fair values are determined by the respective general partners
and are based on appraisals or other estimates that require varying degrees of judgment. If no
public market exists for the investments, the fair value is determined by the general partners
taking into consideration significant unobservable inputs including, among other things, the
cost of the investments, prices of recent significant placements of investments of the same
issuer, and subsequent developments concerning the companies to which the investments
relate. Excluding the cost of the investment, significant increases or decreases in the
remainder of those inputs could result in a significantly higher or lower fair value
measurement. The university has performed due diligence with respect to these investments
to ensure NAV or partner’s capital per share is an appropriate measure of fair value as of
June 30. NAVs are calculated by the investees in a manner consistent with generally accepted
accounting principles for investment companies.
Significant terms of agreements with external investment managers or funds by major classes
of investments are provided in the following tables.
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
19
The following table summarizes the significant terms of the agreements with external
investment managers or funds by major category at June 30, 2021:
Unfunded Remaining Redemption Redemption
Investments Commitment (1) Life (2) Terms Restrictions
Public equities $ No Limit Daily to Lock-up provision
annually, with periods range from 0 to
same day-180 day 5 years. Certain
notice investments include side
pockets subject to
external manager
discretion.
Fixed income No Limit Daily, 1-2 No lock-up provision
and short-term days notice periods
investments
Absolute return No Limit Lock-up provision
periods range from 0 to
3 years. Certain
investments include side
pockets subject to
external manager
discretion.
Private capital 1,691,267 0 - 28 Years Not eligible Not redeemable
for redemption
Real assets 337,723 0 - 11 Years Not eligible Not redeemable
for redemption
Total 2,028,990$
Quarterly to
semi-annually
with 45 – 180
days notice
Footnote (1): Includes $21 million nonbinding unfunded commitments. The university is
obligated under certain agreements to fund capital calls periodically up to specified
commitment amounts. Such commitments are expected to be called over the life of the
agreement and are not expected to be fully funded in the subsequent year.
Footnote (2): For private equities and real assets, assuming all extension options under the
agreements are exercised and approved except for funds with no fund life end date or
unlimited extension.
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
20
The following table summarizes the significant terms of the agreements with external
investment managers or funds by major category at June 30, 2020:
Unfunded Remaining Redemption Redemption
Investments Commitment (1) Life (2) Terms Restrictions
Public equities 1,805$ 2 Years - No Limit Daily to Lock-up provision
annually, with periods range from 0 to
1 day-1 year 5 years. Certain
notice investments include side
pockets subject to
external manager
discretion.
Fixed income No Limit Daily, 1-2 No lock-up provision
and short-term days notice periods
investments
Absolute return 1 Year - No Limit Lock-up provision
periods range from 0 to
3 years. Certain
investments include side
pockets subject to
external manager
discretion.
Private capital 1,700,420 0 - 29 Years Not eligible Not redeemable
for redemption
Real assets 335,813 0 - 11 Years Not eligible Not redeemable
for redemption
Total 2,038,038$
Quarterly to
semi-annually
with 45 – 180
days notice
Footnote (1): Includes $28 million nonbinding unfunded commitments. The university is
obligated under certain agreements to fund capital calls periodically up to specified
commitment amounts. Such commitments are expected to be called over the life of the
agreement and are not expected to be fully funded in the subsequent year.
Footnote (2): For private equities and real assets, assuming all extension options under the
agreements are exercised and approved except for funds with no fund life end date or
unlimited extension.
Public Equities
Public equities include investments in publicly–traded securities in domestic, developed
international, emerging, and frontier markets. The majority of assets are held in pooled
comingled funds which are valued at NAV as described above. Investments held in custody
accounts are valued at quoted market price in accordance with Level 1 and Level 2 valuation
techniques as described above.
Fixed Income and Short-Term Investments
Investments in this class include domestic and international nominal fixed income
instruments. Fixed income investments are held principally as liquid vehicles for operating
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
21
needs and as a source of diversification. A significant component of non-endowment fixed
income investments is held in highly liquid funds. The valuation of these funds is determined
using a market approach in accordance with the techniques for Level 2 as described above.
Absolute Return
Investments in absolute return are typically held in commingled funds that employ various
uncorrelated investment strategies including but not limited to equity hedged and event
driven. These funds are valued at net asset value as described above.
Private Capital
Investments in private capital strategies are made in targeted categories including growth
equity, venture capital, distressed credit, and corporate finance. Redemptions of such funds
are not permitted and distributions are received as underlying investments are liquidated.
These funds are primarily valued at net asset value as described above.
Real Assets
Investments in the real assets class are made in targeted categories. The majority of these
assets are held in non-redeemable fund structures that invest primarily in real estate and
natural resources. These funds are primarily valued at net asset value as described above.
The following tables roll forward the consolidated statement of financial position amounts for
financial instruments classified by the university within Level 3 of the fair value hierarchy
defined above for the years ended June 30, 2021 and 2020.
Net Realized Purchases, Sales T ransfers
Balance and Unrealized and Settlements in/(out) of Balance
June 30, 2020 Gains (Losses) Net Level 3, net June 30, 2021
Investments (by strategy)
Private capital 158,996$ 246,61 1$ (202,365)$ 51,059$ 254,301$
Real assets 2,128 101 (1,480) 7 49
Other investments 69,7 24 9,928 2,519 (14,149) 68,022
Total 230,848$ 256,640$ (201,326)$ 36,910$ 323,07 2$
Net Realized Purchases, Sales T ransfers
Balance and Unrealized and Settlements in/(out) of Balance
June 30, 2019 Gains (Losses) Net Level 3, net June 30, 2020
Investments (by strategy)
Private capital 130,923$ (1 ,296)$ 31,425$ (2,056)$ 158,996$
Real assets 110,600 363 (108,835) 2,128
Other investments 70,183 643 102 (1,204) 69,724
Total 311,7 06$ (290)$ (7 7 ,308)$ (3,260)$ 230,848$
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
22
The amount of realized and unrealized gains (losses) for Level 3 investments for the period
included in net assets attributable to the change in unrealized gains or losses relating to assets
still held at June 30, 2021 and 2020 respectively, reported as investment returns net of
endowment spending in the consolidated statements of activities by type of investment is:
2021 2020
Private capital 43,818$ (1 29)$
Real assets (823) 3,97 3
Other investments 8,023 (341)
Total 51,01 8$ 3,503$
3. Investment Return
The following summarizes the return on investments. Investment income represents earnings
on non-endowed funds. Return on investments is presented net of investment management
fees. Certain investments, including some but not all of those in the absolute return and
private capital categories, report investment returns net of fees.
2021 2020
Investment income 11,117$ 21 ,1 7 2$
Pooled endowment dividends and interest income,
net of investment management fees (71,542) (59,117)
Pooled endowment distribution in excess of income 437 ,321 420,989
Pooled endowment spending distribution 365,7 7 9 361,87 2
Investment gains, net 6,17 7 ,960 899,464
Gains distributed as endowment distribution (437 ,321) (420,989)
Investment gains net of endowment
spending distribution 5,740,639 478,475
Net investment return 6,117 ,535$ 861,51 9$
4. Endowment
The state of Missouri has adopted legislation that incorporates the provisions outlined in the
Uniform Prudent Management of Institutional Funds Act (UPMIFA). The statutory guidelines
contained in this legislation relate to the prudent management, investment, and expenditure of
donor-restricted endowment funds held by charitable organizations. Additionally, the
legislation specifies factors for fiduciaries to consider prior to making a decision to appropriate
from or accumulate into an institution’s endowment funds.
At June 30, 2021, the university’s endowment consists of 3,785 individual donor-restricted
endowment funds and Board of Trustees or management-designated endowment funds for a
variety of purposes plus split-interest agreements and other net assets where the assets have
been designated for endowment. The net assets associated with endowment funds, including
funds designated by the Board of Trustees or management to function as endowments, are
classified and reported based on the existence or absence of donor-imposed restrictions.
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
23
The university has interpreted Missouri UPMIFA as requiring the preservation of the original
gift as of the gift date of the donor-restricted endowment funds absent explicit donor
stipulations to the contrary. As a result of this interpretation, the university classifies as net
assets with donor restrictions, (a) the original value of gifts donated to the donor-restricted
endowment, (b) the original value of subsequent gifts to the donor-restricted endowment, (c)
accumulations to the donor-restricted endowment made in accordance with the direction of
the applicable donor gift instrument at the time the accumulation is added to the fund. The
remaining portion of donor-restricted endowment funds that are not restricted in perpetuity
are considered restricted until the donor-imposed stipulations attached to those amounts have
been met by actions of the university and/or passage of time and appropriated for expenditure
in a manner consistent with the standard of prudence prescribed by UPMIFA.
Endowment net asset composition, which includes the effect of changes in endowment
investments as well as other endowment-related assets and liabilities, by type of fund as of
June 30, 2021:
Without Donor With Donor
Restriction Restriction Total
Donor-restricted endowment funds $ 8,268,427$ 8,268,427$
Board-designated endowment funds 4,753,833 645,821 5,399,654
Total endowment funds 4,753,833$ 8,914,248$ 13,668,081$
Changes in endowment net assets for the year ended June 30, 2021:
Without Donor With Donor
Restriction Restriction Total
Endowment net assets, beginning of year 3,085,820$ 5,403,474$ 8,489,294$
Investment return
Net investment income (29,528) (40,961) (70,489)
Net appreciation (realized and
unrealized) 2,468,932 3,714,753 6,183,685
Total investment return 2,439,404 3,673,792 6,113,196
Gifts 109 78,578 78,687
Appropriation of endowment assets for
expenditure (150,971) (214,808) (365,779)
Net transfers of funds 29,884 2,797 32,681
Allocation of endowment return to treasurer's
investment pool (653,549) (29,804) (683,353)
Other activity 3,136 219 3,355
Endowment net assets, end of year 4,753,833$ 8,914,248$ 13,668,081$
Of the amount classified as endowment net assets with donor restrictions, $ 5,540,335
represents the portion of endowment funds subject to time restrictions under Missouri’s
enacted version of UPMIFA.
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
24
Endowment net asset composition by type of fund as of June 30, 2020:
Without Donor With Donor
Restriction Restriction Total
Donor-restricted endowment funds $ 5,103,500$ 5,103,500$
Board-designated endowment funds 3,085,820 299,97 4 3,385,7 94
Total endowment funds 3,085,820$ 5 ,403,47 4$ 8,489,294$
Changes in endowment net assets for the year ended June 30, 2020:
Without Donor With Donor
Restriction Restriction Total
Endowment net assets, beginning of yea
r
2,845,594$ 5,163,331$ 8,008,925$
Investment return
Net investment income (24,515) (33,356) (57,871)
Net appreciation (realized and
unrealized) 446,000 438,638 884,638
Total investment return 421,485 405,282 826,767
Gifts 83 79,937 80,020
Appropriation of endowment assets for
expenditure (150,064) (211,808) (361,872)
Net transfers of funds 15,834 (2,815) 13,019
Allocation of endowment return to treasurer's
investment pool (51,171) (28,772) (79,943)
Other activit
y
4,059 (1,681) 2,378
Endowment net assets, end of year 3,085,820$ 5,403,474$ 8,489,294$
Of the amount classified as endowment net assets with donor restrictions, $2,686,050
represents the portion of endowment funds subject to time restrictions under Missouri’s
enacted version of UPMIFA.
Endowment by Purpose
The purpose of endowment funds as of June 30, 2021:
Without Donor With Donor
Restriction Restriction T otal
Restricted for general activities 3,47 9,522$ 6,052,357$ 9,531,87 9$
Restricted for student assistance 687 ,806 1,57 1,424 2,259,230
Restricted for buildings and renovations 586,505 1,244,7 25 1,831,230
Life income 45,7 42 45,7 42
Total endowment net assets 4,7 53,833$ 8,914,248$ 13,668,081$
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
25
The purpose of endowment funds as of June 30, 2020:
Without Donor With Donor
Restriction Restriction Total
Restricted for general activities 2,321,054$ 3,621,441$ 5,942,495$
Restricted for student assistance 407,464 1,013,383 1,420,847
Restricted for buildings and renovations 357,278 743,597 1,100,875
Life income 24 25,053 25,077
Total endowment net assets 3,085,820$ 5,403,474$ 8,489,294$
Endowment Funds with Deficits
As determined under UPMIFA, the fair value of assets associated with individual donor-
restricted endowment funds may fall below the value of the initial and subsequent donor gift
amounts (i.e., deficit). When donor endowment deficits exist, they remain classified as net
assets with donor restrictions. Deficits of this nature were immaterial as of June 30, 2021 and
2020. The deficits resulted largely from unfavorable market fluctuations.
Return Objectives and Risk Parameters
The university has adopted endowment investment and spending policies that attempt to
provide a predictable stream of funding to programs supported by its endowment while
seeking to maintain the purchasing power of endowment assets. Under this policy, the return
objective for the endowment assets, measured over a full market cycle, shall be to meet or
exceed the return of its policy benchmark, based on the endowment’s target allocation applied
to the appropriate individual benchmarks. The university expects its endowment funds, over
time, to provide an average rate of return that will exceed the sum of inflation and the
spending rate. Actual returns in any given year may vary from this amount.
Strategies Employed for Achieving Investment Objectives
To achieve its long-term rate of return objectives, the university relies on a total return strategy
in which investment returns are achieved through both capital appreciation (realized and
unrealized gains) and current yield (interest and dividends). The university targets a
diversified global asset allocation that places greater emphasis on equity-based and alternative
investments to achieve its long-term objectives within prudent risk constraints.
Endowment Spending Allocation and Relationship of Spending Policy to
Investment Objectives
The university has an endowment spending distribution policy designed to stabilize annual
spending levels and preserve the real value of the endowment over time. Under this policy,
earnings of the pooled endowment are distributed at a rate set annually to the schools and
other units of the university. Consideration is given to the provisions of UPMIFA in
determining the amount to appropriate. This spending rate must fall within the range of 3.0%
to 5.5% of the five-year average market value of a unit of the pooled endowment. For 2021, the
spending rate from the pooled endowment was 4.4% of the beginning market value of the
pooled endowment. The spending rate is funded from current earnings and, in years when
current earnings are insufficient, from previously accumulated earnings of the endowment.
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
26
The university’s endowment assets at June 30 are as follows:
2021 2020
Pooled endowment and other funds 15,310,698$ 9,547,820$
Life income trusts and pools 88,583 76,091
Externally administered trusts 37,338 30,804
Separately invested endowment 9,674 8,577
Total 15,446,293 9,663,292
Less: Operating funds invested in pool (1,780,908) (1,148,092)
Net endowment assets 13,665,385$ 8,515,200$
The amounts above include term endowments of $150,012 and $102,870 as of June 30, 2021
and 2020, respectively.
5. Liquidity and Availability of Resources
At June 30, 2021 and 2020, the university’s financial assets available for general expenditures
within one year of the balance sheet date are as follows:
2021 2020
Total assets at year end 21,212,7 47$ 1 5,103,569$
Less:
Accounts and notes receivable due in more than one year (96,258) (104,244)
Pledges receivable unavailable for general expenditure (307 ,854) (332,861)
Donor-restricted endowment funds (8,283,442) (5,135,123)
Board-designated endowment funds (5,381,943) (3,380,07 7 )
Other long-term investments (2,089,396) (1,590,7 48)
Right-of-use assets (88,698)
Othe r asse ts (32 7 ,3 7 0 ) (27 3,47 3 )
Fixed assets (3,017 ,355) (2,902,823)
Total financial assets available within one year
1,620,431$ 1 ,384,220$
The university’s endowment funds consist of donor-restricted and board-designated
endowment funds. As described in Note 4, the university has an endowment spending
distribution policy with a spending rate range of 3.0% to 5.5% of the five-year average market
value of a unit of the pooled endowment. For fiscal year 2022, the Board of Trustees approved
a spending rate which will generate an endowment payout equaling or exceeding that of fiscal
year 2021, including an allocation to the treasurer’s investment pool, that will be available for
operations during fiscal year 2022.
In addition to these available financial assets, the university’s annual expenditures will be
primarily funded by current year operating revenues including tuition, patient services
income, and sponsored research income. As part of the university’s liquidity management, a
policy is in place to structure its financial assets to be available as general expenditures,
liabilities, and other obligations come due. The university also invests cash in excess of daily
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
27
requirements in short-term investments. Furthermore, although the university does not
intend to spend from its board-designated endowment funds other than amounts appropriated
for general expenditure as part of its annual budget approval and appropriation process,
amounts from its board-designated endowment that are free from investment restrictions
could be made available if necessary. Other long-term investments are primarily composed of
amounts designated by the university as reserves. Such investments are without donor
restriction and could be drawn upon in the event of extreme stress. In the event of an
unanticipated liquidity need, the university could also draw upon $250,000 of available lines
of credit at June 30, 2021.
6. Accounts and Notes Receivable
Accounts and notes receivable at June 30 were as follows:
2021 2020
Patient services 489,7 26$ 418,149$
Student and parent loans
Parent loan fund 43,037 44,928
Gov ernment student lo ans 1 5 ,65 6 20 ,042
Institutional student loans 19,127 21,987
Due from affiliates 1 55 ,096 1 57 ,27 6
Sponsored project receivables 98,222 7 1,590
Other 145,830 98,67 3
966,694 832,645
Less: Allowance for contractual adjustments
and doubtful accounts (319,698) (280,053)
Total 646,996$ 5 52,592$
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
28
7. Notes and Bonds Payable
Outstanding principal on bonds and notes payable at June 30, 2021 and 2020 consists of the
following:
Rates at
June 30, 2021 Maturity 2021 2020
Missouri Health and Educational Facilities Authority
$142,400 of 1996A, B, C and D Series
Variable Rate Bonds, due in full 0.11% - 0.13% September 1, 2030 $ 132,400$
$88,000 of 2000B and C Series
Variable Rate Bonds, due in full 0.01% - 0.03% March 1, 2040 88,000 88,000
$25,135 of 2003B Series
Variable Rate Bonds, due in full 0.02% February 15, 2033 25,135 25,135
$77,495 of 2011C Series Revenue Bonds due serially
from November 15, 2012 to November 15, 2037 .75% - 5.06% November 15, 2037 49,595 51,890
$200,785 of 2012A Series Revenue Bonds due serially
from February 15, 2023 to February 15, 2047 2.39% - 3.69% February 15, 2047 200,785 200,785
$150,000 of 2014A Series Revenue Bonds due in full 4.07% October 15, 2044 150,000 150,000
$402,920 of 2016A Series Revenue Bonds due in full
January 15, 2036 ($109 ,300) and January 15, 2046 January 15, 2036
($293,620) 3.47% - 3.65% and 2046 402,920 402,920
$272,750 of 2016 B Series Revenue Bonds due in full 3.09% September 15, 2051 272,750 272,750
$375,000 of 2017 A Series Revenue Bonds, due in full 3.65% August 15, 2057 375,000 375,000
$450,000 of 2020 A Series Revenue Bonds, due in full 3.23% May 15, 2050 450,000 450,000
Other Bonds:
$131,435 of 2015A Series Taxable Bonds due in full 3.79% October 15, 2055 131,435 131,435
Other notes payable 254,953 145,783
Total outstanding notes and bonds payable 2,400,573 2,426,098
Unamortized original issue premiums/discounts and
cost of issuance, net (10,195) (10,756)
Total 2,390,378$ 2,415,342$
Bonds payable are redeemable at the option of the university at various times from 2021
through 2057. The university is required to maintain certain ratios and comply with other
restrictive covenants principally that the university maintain a ratio of expendable financial
resources to debt of at least 1.25 times. The university is in compliance with this covenant.
During 2021 and 2020, interest, accretion of debt discount and related fees incurred on notes
and bonds payable totaled $75,531 and $72,003, respectively.
Maturities on notes and bonds payable for the next five fiscal years are as follows:
2022 76,658$
2023 58,127
2024 2,57 7
2025 2,627
2026 147,434
Thereafter 2,113,150
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
29
During fiscal 2021, the university borrowed $132,400 under a five year term note, the
proceeds of which were used to retire the balance of the 1996 MOHEFA bonds. During fiscal
2020, the university issued $450,000 of Series 2020A Missouri Health and Educational
Facilities Authority (MOHEFA) bonds. The bonds bear a fixed rate of 3.23% and will mature
on May 15, 2050. The proceeds of these bonds will be used to finance various construction
projects.
The university has other lines of credit, which generally expire annually, aggregating
$370,220, of which $257,695 is available at June 30, 2021. The university expects that these
lines of credit will be renewed but can make no assurances.
8. Operating Leases
The university and its consolidated affiliates primarily lease laboratories, office space, and
medical offices for educational, research, and patient care purposes under operating leases
expiring through 2031. At June 30, 2021, the weighted average remaining lease term was 6.5
years and the weighted average discount rate was 3.05%. Total lease expense of $28,188 is
included in supplies, services, and other on the consolidated statement of activities as of June
30, 2021.
The undiscounted cash flows due by fiscal year related to significant non-cancelable operating
leases with initial terms in excess of one year as of June 30, 2021, along with a reconciliation
to the discounted amount recorded as of June 30, 2021 were as follows:
2022 23,213$
2023 20,549
2024 15,364
2025 12,180
2026 11,586
Thereafter 27,108
Total minimum lease payments 110,000$
Less: Imputed interest (10,334)
Total lease liabilities 99,666$
9. Derivative and Other Financial Instruments
The university utilizes derivative instruments including futures, swaps, and options, to manage
market risk, to provide temporary investment exposure in stocks and bonds, and to manage
currency and interest rate exposures. When directly implementing a derivative strategy, the
university uses a third party manager to execute, settle and manage the positions on a non-
discretionary basis. These contracts are valued at periodic intervals such as daily, monthly,
and quarterly as well as at June 30, with the resulting changes in the values of the contracts
either added to or deducted from the university’s custodial account. Gains or losses from these
derivative instruments are reported as realized and unrealized gains or losses in the
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
30
consolidated statements of activities. Indirect strategies in derivatives held by limited
partnerships and commingled investment trusts in which the university invests pose no off-
balance sheet risk to the university due to the limited liability structure of the investments.
Derivatives are also used to manage operating expenses but are not material to the
consolidated financial statements. No derivative contracts are designated as hedges for
accounting purposes.
10. Functional Expenses
Operating expenses are reported on the consolidated statements of activities in natural
categories. Expenses reported by functional categories include allocations of costs for
operation and maintenance of plant, interest on indebtedness and depreciation expense.
Operation and maintenance of plant and depreciation are allocated to functional categories
largely based on square footage. Interest expense is allocated based on specific identification
of the uses of debt proceeds. Instruction expenses include instruction, departmental research
and patient care costs.
Operating expenses by functional and natural classification for the year ended June 30, 2021
are as follows:
Supplies,
Compensation services and
and benefits other Depreciation Interest Total
Instruction $ 1,489,996 $ 814,548 $ 75,136 $ 18,189 $ 2,397,869
Research 375,891 168,192 54,943 13,278 612,304
Academic Support 176,099 32,063 10,354 218,516
Student Services 43,105 45,323 5,318 2,443 96,189
Institutional Support 124,096 25,399 4,538 799 154,832
Auxiliary Enterprises 19,745 60,265 39,749 26,263 146,022
Other
24,004 11,171 2,078 159 37,412
Total
$ 2,252,936 $ 1,124,898 $ 213,825 $ 71,485 $ 3,663,144
Operating expenses by functional and natural classification for the year ended June 30, 2020
are as follows:
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
31
Supplies,
Compensation services and
and benefits other Depreciation Interest Total
Instruction
$ 1,437,775 $ 772,494 $ 71,378 $ 18,769 $ 2,300,416
Research 349,358 158,325 48,975 13,817 570,475
Academic Support 183,997 32,524 10,652 227,173
Student Services 45,838 45,295 6,125 2,710 99,968
Institutional Support 124,582 58,171 5,362 1,037 189,152
Auxiliary Enterprises 19,624 54,167 35,372 23,058 132,221
Other 22,770 15,459 2,237 157 40,623
Total
$ 2,183,944 $ 1,103,911 $ 201,973 $ 70,200 $ 3,560,028
11. Commitments and Contingencies
At June 30, 2021 and 2020, the university had outstanding commitments under certain
construction contracts in the amount of $262,844 and $109,955, respectively.
The university maintains a self-insurance program for professional liability at the Medical
School and a separate program for Washington University Physicians in Illinois. This program
is supplemented with commercial excess insurance above the university’s self-insurance
retention. Funding for the program reserves is based on claims made. The assets supporting
the funded reserve are reported as investments in the consolidated statements of financial
position. The university also accrues for an estimate of claims incurred but not reported.
Reserves, funded and unfunded, are based upon actuarial studies and represent undiscounted
estimated claims and related costs. The total self-insurance reserves at June 30, 2021 and
2020, respectively, were $95,793 and $91,493. Self-insurance reserves are necessarily
estimates based on historical loss experience and other factors, and while management
believes that the reserves are adequate, the ultimate liabilities may be in excess of or less than
the amounts provided.
The university is a party, along with other universities, to an agreement with a reciprocal risk
retention group for purposes of obtaining general liability and auto liability insurance coverage
in excess of a pre-determined retention level. Under the terms of these agreements, the
university can be called upon to make additional capital contributions. In management’s view,
any such capital calls would not be material.
The university is involved in various legal proceedings arising in the normal course of
operations. Although the outcome of any legal proceeding cannot be predicted with certainty,
it is the opinion of the university’s management that the outcome of these proceedings
individually or in the aggregate, will not have a material adverse effect on the business,
consolidated statements of activities, financial position or liquidity of the university.
Washington University
Notes to Consolidated Financial Statements
June 30, 2021 and 2020
(All amounts in thousands of dollars)
32
12. Retirement Plan
The university provides its faculty and staff with a defined contribution (403(b)) retirement
savings plan in which employee contributions, university contributions and investment
earnings accumulate to assist employees at retirement. Participating employees own
individual retirement accounts through the Teachers Insurance and Annuity Association
(TIAA) and College Retirement Equity Fund (CREF). Under this arrangement, the university
and plan participants make monthly contributions to TIAA-CREF. The amount of
contribution made by the university is based on employee’s hire date, age and/or base salary.
Vesting provisions are full and immediate. The university’s share of the cost of these benefits
in 2021 and 2020 was $71,490 and $95,214, respectively. During the period July 1, 2020
through October 31, 2020, employer contributions to the plan were temporarily suspended in
response to the COVID-19 pandemic. The university provides dependent tuition benefits to
qualified retirees. The liability under this plan was $18,917 and $22,027 as of June 30, 2021
and 2020, respectively.
13. Agreements with Affiliated Hospitals
The university has affiliation agreements with Barnes Jewish Hospital (BJH), St. Louis
Children’s Hospital (SLCH), and Barnes Jewish West County Hospital (BJWCH), collectively
the Hospitals, which expire December 31, 2027, but may be canceled upon a one-year written
notice by either party. These agreements relate to various operating activities of the Hospitals
including Orthopedic Center (OC) in Chesterfield, the Siteman Cancer Center – South County,
Center for Advanced Medicine (CAM) in South County, BJH Psychiatric Support Center (PSC),
and the Children’s Specialty Care Center in Town and Country.
Under the terms of the affiliation agreement, the university trains and supervises medical
residents and interns and manages certain clinical and research activities of the Hospitals.
BJH, SLCH, and BJWCH are responsible for the hospitals and health care delivery facilities
and compensate the university for services provided by the university through a fixed annual
base payment (adjusted annually for inflation) plus an additional variable payment based on
the combined Hospitals’ net operating income. In addition, the university derives revenue
from patient services provided at Barnes-Jewish at St. Peters Hospital under an agreement
with that hospital and BJH. Payments to the university under affiliation agreements are
reported as affiliated hospital revenue on the consolidated statements of activities (see
footnote 1). During 2013, BJH agreed to fund on a cost-reimbursement basis over a period of
years, certain expenditures by the university. Payments of $17,923 and $21,507 were received
or accrued as gifts on the consolidated statements of activities under the agreement during
2021 and 2020, respectively.
14. Subsequent Events
The university has performed an evaluation of subsequent events through October 4, 2021,
which is the date the consolidated financial statements were issued.
