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-7-

[[underlined]]Chart 2 -- Sources of General Unrestricted Trust Funds Net Income[[/underlined]]

--[[underlined]]Shows growth[[/underlined]] of this income from $1 million loss in FY 1970 to nearly $13 million gain in FY 1978.

--[[underlined]]Investment income[[/underlined]] from Unrestricted Endowment Funds and from current fund investments together provide only $1.4 million, slightly over 10%, of the total in FY 1978, with practically all the rest of the $12.7 million coming from auxiliary activities.

--Substantial decline in this net income has been budgeted for FY 1979, with a slight further decline projected for FY 1980. Principal reasons for the budgeted FY 1979 decline are conservative estimates for the magazine because of rising costs plus decline in revenues if a recession materializes; also reduced income assumed from shops and sales of records and books compared to very favorable results in the past year. Based upon actual results for the first three months of FY 1979, however, these estimates appear very conservative, since general Unrestricted net income for first three months is approximately $500,000 ahead of budget.

[[underlined]]Chart 3 -- Application of General Unrestricted Trust Funds Net Income[[/underlined]]

--[[underlined]]Tax Reserve[[/underlined]]: Reserve for possible tax on magazine advertising revenues and unrelated business activities (held in Special Purpose Funds balances) totaled $1,900,000 at end of FY 1978, with $500,000 projected to be added in each of FY 1979 and FY 1980.

--[[underlined]]General Program Allotments[[/underlined]]: Increased in FY 1979 and FY 1980 by Regents-approved decision to pay with Trust Funds for $1.0 million of programs previously funded with Federal appropriations. Also increased by inflation-bred rise in administrative costs with nearly $1.0 million of this estimated to be non-recoverable from overhead charges in current year.