University of Rochester
The 2005-2006 Annual Report


We at the University of Rochester take our roles as financial stewards very seriously. This involves management of the University’s investment portfolio under the close supervision of trustees, implementation of comprehensive compliance and risk management programs, and continued pursuit of lower overhead costs. Our ongoing efforts to contain costs have resulted in significant savings; some examples are included below.

Cogeneration Facility

When fully operational this fall, the 25-megawatt power facility will generate approximately one-half of the electricity used by the Medical Center and River Campus. The facility also will generate power in the event of a failure of the grid. Savings: $3 million annually.

Energy Management

The University has implemented automatic, real-time metering to optimize building systems’ performance, as well as a layered energy-purchasing strategy, which helped the University avoid the shock of energy costs caused by the Gulf hurricanes in 2005. Savings: $250,000 annually.

Employee Health Insurance Benefits

The University has converted to a self-funded employee health benefits program, which includes disease management and employee wellness activities to further help hold costs in the future. By the end of 2006, this program will have saved the University and its employees more than $16 million since its inception in 2002. Savings: $4.7 million annually.

Group Purchasing Program

Recent implementation of group purchasing contracts has resulted in savings in the University’s substantial material and equipment purchases. Savings: $21.5 million annually—$8 million in price reductions and $13.5 million in avoided cost increases.

Minimizing Borrowing Costs

The University seeks to finance its capital projects at the lowest possible cost. Ongoing efforts include monitoring of the interest rate environment and refunding whenever possible. In 2006, the University refunded approximately $111 million in existing bonds. Annual savings will vary but will total $15.5 million over the life of the bonds.

Competitive Bidding Practices

The University regularly evaluates contractual agreements and engages in competitive bidding whenever possible. Recent examples include the following:

  • Reverse-auction contract for office supplies. Savings: $1 million annually.
  • Rebidding contracts for group University Life and Term Life insurance, resulting in a change of insurers. Savings: $1.5 million annually.