In July, Forbes magazine listed the University as the 19th richest school in the country, with an endowment just surpassing $5 billion — good for the fifth richest public school in the nation.

Handling the annual budget, managing the endowment, and making sure payments are actually dispersed proves an extensive operation.

The approved budget for the current fiscal year — which began July 1 — calls for $2.8 billion in spending — a number higher than the GDP of more than 30 countries. And, though cuts from state appropriations in September lessened this year's total revenues, the budget continues to grow each year.

UVA Budget: 2014-2015 | Create Infographics

Where It Comes From

Operating budget revenues are broken down into three categories: the Medical Center, the Academic Division and the College at Wise. Wise accounts for less than 2 percent of revenues. The rest are almost squarely divided between the Academic Division and the Medical Center.

The bulk of the University income made through the Medical Center comes from patient revenues, which accounted for about 45.2 percent of the total operating budget this fiscal year. Tuition and fees come in second at 19.2 percent of revenues.

The Academic Operating Budget receives $1.47 billion across seven categories, primarily coming from student tuition and fees (36.4 percent). To support increased undergraduate enrollment in the class of 2018, the budget includes an increase in $6.6 million from tuition revenues and $1.1 million of support from the Virginia General Assembly as compared to last year's figures.

“When you look at the Academic Division, the 11 schools and all the support operations, then tuition would supply the largest of any other single revenue source,” said Colette Sheehy, vice president for management and budget.

Other significant sources of revenue for the Academic Operating Budget include sponsored programs, at 19.3 percent, and University sales and services, an umbrella category which contributes 12.5 percent.

State appropriations to the University make up 10.3 percent of the Academic Operating Budget following the $8.1 million reduction implemented for fiscal year 2015. In the past fiscal year, the University received $9,518 per in-state student — significantly less than the University of North Carolina, which received $22,131 per student from its state government, and the University of Michigan, which received $13,887 per in-state student.

“It really goes to the state’s policy and approach to funding higher education,” Sheehy said. “Certainly in North Carolina, they fund higher education better than they do in Virginia.”

The Endowment

One major source of annual revenue for the University is the endowment, which contributed 10.7 percent of the Academic Operating Budget this fiscal year. The endowment, which is controlled by the University of Virginia Investment Management Company, saw a 19 percent return on its long-term investments for fiscal year 2014, exceeding the 13.4 percent benchmark set last fiscal year.

 "Our short and long-term performance compares favorably versus our policy benchmark."

“The 19 percent return for the fiscal year represents participation in the equity market rally with diversifying positions in credit, real assets, fixed income and cash,” said Lawrence Kochard, chief executive officer and chief investment officer. “Our short and long-term performance compares favorably versus our policy benchmark.”

The portfolio consists of two pools, the Short Term Pool and the Long Term Pool. The Short Term Pool remains highly liquid — meaning it can be easily converted to cash — in the form of easily sold stocks. Ten percent of the revenue from the Short Term Pool goes directly to University foundations such as the Alumni Association, the Jefferson Scholars Foundation and the Rare Book School.

The Long Term Pool is more diverse, and is comprised of equity, real estate and fixed income. The funding for the Long Term Pool comes primarily from donations and the long-term operating reserve, and returns on investment are allocated to University-related foundations, long-term operating reserves and back into the endowment.

The Board of Visitors calculates the portion of the endowment revenue allocated to the University budget each year using a set formula, which is designed to keep the percentage of revenue contributed between four and six percent. This calculation is based on the market value of the endowment from the previous year. UVIMCO is not directly involved with the budget planning.

“The endowment has performed very well the last few years, so the distribution percentage is dropping lower and lower in that range of 4 to 6 percent,” Sheehy said. “If it goes below 4 percent, we’d ask the board to consider some kind of adjustment that would put it back within that range. ... If it’s over 6 percent, the endowment is distributing too much.”

Planning the Budget

Planning the University’s budget is a multi-step process. In the fall of the year prior, the Budget Office reviews a set of “assumptions” for the coming fiscal year with the Board, which include compensation for the next year and the cost of fringe benefits.

In the coming fiscal year, the University will transition out of its current budgeting model, known as incremental budgeting, in favor of an activity-based budgeting model. This will allow the University to allocate funds to different schools based on the tuition revenue they bring based on student course enrollment — meaning if an Engineering student enrolls in a College course, for instance, his tuition dollars will be split accordingly.

"By the time you get to the Board approving the final budget, they’ve pretty much approved or looked at all of the biggest pieces of the budget."

In addition to collecting tuition revenues, schools also receive funding from gifts and endowments.

“The process is really a bottom-up process, where the schools prepare their budgets, send them back into the central budget office where we put everything together, and the Board approves it at the end of the day,” Sheehy said.

While the budget is being formulated, the Board considers information from the state about appropriations and approves tuition and fee rates for students.

“By the time you get to the Board approving the final budget, they’ve pretty much approved or looked at all of the biggest pieces of the budget,” Sheehy said.

University President Teresa Sullivan is consulted throughout the planning and approval process as well.

“She influences the priorities that are funded above the base budget, [such as] the new things that are being done,” Sheehy said.

Changing the budget model will not be the only adjustment in the upcoming year.

“We are now trying to do multi-year financial planning, which we’ve never done before,” Sheehy said.

Where It All Goes

Of the total operating budget, the Academic Division receives $1.5 billion, the Medical Center $1.3 billion and the College at Wise at $41.5 million.

Of the Academic Operating Budget, the most money is put toward instruction, which accounts for 26 percent of funds. The next highest expense is University research programs (20.1 percent). Academic support, such as libraries and academic administration, sits at 10.2 percent, financial aid at 9.5 percent and student services at 3.1 percent.

 “We are committed to meeting 100 percent of the need for all of the students who demonstrate [it]"

The past year saw an increase in faculty salaries after significant pressure. In 2013-14, compensation made up 54.9 percent of the Academic Division budget, but 2014-15 projections jumped to 59.3 percent, or $870 million.

The 9.5 percent of the budget which goes toward financial aid contributes in part to AccessUVa. By eliminating grant-only aid packages for low-income students last year, the University reduced AccessUVa costs per student.

“We are committed to meeting 100 percent of the need for all of the students who demonstrate [it] … both for in-state students and out of state students,” Sheehy said. “So we fund whatever needs to be funded for the students who arrive here and qualify for student aid.”

The Athletics Department budget, meanwhile, is $97.6 million, with 68 percent coming from its sales and services, and 31 percent coming from private funds, including gifts and transfers from the Virginia Athletics Foundation.

“Athletics is basically a self-supporting operation,” Sheehy said. “We’re lucky enough that we’re in a large conference [like] the ACC, and we have really good television contracts that the conference negotiates, and we share in the revenue from those.”

—Anna Pollard contributed to this story