Penn reports increases in revenue, University assets during fiscal year 2025

Penn’s total net assets increased by roughly $2.9 billion in the fiscal year of 2025, according to a recently released financial report. 

The Feb. 6 document indicated a $1.5 billion increase in revenue, a $1.3 billion increase in expenditures, and a nearly 400-student increase in enrollment. The theme of this year’s report — “Illuminating the Endowment” — comes as a new federal tax on university endowments is scheduled to take effect in July.

Compensation and benefits accounted for the largest share of spending — at just over nine billion — which the report attributed to wage adjustments and staffing costs. Spending on compensation increased by nearly $621,000 in FY25.

“Penn’s largest expense category reflects one of its greatest assets: the faculty, staff, researchers, and clinicians who propel our mission every day,” a Division of Finance spokesperson wrote to The Daily Pennsylvanian. “The 7% increase in compensation expenses was driven primarily by rising employee healthcare benefit costs and market-based salary adjustments within the Health System – trends we’re seeing across higher education and healthcare more broadly.” 

The spokesperson emphasized proactive steps taken by the University to “moderate expense growth,” which included a “staff hiring freeze and reducing non-compensation expenses by 5% in Spring 2025.”

Penn ended the fiscal year with an $857 million increase in net assets from operations, which Executive Vice President Mark Dingfield wrote inspired the report’s theme. 

“As we move from a year of financial strength into a period that requires ever-more-careful planning and navigation, it has never been more important that the University shed new light on the endowment’s structure as well as our strategy,” the report read. 

The largest source of revenue growth was the University of Pennsylvania Health System, which marked an 8% increase in net patient service revenue “due to higher patient volume and the addition of Penn Medicine Doylestown Health,” according to the Division of Finance spokesperson. 

Other sources of revenue included philanthropy — which had a 10% year-over-year increase — and tuition revenue — which the spokesperson described as “steady.”

Over FY25, federally sponsored research awards declined 4%, a change the spokesperson attributed to federal policy changes. 

Penn set a 5% spending target to “offset both annual spending and inflation.” The report described the target rate as “a balance between current and future needs.”

“Informed by long-term market returns and inflation, this rate aligns with the endowment’s investment strategy and the goal of preserving its purchasing power over time,” the document read.

The report’s focus on the endowment comes in anticipation of a 4% federal excise tax on endowment income set to begin July 1 — a move that University officials previously warned may significantly hinder Penn’s ability to support student financial aid, faculty research, and capital growth.

The 4% tax bracket applies to schools with a student-adjusted endowment between $750,000 and $2 million. Penn’s current endowment tax is derived from the 2017 Tax Cuts and Jobs Act, which only places a 1.4% tax on private universities with endowments of more than $500,000 per student. 

Over FY25, the endowment returned 12.2% and grew to $24.8 billion. According to the spokesperson, the endowment follows a “5% annual spending policy designed to smooth short-term market volatility and preserve long-term purchasing power.”

The report explained that around 90% of individual endowment funds are donor-restricted. This means the use of those funds “must support the purpose designated by the original donor.”

Penn’s balance sheet showed total assets increased to approximately $44.19 billion, while liabilities increased to about $10.28 billion. Net assets grew to around $33.9 billion at the end of FY25, compared to the $30.95 billion the year prior. 

Per the Division of Finance spokesperson, key areas of focus for the University in the future include rising costs, changes to student loan programs, evolving visa policies, federal research funding “uncertainty,” and the upcoming endowment tax. 

Last month, Penn ordered all schools and centers to make a 4% reduction to certain expenditures, citing “uncertainty about how evolving federal policy changes might impact.”

“As we move forward, we do so with a clear understanding of the challenges ahead and with confidence in the foundations that support us,” Dingfield wrote.

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