Operating Budget Overview

Princeton’s nearly $3 billion annual operating budget is viewed through different lenses. On the one hand, it serves as an aid in the understanding of the University’s annual activity. It also reveals different measures of our mission-related work:

  • Organizational Group: Departments in which activity is managed within the University

  • Fund Group: Specific sources of support

  • Account Group: Specific types of revenue or expense

Given their importance in planning and monitoring the University’s activity from these perspectives, the Department, Fund, and Account ChartFields are the main building blocks used to construct the operating budget.

Operating Activity, by Organizational Group (Department)

Viewed from the angle of the units that manage various parts of the University’s operational activity, the operating budget typically breaks into several major organizational groups in the following proportions:

Academic Departments and Programs (50%)

Teaching, departmental research, and the direct costs of operating academic departments and programs are recorded in this group, as well as most graduate student support and externally sponsored research. Below this major group, activity is reported by academic division, as well as the specific department groups under each division.

Administrative and Student Services Departments that Report Directly to the President, Provost, or Executive Vice President (33%)

The President’s Group includes the cost of central financial operations and advancement operations. It also includes operations of the Dean of the College, library, computing, and research administration, as well as other administrative units that report directly to the Provost. The operations and maintenance costs of academic, administrative, and residential space and properties, along with Campus Life services and programs, are some of the larger organizations in the EVP’s area.

Central Financial Aid Departments (10%)

This category includes all undergraduate scholarship expenses, as well as a portion of graduate student fellowships that are managed directly in the Graduate School rather than in academic departments.

Princeton Plasma Physics Laboratory (7%)

PPPL reflects 7% of the total.

Operating Activity, by Fund Group (Fund)

While spendable balances on Prime Financial Information Warehouse (IW) reports are set in Prime Planning only for centrally managed funds, the University also uses EPM Planning to project fiscal year revenue and expense for all three major fund groups. This produces an overall estimate of total operating budget activity.

Institutional Expense and General Funds

Approximately 50% of total operating budget activity is recorded in the two centrally managed funds. Primary funding sources for centrally managed funds include payout from professorships, financial aid, and other centrally managed endowments; tuition revenue; Annual Giving; housing, dining, and other auxiliary income; as well as indirect cost recoveries.

Departmentally Managed Funds

About 35% of each year’s operating activity is recorded in departmentally managed funds, mostly weighted toward expendable gifts for specific purposes, endowments, and designated central allocations. The latter include discretionary allocations to academic departments (Academic Allowances), and research support (the Science Fund, for example). 

Sponsored Research

15% of the total annual operating spend typically occurs in sponsored research funds.

Operating Activity, by Account Group (Revenue Accounts)

The operating budget is frequently analyzed from a third perspective: according to its sources and uses, or revenue and expense categories. Revenue is typically composed as follows:


Net Investment Income

Well over half (55%) of the University’s total operating revenue comes from net investment income, primarily from the 4,400-plus University-managed endowments, as well as from external trust funds.

Tuition Revenue

Tuition provides about 17% of the total: 11% from undergraduate students and 5% from graduate students. Much of this revenue is, of course, offset by scholarships and fellowships.

Grant and Contract Revenue

15% usually comes from federal and non-federal grants and contracts. This includes federally funded student aid.

Housing, Dining, Rental, and Other Forms of Unrestricted Income and Fees

These make up about 9% of the total revenue.

Expendable Gift Revenue

Expendable gifts in the form of unrestricted Annual Giving, as well as those for specific programs and purposes, usually contribute about 4% of total annual revenue. This does not include gifts made to a permanent endowment principal, or gifts tied to capital projects.

Operating Activity, by Account Group (Expense Accounts)

Operating budget expense categories typically divide in the following percentages:



42% of the University’s annual operating expense is compensation- related: 30% in the form of salaries, wages, and other payments to faculty, staff, and students; and 12% as charges to cover employee benefits. 

Student Support

Financial aid and student support are large components of non-personnel expense, with 10% typically spent on undergraduate scholarships, and 12% on graduate fellowships and stipends, as well as student prizes.

Purchased Goods and Non-Personnel Expenses

All other purchased goods, services, and other non-compensation expenses comprise the remaining 36% of total operating expense. Among the many components of this category, maintenance and equipment services, laboratory supplies and equipment, and research subcontracts are usually the largest specific expense accounts. This also includes allocations for capital construction and renewal.