We wrestled with a paradox in creating our financial plan for fiscal 2012. Although conditions in the higher education market pointed to modest growth in HBP and Executive Education, we knew that fiscal 2012 would be a year of innovation and experimentation at HBS. The initiatives unfolding across the campus would likely give rise to unforeseen expenses, largely but not solely related to the MBA?FIELD course. MBA program delivery costs are not fully recovered by student tuition and fees, and FIELD has widened this gap.
Given these upward pressures on operating costs, we set ambitious growth targets for HBP and Executive Education, as well as the School's External Relations group. Fortunately, the School's initial stretch revenue targets for HBP and Executive Education were surpassed at year-end, despite factors that could have limited their growth—challenges in the publishing industry, for example, and a growing array of competitors offering executive development programs.
The School's publishing business continued to distance itself from the competition in an environment of rapid change in consumer preferences and in the industry's underlying technology, while managing its expenses very effectively. Led by strong sales in the higher education market and improved circulation metrics at Harvard Business Review, all of our publishing groups delivered top-line growth in fiscal 2012. As a result, HBP again outperformed our initial expectations for revenue and margin contribution, following an extraordinary performance in the prior year. The School's publishing revenue for fiscal 2012 increased by $13 million, or 9 percent, from fiscal 2011, exceeding our forecast by 3 percent.
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In the School's Executive Education business, meanwhile, everything came together in fiscal 2012 in a way that could not have been predicted. Participation in both open enrollment and custom programs far exceeded the targets in our financial plan. Executive Education revenue grew by $10 million, or 8 percent, from fiscal 2011, exceeding the School's fiscal 2011 budget by 14 percent.
This growth was driven by the launch of new Executive Education programs on campus and in China, India, and Europe, as well as by the establishment of new relationships with a range of global businesses and higher education partners. At the same time, Executive Education continued to be increasingly effective in managing expenses and utilizing available capacity, and the group's margin contribution for fiscal 2012 exceeded the School's forecast.
Fiscal 2012 also turned out to be a successful year for fundraising at the School, highlighted by strong growth in current use giving. Driven by the HBS community's class reunion and annual giving, unrestricted current use gifts grew by $2 million, or 12 percent, year-over-year to an all-time record of $19 million.
Income from current use gifts provides flexible funds that enable the School to execute on new strategic priorities, chief among them in fiscal 2012 being FIELD, the i-lab, and the U.S. Competitiveness Project. Because launching FIELD added significantly to operating costs during the year, unrestricted current use giving provided crucial support at a pivotal moment in the evolution of MBA education at the School. Total current use giving, including restricted as well as unrestricted gifts, totaled $35 million, nearly matching the record of $36 million set in fiscal 2011.
From a broader perspective, gifts of all kinds from HBS alumni and friends—including endowment and construction gifts as well as current use giving—are central to the School's economic model. Without the HBS community's generosity, the School may well have been forced to tap unrestricted reserves in order to execute on its strategic priorities in fiscal 2012.
Cash giving to HBS for construction projects totaled $5 million in fiscal 2012. This compares to $25 million in the prior year—the amount received from philanthropic entities of India's Tata Group for the construction of Tata Hall. Reflecting this decline, as well as modestly lower endowment giving, total cash received from gifts in fiscal 2012 decreased to $68 million from $89 million in the prior year.
HBS funds a substantial portion of its operations through distributions from the School's endowment—income from endowment giving by alumni and friends over many years. Through the endowment, the HBS community's generosity makes an enormous difference to the financial health of the School. Reflecting the 20 percent gain in its market value in 2011 as the endowment continued to recover from losses incurred earlier in this decade, the School's financial plan for fiscal 2012 assumed that endowment distribution income would increase 4 percent from the prior year.
However, HBS continued its efforts to maximize the use of investment income from existing endowment funds, while receiving a number of new endowment gifts. As a result, the School's fiscal 2012 endowment distribution exceeded the budget by $4 million, rising 9 percent year-over-year to $109 million. Including the endowment distribution and revenue from unrestricted current use giving, total income from past and current gifts to HBS in fiscal 2012 exceeded the School's forecast by $8 million, or 7 percent.
We develop each year's financial plan with an eye not only toward living within its means, but also toward serving as a model of what the School teaches. In line with these goals, we believe that generating an operating surplus is crucial to the School's identity. As it has for the past decade, HBS successfully delivered on this objective in fiscal 2012, generating $42 million in cash from operations, compared to $53 million in fiscal 2011, and remaining solidly cash flow positive for the year.
The Supplemental Financial Information section of this report concludes with a discussion about the School's unrestricted reserves. I will preview this discussion here. Along with a mix of internally generated cash, gifts, and judicious use of debt, HBS relies on unrestricted reserves to finance major campus expansion projects and to capitalize on strategic opportunities as, and sometimes before, they emerge. After funding its ambitious teaching and research agenda and nearly doubling its capital investments, as previously discussed, the School concluded fiscal 2012 with a strong year-end unrestricted reserves balance.
Maintaining a healthy level of unrestricted reserves outside the endowment is particularly crucial to the HBS economic model because the School derives such a large percentage of its income from HBP and Executive Education. Financial results in these businesses are directly affected by economic and competitive pressures, as evidenced by their slower growth during the recession of the late 2000s. When cyclical forces work against us again, as they surely will at some future point, the liquidity provided by our strong unrestricted reserves balance will prove to be as critical to ensuring continuing execution of the School's mission as it was four years ago.
Although HBS is still in the early stages of executing on its strategic priorities, we are more confident about the investment levels needed to support key activities in fiscal 2013 than we were in fiscal 2012. Our financial plan for fiscal 2013 is guided, as always, by our desire to be strategically ambitious but financially prudent.
In preparing the fiscal 2013 plan we were cautiously optimistic in estimating revenues and operating margins. HBP is seeing mixed signals as we begin the year. Domestic demand for print and eLearning products remains strong, but global economic issues, particularly in Europe, are slowing HBP's overall business growth. At the same time, we expect fiscal 2013 to be another year of aggressive competitive investment in products and technology at HBP, leading to corresponding pressures on the unit's operating margins.
Fiscal 2013 is shaping up as another challenging year for Executive Education as well. Given the currently strong market demand for the School's executive program offerings—and the group's proven ability to surprise on the upside—the potential for outperformance in fiscal 2013 cannot be ruled out. However, the School has truly reached its limits for housing capacity, and this headwind will persist until the opening of Tata Hall.
Elsewhere on the top line, revenue from MBA tuition and fees is projected to rise 7 percent from fiscal 2012, which will be partially offset by growth in financial aid. We have been informed by the University that the School's fiscal 2013 endowment distribution payout rate will grow 5 percent from fiscal 2012. Reflecting this increase, as well as additional income from new gifts to the School's endowment, we expect the School's total endowment distribution revenue to rise 6.4 percent in fiscal 2013.
While applying caution in estimating the School's fiscal 2013 revenue performance, we looked carefully for areas where additional investment might be needed and, conversely, where we might be able to scale back our spending. We responded to revenue challenges in the late 2000s by finding a multitude of ways to improve the efficiency of the School's underlying operations. As a result, rigorous expense control is part of our culture at HBS, and it will remain so going forward.
Nonetheless, the pace of change across the School will continue to accelerate. In addition to completing the modular program rollout in the MBA elective curriculum in fiscal 2013, further innovation is planned for the MBA Class of 2016. The School also will be redoubling on its commitment to making MBA and Doctoral education affordable for a broader cross section of applicants in fiscal 2013, leading to a planned 11 percent year-over-year increase in fellowship expense. Faculty research spending is projected to continue growing as well.
HBS will also be strengthening the technology infrastructure that supports many of its core business operations. There will be increased collaboration between HBS and University partners on the development of a new Student Information System. Our fiscal 2013 financial plan also reflects higher compensation costs, driven primarily by the addition of staff FTEs to support FIELD, I.T. projects, Executive Education business development and program delivery initiatives, and growth in the School's publishing business, as well as the next HBS capital campaign. Increased travel and other campaign-related activities will also add to the School's spending in fiscal 2013.
In addition, HBS has ambitious capital projects planned for fiscal 2013. With this being the year of peak construction spending at Tata Hall, our capital budget is up 94 percent from fiscal 2012 to $99 million, including $58 million related to that project. Tata Hall is the centerpiece for a broader, long-term transformation of the Executive Education precinct at the northeast corner of the HBS campus.
Also included in the fiscal 2013 capital budget is $5 million for the initial construction of a new Executive Education facility—The Ruth Mulan Chu Chao Center—to replace Kresge Hall. We will simultaneously be investing in a project to extend the campus tunnel system, with the goal of ultimately integrating the Chao Center and Tata Hall with the rest of the Executive Education precinct.
The School is financially well positioned to execute on these operational and campus improvement objectives in fiscal 2013. The economic model that HBS has developed over the years remains strong and self-sustaining. Given the School's agenda, however, the need for flexible innovation-focused funding will continue to grow. This need cannot be met solely by growth in revenue from HBP, Executive Education, and the endowment, much less MBA tuition and fees. Consequently, income from unrestricted current use gifts will be crucial to HBS over the next few years, and this type of giving will be a priority for the School's next capital campaign.
Although HBS is in strategic investment mode as we begin fiscal 2013, we will be vigilant to signals that may warrant our being more cautious, mindful of the risks that persist in the global economy. We remain committed as always to be responsible stewards of the School's financial resources in the year ahead.
Richard Melnick, MBA '92 Chief Financial Officer