By William Hodgkiss
Vice President for Business Affairs and Administration
In most respects, Lawrence University experienced a very good year in 2000-2001. Opening full-time-equivalent enrollment totaled 1,275 students, campus construction projects moved ahead on schedule, and planning for future projects within the framework of an updated campus plan continued.
Net operating results met the goal set by the Board of Trustees of covering non-building depreciation expense within the operational budget. Lawrence finished the year with an operational deficit of $2.1 million, which represented a coverage of $2.2 million in the $4.3 million annual depreciation expense. A stated goal for future operations is to develop the ability to consistently cover the full annual depreciation expense -- which, if accomplished, would significantly strengthen the financial stability of the university.
Overall financial results were not as positive as those for operations. Prior to this year Lawrence had enjoyed seven straight years of increased net assets as a result of an aggressive building program, outstanding levels of contributions, and attractive investment returns. In 2000-2001, the building program was concluded for the present with completion of the Youngchild Hall renovation.
The contribution level continued its outstanding record, as described more fully in the Development Report.
Investment returns, while performing better than the overall market, still posted a negative 3.3 percent return, causing a net $11 million dollar decline in the market value of the endowment and lowering net assets from $219.6 million to $208.2 million.
Operations
Revenue components of the operational budget -- tuition, room and board, endowment support, and unrestricted gifts* -- were up 17.1 percent over the previous year's total, while total expenses were up 10.4 percent. The breakdown is as follows:
Net operating revenue showed consistent increases in student-related income -- made up of tuition, room, and board -- which accounted for 55 percent of total operating revenue. Endowment distribution accounted for 21 percent, while contributions and other income made up the remaining 24 percent.
Operating expenses grew slightly less, at 10.4 percent of last year's figure, the largest portion being made up of academic-related expenses at $15 million, student-related expenses at $7.7 million, institutional-administration expenses at $6.8 million, and physical facility expenses -- maintenance-related expenses, depreciation, and interest costs -- at $11.4 million. The cost of utilities was more than triple that of the previous year, rising at a rate reminiscent of the mid-1970s.
Net student revenue continued to improve as a result of a steadily growing student body for the past four years and a financial-aid program that has been maintained within budgeted parameters.
Endowment
The endowment, which comprises the vast majority of the university's investments, reached its all-time high in December 2000, totaling $188 million. This capped a five-year growth record of 109 percent. During that period, the endowment, after distribution to operations, averaged a growth rate in excess of 15 percent annually.
A decline in the stock market, which began in the first quarter of 2001, reduced the total endowment -- after gifts of $5.3 million and after a record-setting distribution to operations of $8.9 million -- to an ending balance of $176.2 million.
Physical plant
When construction of Science Hall was completed in fall 2000, Lawrence began renovation of Youngchild Hall, a $10.2 million project that now provides renovated space for the Departments of Physics, Geology, and Biology.
Other projects completed in 2000-2001 were interior renovations in the president's home, conversion of three small houses to student residences, and work on the exterior of the Lawrence Memorial Chapel that included roof repairs, re-cladding of the steeple, and repair and painting of the exterior.
New projects during the past year included purchase and renovation of apartment buildings on the corner of John and Meade Streets for student residences, renovations to Sampson House and to offices on the third floor of Main Hall, an extension for the stage in Lawrence Memorial Chapel, and extensive improvements to the first floor of the Seeley G. Mudd Library.
* Although the figures here presented are in compliance with standards adopted by CASE (Council for the Advancement and Support of Education) and NACUBO (National Association of College and University Business Officers), they differ from the presentation of gift income in the college's development report, which includes both gifts and payments on pledges received during 2000-2001 but excludes new pledges received during the fiscal year. Financial statement gift income, on the other hand, augments these numbers by the value of new pledges received during the year and reduces them by the value of payments made on pledges received in prior fiscal years.