By Gregory A. Volk
Executive Vice President
Lawrence’s
overall financial picture improved considerably over the past year. As indicated
on the statements
of financial position or
balance
sheet, total assets increased by 3.5 percent (from $266 million to $275 million
as of June 30, 2004); total liabilities were reduced by $6 million to $71.17
million; and total net assets reached $204.18 million, versus $188.92 million
on June 30, 2003. Assuredly, the college’s efforts to contain expenditures
and reduce the endowment distribution to the operating budget, along with the
rebound in the market, contributed to a stronger financial position.
Operations
Net operating revenue totaled $42.2 million in fiscal 2004, an increase of
$2.55 million from last year’s $39.65 million. Our enhanced revenue stems
principally from a $2.1 million increase in net student revenue (gross student
revenue less financial aid).
Efforts to decrease expenditures within the administration succeeded in reducing
operating expenses to $46.29 million, approximately $506,000 less than the
$46.79 million budgeted. Nevertheless, several uncontrollable expense lines,
most notably utilities and health insurance, continue to exert pressure on
our budget. Like other colleges and universities, Lawrence is now required
to incorporate depreciation (a non-cash expense) in its operating budget. The
college’s depreciation expense grew to $5.5 million in fiscal 2004. Even
with these increases, however, operating expenses were only $912,000 over fiscal
2003. The net operating loss was considerably reduced from fiscal 2003 ($5.729
million) to $4.084 million for fiscal 2004. Moreover, while Lawrence did not
cover any depreciation expense in fiscal 2003, the college covered $1.417 million
in depreciation expense this past year.
Endowment
Last year’s market gains enabled Lawrence to post a significant increase
in the endowment’s market value. As of June 30, 2004, the endowment totaled
$182.2 million, versus $164.4 million the preceding June. This increase included
$2.847 million in gifts to the endowment. The return on the endowment was 16.9
percent. While we trailed the performance benchmark of 19.0 percent (established
by EnnisKnupp & Associates, our investment managers), we did outperform
the Endowment/Foundation Index of 15.4 percent.
Lawrence calculates the endowment distribution applied to the operating budget
based on a 12-quarter average of its market value. Last year’s distribution
of $9.5 million constituted a 5.58 percent “take” from the endowment.
While the college remains committed to reducing the distribution to 5 percent,
the combination of budgetary pressures and our projections for more modest
returns (7.5 percent) in the endowment in the foreseeable future suggest that
it will be a few years before we achieve that goal.
Physical plant
Since completing Hiett Hall, our magnificent 78,000-square-foot student residence
in 2003, the college has not undertaken any new significant capital projects.
While we hope to turn our attention in the future to address the need for a
new campus center, current investments in our physical plant are designed to
ensure that we avoid the kind of deferred maintenance problems that some colleges
have confronted. Fortunately, Lawrence has invested so significantly in new
and renovated academic buildings (in addition to Hiett Hall) in recent years,
that the campus and its buildings serve admirably the college’s faculty
and students.