By Gregory A. Volk
Executive Vice President
Lawrence
continues to make progress on strengthening its financial position. As indicated
on the statement of financial position, total net assets increased
to $280 million as of June 30, 2005, versus $275 million the preceding year,
and total liabilities dropped slightly, to $70.6 million. Total net assets
reached $209 million, versus $204 million on June 30, 2004. Our budget performance
was the best in years, and the college succeeded in fully covering depreciation
in its operating results.
Operations
Total unrestricted operating revenue reached $46.7 million in fiscal 2005,
an increase of $4.1 million from last year and 5 percent more than budgeted.
Net student revenue (gross student revenue less financial aid) was the most
significant factor in our enhanced revenue, along with an increase in net assets
released (due to the receipt of several restricted trusts).
The college community continues to work in a collaborative fashion to contain
and reduce costs. While last year’s budget limited increases in total
operating expenses to 3.3 percent, our actual performance was substantially
stronger. Actual operating expenditures ($46.5 million) were down by nearly
$1.3 million from the budget, with significant savings achieved in salaries,
repairs and maintenance, printing, and postage. We exceeded expenditures in
the $800,000 capital budget by $344,000 as a consequence of undertaking some
critical projects to improve the infrastructure of the campus, most notably
through steam line replacements. Nevertheless, even with overspending in the
capital budget, the strong operating results enabled us to cover the entire
$5.5 million depreciation expense in full and produce a $197,000 net surplus.
Endowment
Last year’s market gains were considerably weaker than those of 2004.
As of June 30, 2005, however, the college’s endowment reached $188 million,
versus $182.3 million on the preceding June. Our overall return was 8.06 percent,
versus 16.9 percent last year. Our budgetary reliance on a distribution from
the endowment has been stable at approximately 20 percent of operating revenue
in recent years, and the college continues to make progress toward reducing
the spending rate to no more than 5 percent of a 12-quarter average of its
market value. While $188 million represents an all-time high for the college’s
endowment, we recognize that for a college of our stature, Lawrence is under-endowed.
The endowments of Grinnell, Carleton, Macalester, and Colorado Colleges — to
name four of our sister institutions within the Associated Colleges of the
Midwest — stand
at $1.2 billion, $546 million; $524 million; and $423 million respectively.
Thus, Lawrence provides a comparable liberal
education with far less support from its endowment. Bolstering the endowment,
then, must remain a top priority for the college’s fund-raising, along
with striving to maximize the return on our invested assets.