By
Gregory A. Volk
Executive Vice President
The
combination of exceedingly strong fund-raising results, increased student revenue
emanating from our robust enrollment, and a good market and its positive impact
on the endowment enabled the college to balance the budget and fully cover
depreciation. In addition, the statement of financial
position indicates
that total net assets grew to $305 million, versus $279 million the preceding
year, and total liabilities dropped slightly, to $68.5 million.
Operations
Total unrestricted operating revenue (see statement
of activities)
represents the critical dollars for the college’s operating budget. This
past year, that revenue grew to nearly $54 million, a hefty 15 percent increase
over last year’s $46.7 million that comfortably covered the college’s
$49.6 million in expenditures. Non-operating temporarily restricted income
increased dramatically to approximately $12 million (versus $733,542), reflecting
principally gifts and pledge payments received for future construction projects.
Permanently restricted non-operating income — principally endowment commitments — reached
$3.9 million, more than double the previous year’s sum.
This year’s statement of activities includes a new expense of $3.2 million
that reflects the college’s asbestos removal liability in response to
the Financial Accounting Standards Board (FASB) interpretation of FIN 47 that
requires us to estimate and account for future asbestos clean-up costs. Hence,
we have recorded $158,433 as a 2006 expense and $2.99 million for years prior
to 2006 as a cumulative effect of this change in accounting principle.
Endowment
As of June 30, 2006, the college’s endowment reached an all-time high
of $200.4 million. Our overall return for fiscal 2006 was 12.06 (versus 7.94
percent in fiscal 2005). Lawrence trustee J. Terrence Franke ’68 became
chair of the investment committee this past year, succeeding Richard Gunderson,
who provided exemplary leadership on this committee until becoming trustee
emeritus in October 2005. Franke and the committee work closely with the college’s
investment advisors, Ennis Knupp of
Chicago, to bolster the endowment return and gradually reduce the endowment
distribution
to the operating budget to no more than 5 percent of invested assets. This
past year, our endowment performance matched the performance benchmark set
by Ennis Knupp and also exceeded the 11.0 percent return of the Endowment/Foundation
Index.