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Budget & Planning Guide FY12-13

Allegheny College January 11, 2012


1. Summary

Table of Contents

1.

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

2.

Consolidated Financial Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

Consolidated Financial Statement . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Cash Flow Statement . . . . . . . . . . . . . . . . . . . . . . . Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Comparison Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5 6 7 8

3.

4.

5.

Financial Statement Detail

..................................

9

Operating Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Campaign Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restricted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13 14 14 15

Strategic Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management and Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17 20 21 22

Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23

Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Five-Year Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . Five-Year Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23 24 27

Allegheny College Division of Finance and Planning

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1. Summary

Summary The 2012-13 (FY13) operating budget is balanced, with revenues and expenditures of approximately $71.1 million, including debt. The budget includes a tuition increase of 3.9%, which is expected to be at or below the median of the standard comparison group. The all-student discount is 49.8%. Budget assumptions and detailed revenues and expenditures can be found in part three of this guide. The most significant factor influencing this budget is the discount rate assumption. The FY12 budget included a first-year discount assumption of 49.5%, but the actual discount was 51.5%, leading to an $800,000 revenue shortfall. This was due to a variety of economic and competitive factors. Allegheny attempted to hold merit scholarship levels steady while other colleges increased their merit awards significantly, with many competitors—particularly those with larger endowments—allowing first-year discount to rise to the high 50’s (some exceeded 60%). We do not become aware of competitors’ discounting strategies until after financial aid is awarded in the spring of each year, so despite record applications, we needed to allow discount to rise in order to meet enrollment targets. We do not think that ever-increasing discounting is a sustainable long-term strategy for private colleges, so the FY13 budget is based on the assumption that we can begin to pull the first-year discount back by 0.5% to 51.0%. This depends in large part on Allegheny’s perceived value in the marketplace, as well as an effective communication program throughout the recruitment process. Each percent of first-year discount represents approximately $220,000, so the FY13 budget includes a $1 million contingency in the event that we are unable to reduce discount without threatening overall enrollment. The moderate tuition increase, combined with an all-student discount of nearly 50%, means that the FY13 budget will continue our recent trend of slow growth. Revenues will be 1.8% greater than this year’s projected actual figures and expenses will grow by 1.7%. This is consistent with the pace of growth in the U.S. economy. As in recent years, because expenses are not growing very quickly we need to be disciplined in concentrating our spending on strategic priorities. Our largest expense— salaries—will grow by 2.5%. We expect this amount to be sufficient to meet our strategic goal of maintaining faculty salaries within 3% of the dollar value of the standard comparison group median. Other expense growth has been limited to essential priorities determined after an extensive review process. This is made possible in large part by the Board’s agreement to direct annual surpluses to the comprehensive maintenance plan—a system that has worked well following the 2010 debt refinancing, which eliminated the need to use surpluses for the debt service reserve.

Allegheny College Division of Finance and Planning

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1. Summary

The FY13 budget has been placed in the context of a five-year forecast to ensure that it is sustainable. The forecast suggests that Allegheny can continue in this slow-growth mode for the foreseeable future and remain financially sound; however, that will not provide for the program enhancements called for by the strategic plan. The forecast that appears later in this guide includes the endowment growth projected in the campaign resource proposal adopted by the Board in 2010, which in turn allows for strategic expenditures such as increasing off-campus study, decreasing student-faculty ratio, and enhancing student scholarships.

Allegheny College Division of Finance and Planning

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2. Consolidated Financial Statements

The Consolidated Financial Statement shows Allegheny’s overall financial position for FY13. The columns summarize each area of activity and are described in greater detail later in this guide. Debt service is included in the operating budget column. We anticipate the change in net assets to be a reduction of $1,140 in FY13. FY13 Consolidated Financial Statement (000’s)

Net Tuition Auxiliary Endowment support Gifts and grants Other revenue

NonOperating Campaign Restricted operating Total $ 39,261 $ $ $ $ 39,261 19,541 19,541 7,376 900 8,276 2,850 2,000 4,850 2,049 13,300 15,349

Total revenue

$ 71,077 $

900 $

Compensation Auxiliary Equipment/CMP Other expenses Depreciation/reserves Debt

$ 39,262 $ 7,713 1,851 18,498

675 $

Total expenses Change in net assets

2,000 $ 13,300 $ 87,277 -

$

225

2,180 5,992

$ 39,937 7,713 1,851 8,276 29,179 5,992 3,745

$ 71,069 $

900 $

8,172 $

8,276 $ 88,417

$

-

3,745

8 $

$

(6,172) $

-

5,024 $

Note: Debt has been rolled into Operating and is no longer reported as a separate column in the Financial Statement. The campaign expense column includes only the revenues and expenditures associated with the extraordinary endowment draw; development expenditures are included in operations.

Allegheny College Division of Finance and Planning

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(1,140)


2. Consolidated Financial Statements

The Consolidated Cash Flow Statement tracks cash movement and expenditures. Key items include pledges receivable, transfers, building project expenditures, and non-cash activity like depreciation. The anticipated change in cash position in FY13 is $5.7 million. This includes the assumption that all spending for the Carr project will be completed prior to FY13 so the cash balance for “projects/bond reserves” primarily consists of the bond cash reserves. Pledges received for prior projects will be transferred to operating cash as reimbursement. Consolidated FY13 Cash Flow Statement (000’s)

Operating Restricted Change in net asset $ Depreciation Operating surplus transfer Transfers Capital spending Pledges receivable

8 $

113

Debt Reserve

(6,172) $ 5,992

-

Nonoperating $

Projects/ Bond Reserves

5,024 $

Total

-

$

(1,140) 5,992 808

-

$

5,660

(113) 113

695

Net cash change

$

121 $

(180) $

-

$

5,719 $

Beginning cash

$

3,162 $

6,159 $

3,961 $ 172,937 $

2,589 $ 188,808

Ending cash

$

3,283 $

5,979 $

3,961 $ 178,656 $

2,589 $ 194,468

Note: Campaign operations net to zero and do not impact the Cash Flow Statement. Although debt activity was rolled into Operating, there is still a cash balance reported on the Cash Flow Statement, Debt Reserve.

Allegheny College Division of Finance and Planning

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2. Consolidated Financial Statements

The Balance Sheet completes the summary of Allegheny’s finances. Note that the following table includes the audited figures from FY11 (June 30, 2011) and the projected figures for FY12 and FY13. The most significant changes are investment growth, pledges receivable, reduction to bonds payable and net changes to plant, property and equipment for accumulated depreciation. Balance Sheet FY11, FY12 and FY13 (000’s) June 30, 2011 Audited Assets: Operating cash Grant cash Total cash and cash equivalents Operating investments Debt (Plant Fund) Capital investments Endowment Annuities and pooled income Trusts Total investments Total cash and investments Net pledges receivable Accounts receivable Inventories Prepaids and other assets Plant, property and equipment Assets held by others Total assets Liabilities and net assets: Accounts payable Accrued salaries and wages Student and other deposits Other payables Federal Perkins Loans payable Bonds payable Trusts held for others Annuities payable Total liabilities Total net assets Total liabilities and net assets

$ $

2,123 5,659 7,782

$

70 3,961 6,624 153,504 8,551 5,742 178,452

June 30, 2012 Projected $ $

3,162 6,159 9,321

$

3,961 2,589 158,645 8,551 5,741 179,487

June 30, 2013 Projected $ $

3,283 5,979 9,262

$

3,961 2,589 164,364 8,551 5,741 185,206

$

186,234 2,031 6,881 542 452 127,559 6,948

$

188,808 999 6,881 542 452 127,688 6,948

$

194,468 192 6,881 542 452 123,547 6,948

$

330,647

$

332,318

$

333,030

$

$

$

772 3,207 1,161 1,680 4,857 56,164 294 6,761 74,896

$

$

772 3,207 1,161 1,680 4,857 57,584 294 6,761 76,316

$

772 3,207 1,161 1,680 4,857 54,696 294 6,761 73,428

$

254,331

$

257,422

$

259,602

$

330,647

$

332,318

$

333,030

Allegheny College Division of Finance and Planning

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2. Consolidated Financial Statements

Allegheny’s strategic priorities and financial decisions are influenced by our ranking in the Standard Comparison Group (SCG). The following charts illustrate our position on four key measures: endowment, net tuition per student, expenses per student, and U.S. News ranking. This overall sense of the College’s competitive position provides context for the detailed financial planning that follows in this document. Endowment Market Value ($000)

2009-10

Net Tuition & Discount Fees per Student

2010

2011

Hamilton College Denison University Bucknell University St Olaf College Dickinson College Union College Franklin and M arshall College of Wooster Gettysburg College Bates College Lawrence University Connecticut College Ohio Wesleyan University Kenyon College Hobart & Wm Smith Colleges Wheaton College (M A) Albion College Hope College

552,768 564,435 491,495 274,304 277,993 290,543 266,339 223,831 207,835 198,548 180,258 179,250 158,605 158,752 151,304 146,690 132,944 134,172

657,529 654,584 575,367 342,729 326,551 321,902 303,321 247,480 237,706 231,451 214,651 212,622 189,224 179,923 174,646 164,948 162,366 153,813

Bates College Connecticut College Franklin and M arshall Hamilton College Bucknell University Kenyon College Dickinson College Gettysburg College Wheaton College (M A) M uhlenberg College Union College Hobart & Wm Smith Colleges St Olaf College Hartwick College Lawrence University Denison University Washington and Jefferson Co

$37,598 $31,800 $31,463 $28,959 $26,965 $26,823 $26,651 $26,088 $25,055 $24,218 $24,062 $22,955 $20,766 $20,331 $20,313 $19,827 $19,668

24.7% 26.2% 27.1% 30.8% 30.1% 32.5% 34.1% 35.7% 36.9% 31.5% 37.7% 40.2% 41.5% 44.6% 40.1% 53.3% 46.1%

Allegheny College

$18,432

44.8%

Allegheny College

134,558

153,505

M uhlenberg College Washington and Jefferson College Wittenberg University Westminster College (PA) Juniata College Hartwick College Hiram College

126,482 81,947 88,470 77,907 62,749 52,260 53,826

150,241 103,968 96,083 90,035 76,871 61,162 61,155

Juniata College College of Wooster Ohio Wesleyan University Wittenberg University Hope College Albion College Hiram College Westminster College (PA)

$17,324 $16,727 $15,811 $15,680 $15,384 $15,001 $14,597 $12,681

46.1% 51.1% 51.2% 51.4% 35.9% 50.0% 53.0% 51.7%

data s o urc e : N A C UB O Endo wm e nt S tudy, S e pte m be r 2011, 2012

data s o urc e : IP EDS Financ e S tudy

Total Expenses Per Student FTE

U.S. News Ranks

2008-09

2009-10

Hamilton College Kenyon College Bates College Connecticut College Union College Franklin and M arshall College Bucknell University Denison University Dickinson College Wheaton College Gettysburg College Hobart and William Smith Colleges College of Wooster Lawrence University Saint Olaf College Ohio Wesleyan University Washington and Jefferson College Juniata College

$60,455 51,731 50,925 52,118 48,994 49,440 46,841 46,551 45,787 43,736 43,487 42,796 38,878 38,275 34,552 32,697 31,130 32,578

61,379 52,507 51,838 51,115 50,627 49,488 46,788 45,859 45,703 43,893 42,646 40,525 40,040 37,162 34,551 33,991 33,985 33,731

Allegheny College

31,210

33,350

M uhlenberg College Wittenberg University Albion College Hartwick College Hope College Hiram College Westminster College

32,374 31,850 30,062 31,875 29,919 28,740 25,431

32,878 31,702 30,583 29,806 29,465 27,194 25,158

data s o urc e : IP EDS Financ e S tudy

2009

2010

2011

2012

Hamilton College Bates College Bucknell University Kenyon College Connecticut College Union College Franklin & M arshall College Dickinson College Gettysburg College Denison College St. Olaf College Lawrence University Wheaton College Hobart and William Smith Co College of Wooster M uhlenberg College

20 25 30 32 42 42 42 45 49 53 47 56 58 68 77 71

21 25 30 33 42 43 43 46 49 53 49 59 58 68 68 68

18 21 30 32 41 41 41 47 47 51 51 67 59 67 71 75

Allegheny College

94

85

93

Hope College Albion College Juniata College Ohio Wesleyan University Washington and Jefferson Co Westminster College Wittenberg University Hiram College Hartwick College

88 104 98 111 104 122 III III III

92 97 85 105 92 122 118 III III

88 111 81 105 101 119 114 152 174

17 21 29 33 37 40 42 47 47 49 53 60 62 64 71 81 86 94 102 102 102 102 121 121 156 171

data s o urc e : A m e ric a's B e s t C o lle ge s , A ugus t 2008-2011

Allegheny College Division of Finance and Planning

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3. Financial Statement Detail

Operating

Financial Statement Detail Operating Budget The FY13 operating budget includes these assumptions: Revenue 1.

Tuition will increase 3.9%; comprehensive fee will increase 4.0% (includes room and board increase of 4.1%). The new comprehensive fee is as follows: Tuition $37,260 Fees 350 Room (standard double) 5,020 Meals (standard plan) 4,520 Total $47,150

2. 3. 4.

New student discount rate will be 51.0%; all-student discount rate will be 49.8% New student class size will be 600 and total enrollment will be 2041 Endowment spending will be based on 5% of the twelve-quarter trailing average as of December 31, 2011 Annual Fund will be $2.85 million

5.

Expense 1. 2. 3. 4. 5. 6.

Salary pool will increase 2.5% Health care insurance will increase 10% ($400,000) The Comprehensive Maintenance Plan (CMP) will remain the same as FY12 The contingency will be $1 million Study abroad expenses will increase $50,000 to correspond to recent years’ actual expenditures Auxiliary expenditures (primarily food service and housekeeping) will increase $100,000

Allegheny College Division of Finance and Planning

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3. Financial Statement Detail

Operating

Additional notes on assumptions for the operating section:

Tuition and fees: Allegheny’s comprehensive fee increase for the past five years was 6.2%, 6.7%, 5.0%, 3.81% and 4.0%. Our gross and net tuition remain at approximately the 30th percentile of our comparison group. We anticipate that the median increase for FY13 will be approximately 4.0%. FY11-12 Standard Comparison Group Comprehensive Fee

Comprehensive Fee

Percent Increase

Bates College Connecticut College Franklin & Marshall College Union College Bucknell University Hobart & William Smith Colleges Dickinson College Hamilton College Gettysburg College Kenyon College Wheaton College (MA) Denison University Muhlenberg College Ohio Wesleyan University College of Wooster Hartwick College St. Olaf College Lawrence University Washington & Jefferson College Wittenberg University

$55,300 54,970 54,310 54,273 54,240 54,072 53,860 53,470 52,790 52,650 52,564 50,170 48,955 47,784 47,600 47,465 46,950 46,371 45,980 45,728

3.8% 3.5% 4.4% 3.7% 3.7% 3.6% 3.7% 3.3% 3.8% 4.5% 2.5% 5.0% 3.9% 4.6% 4.2% 7.9% 3.6% 6.1% 4.8% 2.9%

Allegheny College

45,350

4.0%

43,430 41,922 39,510 38,410 35,280

3.8% 4.7% 4.0% 5.0% 1.9%

$48,370

3.9%

Juniata College Albion College Westminster College (PA) Hiram College Hope College Median

data source: school websites, 12/10/2009, 10/19/2010, 10/04/2011

Allegheny College Division of Finance and Planning

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3. Financial Statement Detail

Net Operating & Debt, Restricted and Non-operating

Discount: The high-tuition, high-discount pricing model is one of the most significant questions facing private higher education. We are essentially holding our current position because that optimizes revenue while still providing the student access that we desire. We must watch closely to see whether the private sector as a whole begins to scale back prices, which we anticipate will happen as discounting reaches a point of diminishing returns. The 51% first-year discount included in this budget will depend in large part on what our competitors do, as well as our perceived value in the marketplace. We believe that we have potential to improve that perceived value once leadership is in place in the enrollment and communications area, and once the College has developed a marketing plan. Enrollment: The optimal enrollment for Allegheny’s staffing and facilities is 2050, which requires us to recruit approximately 600 new students each year. Endowment: The December 31, 2011 endowment value was $139.9 million. Because our endowment spending is based on a twelve-quarter trailing average, FY13 will see a slight uptick in spending as we begin to drop off low-value quarters from 2008, when the recession began. Endowment spending becomes a much more significant factor later in the forecast, when the effects of the capital campaign begin to make resources available for strategic priorities such as scholarships and faculty chairs. Annual Fund: The annual fund total in FY12 was $2.75 million. Continued growth to $2.85 million in FY13 is a prudent but realistic estimate. Salary and benefits: FY13 will be the second year of a three-year salary plan, in which our goal is to maintain faculty salaries within 3% of the median dollar value of our standard comparison group. Allegheny made fast progress with aggressive salary increases in FY08-FY12 and achieved our strategic target. We believe that more moderate increases will now enable us to hold that position. We also anticipate that the cost of benefits may not increase greatly in FY13 due to competitive market conditions caused by the Highmark/UPMC negotiation; however, that is likely to change in FY14, probably returning to double-digit annual increases. Comprehensive maintenance plan: In recent years the College has eliminated deferred maintenance. We now have a plan that will maintain our facilities, enhance sustainability, and improve campus aesthetics and functionality with an investment of $2.0 - $2.5 million per year. The five-year forecast calls for the comprehensive maintenance plan to grow to this level by FY16. In the meantime, we will rely on operating surpluses to supplement the maintenance budget, which ensures that we have earned the funds before spending them. This approach has enabled us to make fasterthan-anticipated progress on campus maintenance for the past two years. Debt: The 2010 refinancing brought our debt service requirements in line with operating revenues. In FY13 the debt service of $3.745 million will be covered entirely by operations, funded in large part by room revenues generated by the new residence halls.

Allegheny College Division of Finance and Planning

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3. Financial Statement Detail

Net Operating & Debt, Restricted and Non-operating

The current capital finance structure includes approximately $26 million in a variablerate bank qualified loan (locked into a fixed rate of 3.4% through an interest-rate swap), $24 million in fixed-rate tax-exempt bonds, and $8 million in variable-rate tax-exempt bonds. Operating sources—primarily residence hall revenues—will support debt service. Long-term debt summary Bond Issue Series 2006 Series 2009A Series 2009B Series 2010

Par Amount Outstanding $14.0M $9.7M $8.0M $25.9M

Purpose North Village Phase I North Village Phase II North Village Phase II Science buildings, Wise Center, College Court and other

Final Maturity 2036 2032 2040 2030

Type Fixed Fixed Variable Bank variable, swap to fixed

Debt service schedule FYE 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 6/30/2024 6/30/2025 6/30/2026 6/30/2027 6/30/2028 6/30/2029 6/30/2030 6/30/2031 6/30/2032 6/30/2033 6/30/2034 6/30/2035 6/30/2036 6/30/2037 6/30/2038 6/30/2039 6/30/2040 Total

Series 2006 669,248 669,248 669,248 669,248 669,248 669,248 669,248 669,248 669,248 669,248 669,248 669,248 669,248 669,248 669,248 669,248 1,949,248 1,953,448 1,949,560 1,952,823 1,952,760 1,953,600 1,950,840 1,949,480 1,949,280

$

28,269,007 $

Series 2009A 810,908 812,653 813,266 812,376 810,078 811,454 810,975 809,026 810,881 810,094 811,847 812,256 811,322 813,909 813,150 813,800 812,350 813,650 812,550 813,900 710,700

16,951,145 $

Series 2009B* 349,744 349,014 349,381 349,381 349,744 349,014 349,381 349,381 349,744 349,014 349,381 349,381 349,744 349,014 349,381 349,381 349,744 349,014 349,381 349,381 452,205 1,164,166 1,161,988 1,162,809 1,166,958 1,168,566 1,168,773 1,171,710 1,172,463 16,777,238 $

Series 2010* 1,992,114 1,991,652 1,991,208 1,992,654 1,995,139 1,995,115 1,995,843 1,998,430 1,996,852 1,999,073 1,997,659 1,997,979 1,999,293 1,998,230 1,999,429 1,999,615 721,342 716,871 721,794 717,497

34,817,789 $

Total 3,822,014 3,822,567 3,823,103 3,823,659 3,824,209 3,824,831 3,825,447 3,826,085 3,826,725 3,827,429 3,828,135 3,828,864 3,829,607 3,830,401 3,831,208 3,832,044 3,832,684 3,832,983 3,833,285 3,833,601 3,115,665 3,117,766 3,112,828 3,112,289 3,116,238 1,168,566 1,168,773 1,171,710 1,172,463 96,815,179

*Variable rate bonds. Debt service includes principal, interest and letter of credit fees. Interest rate assumed is 2.85% for life of issue, which approximates the 15-year variable rate average. Letter of credit fee of 1.50% assumed for life of issue as well. The assumed rates can go up or down.

Allegheny College Division of Finance and Planning

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3. Financial Statement Detail

Net Operating & Debt, Restricted and Non-operating

Based on these assumptions, the FY13 operating budget is as follows (FY12 projected year-end figures as of fall 2011 are included for comparison): Operating (000's) FY12 Projected Operating revenue Tuition/fees Less College-funded aid/scholarship Net tuition Net government funds Unrestricted Annual Fund and gifts Endowment support for the budget Short-term investment income Other revenue Auxiliary operations Total operating revenue

% Change

FY13

$

75,251 $ (36,200) 39,051 900 2,750 7,151 200 890 18,900

78,261 (39,000) 39,261 900 2,850 7,376 200 949 19,541

4.00% 7.73% 0.54% 0.00% 3.64% 3.15% 0.00% 6.63% 3.39%

$

69,842 $

71,077

1.77%

27,687 8,172 2,300 7,616 3,602 2,515 2,229 1,559 7,214 1,036 1,050 1,150 3,745

28,379 8,583 2,300 7,713 3,603 2,539 2,217 1,559 7,439 801 1,050 1,000 3,745 141

2.50% 5.03% 0.00% 1.27% 0.03% 0.95% -0.54% 0.00% 3.12% -22.68% 0.00% -13.04% 0.00%

1.71%

Operating expense Salaries Employee benefits Tuition exchange/remission benefit Auxiliary expenses Utilities and telephone Publications, memberships, insurance Student wages Physical plant Department expenses Equipment Comprehensive maintenance plan Contingency Debt service Non-recurring or unallocated requests Total operating expense

$

69,875 $

71,069

Operating surplus (deficit)

$

(33) $

8

Allegheny College Division of Finance and Planning

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3. Financial Statement Detail

Net Operating & Debt, Restricted and Non-operating

Campaign Operations In October, 2010 the Board of Trustees authorized the use of an extraordinary endowment draw to cover the development operation throughout the campaign (FY20). Approximately 75% of the annual expenditures are dedicated to personnel, with the remainder used for travel, mailing, communications, equipment, and events.

Campaign Operations FY12 Projected Campaign Revenue Extraordinary endowment draw

$

Campaign Expense Compensation Other campaign expenses Surplus (deficit)

FY13

700 $

900

(525) (175) $

-

(675) (225) $

-

Restricted Government grants are the most consistent and predictable source of restricted operating funds each year. The College also receives restricted gifts for endowment and building projects, but these gifts are generally not included in the budget since their timing and amounts are not known. The expenses in this category include costs associated directly with grants, such as NSF grants for science equipment. Other expenses are depreciation and reserves for pledges and student loans, which are non-cash items.

Restricted (000's) FY12 Projected Restricted Revenue Endowed gifts Other gifts and grants

$

Restricted expense Gift and grant related Depreciation/reserves Surplus (deficit)

Allegheny College Division of Finance and Planning

$

2,000

FY13 $

2,000

(1,500) (5,800)

(2,180) (5,992)

(5,300) $

(6,172)

14


3. Financial Statement Detail

Net Operating & Debt, Restricted and Non-operating

Non-operating Non-operating funds are primarily earnings on the College’s endowment. The budget reflects a 10% rate of endowment return, which includes new gifts and investment earnings. Non-operating expenditures include the 5% spending in support of the operating budget. Expenditures also include the extraordinary draw for campaign expenses.

Non-operating (000's) FY12 Projected Non-operating revenue Net gains (losses)

$

Non-operating expense Endowment support for operation (transfer) Extraordinary endowment draw (transfer)

$

(7,490) (700) $

Allegheny College Division of Finance and Planning

13,300

FY13

5,110 $

13,300

(7,376) (900) 5,024

15


4. Strategic Indicators

Strategic Indicators This information represents Allegheny’s “dashboard,” designed to provide a sense of the College’s position on key measures over time and in comparison to other schools. Many of these charts refer to the standard comparison group listed on page seven. This information provides an indication of Allegheny’s health on a variety of measures—not just financial matters—but for the sake of easy reference we have grouped them into these categories: •

Revenue Revenue sources Enrollment-related Discounting and financial aid Fund raising

Expenses Expense uses Expense ratios Compensation-related

Financial Position Financial ratios Debt

Management and Operations Retention Diversity Student information

Note: Stars appear on the vertical axis of some graphs on the following pages. These stars indicate the 30th and 70th percentile within the Standard Comparison Group for the most recent year of data.

Allegheny College Division of Finance and Planning

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4. Strategic Indicators

Revenue: sources and enrollment-related 1. Operating Revenue (in millions)

2. Comprehensive Fee $54 ,00 0

$75

$48 ,00 0 $60

$42 ,00 0 $36 ,00 0

$45 $30 ,00 0 $24 ,00 0

$30

$18 ,00 0 $15

$12 ,00 0 $6,000

$0 08-09

09-10

FY10-11

FY11-12

FY12-13

$0 2006-07

Net Tuition Annual Fund Bequests

Auxiliary Gvmt Sources

Endowmt Draw Other

2007-08

2008-09

2009-10

Allegheny

2010-11

SCG Mean

4. Percent of Admits Who Enroll

3. Percent of Applicants Accepted 36%

90%

30%

24%

70%

18%

12%

50%

6%

0%

30% 2006-07

2007-08

2008-09

2009-10

2006-07

2010-11

2007-08

2008-09

Allegheny Allegheny

SCG Mean

SCG Median

5. Full-Time-Equivalent Enrollment (FTE) 2,200

2009-10

2010-11

SCG Mean

SCG*: 17-24 of the 26 schools reported these data to HEDS

6. Net Tuition & Fees Rev. / Student FTE $27,000 $24,000

2,000

$21,000 1,800

$18,000 $15,000

1,600

$12,000 7

1,400

$9,000 $6,000

1,200

$3,000 1,000 2006-07

Allegheny

2007-08

2008-09

SCG Mean

2009-10

2010-11

SCG Median

Allegheny College Division of Finance and Planning

$0 2005-06

2006-07

Allegheny

2007-08

2008-09

2009-10

SCG Mean

17


4. Strategic Indicators

Revenue: discounting and financial aid 8. Percent of Comprehensive Fee Allegheny Students and Families Pay

7. Institutional Discount 50%

Fall 2011: CF = $45,350 doesn't include books, transportation, and personal expenses (est. $3,000) 600 # of Full-time Students

40%

30%

20%

554

500 400 279

300

309 269 236

200 200 105

10% 100

37

68 27

0

0% 2005-06

2006-07

2007-08

Allegheny

2008-09

10%

2009-10

SCG Mean

9. Total Allegheny Scholarships and Grants (Millions) $35

20%

30%

40%

50%

60%

70%

80%

90%

100%

% of Comprehensive Fee

10. Avg. Allegheny Scholarship & Grant Awarded to Aided Students (Thousands) $18

$30 $15 $25 $12 $20 $9 $15 $6

$10

$3

$5 $

$ 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009- 2010- 201103 04 05 06 07 08 09 10 11 12

11. Percent of Allegheny Students with Financial Need

2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009- 2010- 201103 04 05 06 07 08 09 10 11 12

12. Percent of Allegheny Aid Awarded That Exceeds Students' $$ Need

80%

35%

75%

30%

70%

25%

65%

20%

60%

15%

55%

10%

50% 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009- 2010- 201103 04 05 06 07 08 09 10 11 12

Allegheny College Division of Finance and Planning

5% 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009- 2010- 201103 04 05 06 07 08 09 10 11 12

18


4. Strategic Indicators

Revenue: fund raising and alumni 13. Total Endowment

14. Fund Raising Totals (millions) cash received, excluding government grants

not including trusts and annuities $300

$21

$270

$18

$240

$15

(Millions)

(Millions)

$210

$12

$180

$9

$150 $6 $120 $3 $90 $

$60 2005-06

2006-07

2007-08

2008-09

2006-07

2009-10

2007-08

2008-09

Allegheny Allegheny

SCG Mean

SCG Median

15. Endowment per Student FTE

2009-10

2010-11

SCG Mean

*SCG: 24-26 of the 26 schools reported these data to the CAE

16. Percent of Graduates Who Go Directly To Graduate School 60%

$140,000

50% $120,000

40% $100,000

30% $80, 000

20%

$60, 000

10%

$40, 000 2005-06

Allegheny

2006-07

2007-08

SCG Mean

2008-09

2009-10

SCG Median

Allegheny College Division of Finance and Planning

SCG Data Source: USNews&WR Aug 2008, 2009, 2010, 2011

0% 2004-05

Allegheny

2005-06

2006-07

SCG Mean

2007-08

2008-09

SCG Median

19


4. Strategic Indicators

Expenses 17. Operating Expense Uses

18. Expenses / Student FTE 48,000

70 60

40,000

50 32,000

40 30

24,000

20 16,000

10 0 08-09

09-10

Debt Contingency Student Wages Auxiliary

FY10-11

FY11-12

CMP Departmental Pubs, Post, Insur. Benefits

FY12-13

8,000

Equipment Physical Plant Utilities Salary

19. Average Faculty Compensation $140,000

0 2005-06

2006-07

Allegheny

2007-08

2008-09

2009-10

SCG Mean

20. Ratios of Student FTE to Faculty FTE and Staff FTE 14.0

Allegheny $120,000

SCG Mean SCG Median

12.5

Allegheny

11.0

SCG Mean

$100,000

9.5 8.0

$80,000

6.5 $60,000

5.0 $40,000 2006- 2007- 2008- 2009- 201007 08 09 10 11

Assistant Prof.

2006- 2007- 2008- 2009- 201007 08 09 10 11

Associate Prof.

2006- 2007- 2008- 2009- 201007 08 09 10 11

Professor

3.5 2001- 2003- 2005- 2007- 200902 04 06 08 10

Faculty

2001- 2003- 2005- 2007- 200902 04 06 08 10

Staff

21. Total Percentage of Full-time Employees Of Color or International 18%

Allegheny

15%

SCG Mean 12%

9%

6%

3%

0% 2001- 2003- 2005- 2007- 200902 04 06 08 10

Faculty

2001- 2003- 2005- 2007- 200902 04 06 08 10

Staff

Allegheny College Division of Finance and Planning

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4. Strategic Indicators

Financial Position 22. Debt Service Coverage

23. Liquidity

(Operating Surplus + Interest + Depreciation) / Debt

Expendable Resources / Operating Expenses

6

4

5 3 4

3

2

2 1 1

0

0 2007

2008

2009

2010

2011

Moody's "A"

Moody's "Aa"

2007

2008

2009

2010

2011

Moody's "A"

Moody's "Aa"

25. Capital Ratios

24. Debt Outstanding ($ Millions)

(Cash & Investments) / Debt

$14 0

7

$118.0

$12 0

6

$10 0

5

$80

4

$60.3

$59.1

$60

$44.6

$57.6

$61.5 3

$43.4

$40

2

$20

1 0

$0 2007

2008

2009

2010

2011

Moody's "A"

Moody's "Aa"

2007

2008

2009

2010

2011

Moody's "A"

Moody's "Aa"

26. FTE Ratios Debt per Student FTE $70 ,00 0 $61,665 $60 ,00 0 $50 ,00 0 $40 ,00 0 $29,194 $28,860 $27,765

$30 ,00 0

$24,314

$22,096 $20,510 $20 ,00 0 $10 ,00 0 $0 2007

2008

2009

2010

2011

S&P "A" S&P "AA"

Allegheny College Division of Finance and Planning

21


4. Strategic Indicators

Management and Operations 27. First-to-Second Year Retention

28. Six-Year Graduation Rate

100 %

100 %

80%

80%

60%

60%

40%

40%

20%

20%

0% 2006-07

2007-08

2008-09

Allegheny

2009-10

2010-11

0% May '06

May '07

May '08

May '09

May '10

SCG Mean Allegheny

SCG Mean

SCG*: 18-24 of the 26 schools reported these data to HEDS (Higher Education Data Sharing)

29. Total Percentage of Students of Color & International Students (Full-time Undergraduates) 20%

30. Geographic Distribution of Allegheny's Full-time Students 70% 60%

15%

50% 40%

10% 30% 20%

5%

10% 0%

0% 2006-07

2007-08

2008-09

Allegheny

2009-10

2007-08

2010-11

SCG Mean

2008-09

PA

31. Average SAT Score Of Entering Class An Estimate Of An Estimate

2009-10

NY

2010-11

OH

2011-12

Other

32. Alumni Satisfaction With Overall Education Spring 2010, Six Classes Surveyed

1325

% of Responding  Alumni

100

1285 1245 1205 1165 1125 1085

80 60 40 20 0

1989

1995

1999

2004

2007

2008

Gen Sat

35

31

23

26

22

31

Very Sat

64

69

74

70

77

63

1045 2006-07

Allegheny

2007-08

2008-09

SCG Mean

2009-10

2010-11

SCG Median

SCG*: 18-22 of the 26 schools reported SAT/ACT scores to the National Center for Ed. Statistics

Allegheny College Division of Finance and Planning

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5. Forecast

Forecast The following pages include a five-year operating statement forecast and a five-year cash flow forecast. The forecast shows balanced operating budgets and a cash-neutral impact from operations. The cash flow projections could be influenced by capital projects as well as fund raising, enrollment, and financial assumptions. No capital projects are included in the assumptions. The fund raising assumption includes cash projections for pledge payments from current donor receivable. Enrollment, fund raising, and financial assumptions Revenue 1. Tuition will increase 4.00% in FY14 and FY15,then 4.25% annually thereafter 2. New student class size will be 600 (freshmen and transfers) 3. New student discount rate will be 51.0% in FY13 and FY14, 50% in FY15 and FY16, and 49% in FY17 and FY18 4. Auxiliary revenues will increase 4.0% annually 5. Endowment growth will include investment returns plus new gifts, minus spending. New gift totals will include historical averages plus 50% of total campaign cash (as approved by the Board in October 2010). Spending will include the 5% spending formula plus the extraordinary draw for the campaign expenses 6. Annual Fund will be $2.85 million in FY12-13 and will increase $100,000 annually Expense 1. Salary pool will increase 2.5% in FY14, then 3.5% annually thereafter 2. Fringe benefits will increase 6% annually 3. Recurring expenses will increase 3% annually beginning in FY14 unless noted (*) 4. Funds for new strategic initiatives will be $125,000 in FY14, $200,000 in FY15, $450,000 in FY16, and $950,000 in FY17 5. Contingency will increase slightly each year to maintain pace with overall budget growth 6. The Comprehensive Maintenance Plan (CMP) will increase for the first three years of the forecast until reaching the desired level of $2.5 million annually Campaign Operations 1. Campaign expenses are offset with extraordinary endowment draws each year. Approximately 75% of the annual expenditures are dedicated to personnel, with the remainder used for travel, mailing, communications, equipment, and events. 2. Endowment gifts will be based on 50% of total campaign cash and are recorded in the Restricted Operation revenue section of the forecast in addition to sponsored programs (grants). These gifts have been factored into the endowment growth for 5% spending purposes.

Allegheny College Division of Finance and Planning

23


5. Forecast

Five-Year Financial Statement: Operating Revenue (000’s)

Projected 2012-13

Projected 2013-14

Projected 2014-15

Projected 2015-16

Projected 2016-17

Projected 2017-18

Annual Increase

Operating Operating revenue: Tuition/fees Less: College funded aid/scholarship Net tuition New Class (freshmen & transfers) FPE student count FF/TR discount percentage Allowance percentage

$ $

Net government sources Unrestricted annual fund and gifts Endowment support for budget Short-term investment income Other revenue Auxiliary operations Total operating revenue

78,261 (39,000) 39,261 600 2,041 51% 49.83%

$ $

900 2,850 7,376 200 949 19,541 $

71,077

Allegheny College Division of Finance and Planning

81,391.44 (41,100) 40,291 600 2,042 51% 50.50%

$ $

900 2,950 7,851 200 949 20,323 $

73,464

84,197.10 (42,500) 41,697 600 2,022 50% 50.48%

$ $

900 3,050 8,265 200 949 21,136 $

76,197

88,075.47

* $

(44,100) 43,975 600 2,036 50% 50.07%

$

900 3,150 8,520 200 949 21,981 $

79,675

24

91,818.68 (45,900) 45,919 600 2,034 49% 49.99%

* $ $

900 3,250 9,144 200 949 22,860 $

83,222

95,720.98 (47,851) 47,870 600 2,035 49% 49.99% 900 3,350 9,025 200 949 23,775

$

86,069

*

4.0%, 4.25%* FF/TR Rate, below

5.0%

4.0%


5. Forecast

Five-Year Financial Statement: Operating Expense and Campaign (000’s) Projected 2012-13

Projected 2013-14

Projected 2014-15

Projected 2015-16

Projected 2016-17

Projected 2017-18

Annual Increase

Operating Operating expenses: Salaries Employee benefit

$

Tuition exchange/remission benefit Sub-total compensation

28,379 8,583

$

2,300 $

Department expenses: Instruction, Research, Academic Support Student Services, Admissions, Athletics Finance, Public Affairs, Other Admin Strategic plan initiatives Auxiliary Utilities and telephone Publications and postage Student wages Physical plant Non-recurring or unallocated requests Contingency Debt service Equipment Comprehensive maintenance plan

39,262

29,088 9,098

$

2,300 $

2,963 2,250 2,226

40,486

2,300 $

2,963 2,250 2,226 0 7,944 3,711 2,539 2,217 1,559 25 1,050 3,745 801 1,940

7,713 3,603 2,539 2,217 1,559 141 1,000 3,745 801 1,050

30,107 * $ 9,644

2,300

42,050

3,052 2,318 2,293 200 8,183 3,822 2,615 2,284 1,606 29 1,100 3,745 825 2,065

31,160 * $ 10,222

$

* * *

* * *

*

2,300

43,683

3,143 2,387 2,362 450 8,428 3,937 2,694 2,352 1,654 255 1,200 3,745 850 2,500

32,251 * $ 10,836

$

* * *

45,387

*

$

3,335 * 2,532 * 2,505 * 950 8,941 4,177 2,858 * 2,495 * 1,755 * 710 1,400 3,745 902 * 2,500

$

71,069

$

73,457

$

76,186

$

79,639

$

83,128

$

85,971

Operating surplus (deficit)

$

8

$

7

$

10

$

36

$

94

$

98

Campaign Operations Extraordinary endowment draw Total Campaign Revenue

$ $

900 900

$ $

1,300 1,300

$ $

1,300 1,300

$ $

1,400 1,400

$ $

1,300 1,300

$ $

1,100 1,100

Compensation Other expenses Total Campaign Expense

$

675 225 900

$

975 325 1,300

$

975 325 1,300

$

1,050 350 1,400

$

975 325 1,300

$

825 275 1,100

Campaign surplus (deficit)

$

-

$

Allegheny College Division of Finance and Planning

$

-

$

-

$

25

-

3.5% *

47,166

Total operating expenses

-

2.5% 6.0%

2,300

3,238 * 2,459 * 2,432 * 700 8,681 4,055 2,774 * 2,423 * 1,704 * 805 1,350 3,745 875 * 2,500

* * *

33,380 * 11,486

$

-

3.0% * 3.0% * 3.0% * 3.0% 3.0% 3.0% * 3.0% * 3.0% *

3.0% *


5. Forecast

Five-Year Financial Statement: Restricted, Non-Operating (000’s)

Projected 2012-13

Projected 2013-14

Projected 2014-15

Projected 2015-16

Projected 2016-17

Projected 2017-18

Restricted Operations Endowed gifts Sponsored programs (grants) Total restricted revenue Total restricted expense Restricted revenue less expense

$ $

2,000 2,000

$ $

2,180 (180)

Less: Depreciation & pledge reserves

$ $

7,250 3,600 10,850

$

4,500 6,350

5,992

$ $

7,750 4,250 12,000

$

5,050 6,950

6,042

$ $

8,000 4,650 12,650

$

5,250 7,400

6,092

$ $

8,500 5,050 13,550

$

9,000 5,450 14,450

$

5,550 8,000

$

5,750 8,700

6,142

$

6,192

6,242

Net restricted activity

$

(6,172)

$

308

$

858

$

1,258

$

1,808

$

2,458

Operating & restricted activity

$

(6,164)

$

315

$

868

$

1,294

$

1,902

$

2,556

Non-operating Non-operating revenue Realized, net gains/(losses) Total Non-operating revenue

$

13,300 13,300

$

15,227 15,227

$

15,881 15,881

$

18,009 18,009

$

17,389 17,389

$

18,129 18,129

$

900 7,376 8,276

$

1,300 7,891 9,191

$

1,300 8,305 9,605

$

1,400 8,560 9,960

$

1,300 9,184 10,484

$

1,100 9,065 10,165

Expenses Extraordinary endowment draw 5% spending draw Total Non-operating expense Net Non-operating activity Change in net assets

5,024 $

(1,140)

Allegheny College Division of Finance and Planning

6,036 $

6,352

6,276 $

7,144

8,049 $

9,343

26

6,905 $

8,807

7,964 $

10,520

Annual Increase


5. Forecast

Cash Flow FY14 Consolidated Cash Flow Statement (000’s) Operating

Change in net assets (see previous table) Depreciation Operating transfer Endowment gift transfer Pledges receivable Net cash change Beginning cash Ending Cash

$

Restricted

7 $ 4

$ $ $

11 $ 3,283 $ 3,294 $

Debt

308 6,042 (3) (7,250) 3

Non-Oper

$

Projects

6,036

Total

$ (1)

7,250 705

1

6,351 6,042 709

(900) $ $ 13,991 $ $ 13,102 5,979 $ 3,961 $ 178,656 $ 2,589 $ 194,468 5,079 $ 3,961 $ 192,647 $ 2,589 $ 207,570

FY15 Consolidated Cash Flow Statement (000’s) Operating

Change in net assets (see previous table) Depreciation Operating transfer Endowment gift transfer Pledges receivable Net cash change Beginning cash Ending Cash

$

Restricted

10 $ 4

$ $ $

14 $ 3,294 $ 3,308 $

858 6,092 (3) (7,750) 3

Debt

Non-Oper

$

Projects

6,276

$ (1)

7,750 705

Total

1

7,144 6,092 709

(800) $ $ 14,731 $ $ 13,945 5,079 $ 3,961 $ 192,647 $ 2,589 $ 207,570 4,279 $ 3,961 $ 207,378 $ 2,589 $ 221,515

Allegheny College Division of Finance and Planning

27


5. Forecast

FY16 Consolidated Cash Flow Statement (000’s) Operating

Change in net assets (see previous table) Depreciation Operating transfer Endowment gift transfer Pledges receivable Net cash change Beginning cash Ending Cash

$

Restricted

36 $ 4

$ $ $

40 $ 3,308 $ 3,348 $

Debt

1,258 6,142 (3) (8,000) 3

Non-Oper

$

Projects

8,049

Total

$ (1)

8,000 705

1

9,343 6,142 709

(600) $ $ 16,754 $ $ 16,194 4,279 $ 3,961 $ 207,378 $ 2,589 $ 221,515 3,679 $ 3,961 $ 224,132 $ 2,589 $ 237,709

FY17 Consolidated Cash Flow Statement (000’s) Operating

Change in net assets (see previous table) Depreciation Operating transfer Endowment gift transfer Pledges receivable Net cash change Beginning cash Ending Cash

$

Restricted

94 $

Debt

1,808 6,192

Non-Oper

$

6,905

1

95 $ 3,348 $ 3,443 $

8,500 705

Total

$ (1)

(8,500) 3 $ $ $

Projects

1

8,807 6,192 709

(497) $ $ 16,110 $ $ 15,708 3,679 $ 3,961 $ 224,132 $ 2,589 $ 237,709 3,182 $ 3,961 $ 240,242 $ 2,589 $ 253,417

FY18 Consolidated Cash Flow Statement (000’s) Operating

Change in net assets (see previous table) Depreciation Operating transfer Endowment gift transfer Pledges receivable Net cash change Beginning cash Ending Cash

$

Restricted

98 $

2,458 6,242 (9,000)

$ $ $

98 $ 3,443 $ 3,541 $

Debt

Non-Oper

$

7,964

9,000 690

Projects

Total

$ 10,520 6,242 690

(300) $ $ 17,654 $ $ 17,452 3,182 $ 3,961 $ 240,242 $ 2,589 $ 253,417 2,882 $ 3,961 $ 257,896 $ 2,589 $ 270,869

Allegheny College Division of Finance and Planning

28


Allegheny College FY13 Budget