In this issue:
executive elections guide—see pages 4 and 5
a student newspaper of the university of tulsa
april 10, 2012 issue 23 ~ volume 97
Breaking down the budget: tuition at work
TU takes in $18 million a year from an endowment worth nearly a billion dollars. However, the largest source of revenue is still tuition. Kalen Petersen News Editor
A
s the school year ends, another set of graduates will face the world of work and take the reins of their own finances. For many of these graduates, college had been an enormous investment, consuming not just four years’ time, but tens of thousands of dollars each year. To a University of Tulsa student, the question of how the school is funded and how it spends its income are more than just academic. TU’s spending “is important, because it affects all of us, but it’s hard to make everyone happy. My priorities are not someone else’s priorities,” said sophomore Tyler Norman. Junior Hasan Siddiqui said that the university’s spending was important to him. “Once I go out into the real world, I’m not going to want to contribute back to the university if I feel like the money is not being well spent,” he said.
Budget Basics
In the last financial year, TU
took in $180,059,000, about $17 million more than the previous year. Of this money, nearly half came from student tuition and fees. As a private university, TU’s revenue comes from a variety of sources, the biggest of which is tuition. TU collected $109,740,000 in tuition last year, offset by the $51 million awarded in scholarships, for a net income of $58 million. “Tuition covers 49.3 percent of the cost of education,” TU President Steadman Upham said. “The rest is covered by endowment income, annual fund raising, auxiliary income, things like athletics.” TU, which has approximately
4,000 students, charges $31,126 annually in tuition and fees. “I feel like the level of education you get here is worth the money, but still, it’s kind of steep, and I don’t know why we have to keep increasing it every year,” said junior Emily Harris. “From what I can see it’s gone up four or
five thousand dollars since I got here, and I haven’t seen much of a change.” Tuition income, however, is not nearly enough to cover the university’s general operating budget. TU’s expenditures for the most recent year totaled $177,756,000. The remainder of the money comes from several different sources. According to an audit performed last year by the firm Hogan Taylor, LLP, $19.4 million came from gifts, grants and pledges, while $18.2 million was drawn from TU’s endowment, a massive collection of low-risk investments worth over $800 million. Money donated to the endowment may be directed to a specific usage by the donor. “They may give us ten million, and of that they may say five million goes to endow a chair in the science department and the other five million can be spent on whatever,” said Kevan Buck, TU’s Chief Financial Officer. Upham noted that 88 percent of funds received in the recentlycompleted $700 million fundraising campaign were unrestricted. This unusually high percentage allows TU more freedom to direct funds to projects deemed important.
Money taken from the endowment is determined by a formula driven by the endowment’s market performance over several years. To keep the flow of income steady, a higher percentage is drawn when the endowment makes less interest, and vice versa. “In any given year we may have a 24 percent return on our endowment, but we’re still only spending five percent so we’re building up that money for those lean years,” Buck said. Despite this safeguard, TU’s found itself bringing in far less money after the endowment took an enormous dive during the 2008 recession, falling from a peak of $971 million in 2007 to $628 in 2009, over a third of a billion in losses. Though the endowment has since rebounded, “Our annual take from the endowment is down eight million from what it was in 2007,” according to Buck. Upham said that the recession was not as devastating to TU as it had been to other schools. “We
had no disruptions in financial aid, we had no layoffs, we had no program cuts,” he said. Though the recessions prompted a moratorium
on the creation of new professorships, which has since been lifted, it did not halt the pace of TU’s ambitious construction projects,
which are budgeted separately. Though physical renovation of the campus has been heralded as critical to TU’s future, not everyone agrees with the school’s priorities. “I feel like a lot of money is spent on making things look pretty and nice, but as far as the actual classroom goes, there aren’t any new programs that have been implemented as long as I’ve been here,” Siddiqui said.
University Expenses
One of TU’s largest expenses in the past year was scholarships. $51 million in scholarships were awarded by the university last year. “I think it’s really awesome that there’s so much opportunity for scholarship. I think that the best thing they have done is allowing money for that,” sophomore Lauren Neph said. Of the scholarship money, about one-fifth was given in full-ride Presidential Scholarships, and a comparable amount was offered in total athletic scholarships. Fullride athletic scholarships are available only for football and men’s and women’s basketball, according to Upham. Upham said that because there has not been excessive demand for admission among non-scholarship students, athletic scholarships have not cost the university more in lost tuition. “People who are getting athletic scholarships are not taking seats away from people who are paying tuition,” he said. Even without athletic scholarships, athletics are a net loss for the university, at least on paper. “(Athletic) revenue is $12,600,000 and expenditures are $17,900,000, so there’s a subsidy there of five million dollars,” Upham said. However Buck argued that there are financial benefits to athletics that do not show up on the budget, citing the example of Michael Case, a real estate investor and major TU donor. “We now have a beautiful dining hall that Mike’s family has put money towards, but he came here initially because of the athletic hook,” Buck said. “I was very lucky that we could
See Budget on page 3