Breaking open St. Olaf’s annual budget

By Christa Kuck

Contributing Writer

Spend any amount of time on a college campus, St. Olaf included, and you’ll prob- ably hear someone talking about the cost of a college education. It’s expensive. A Gal- lup poll published earlier this year found that parents worry about paying for col- lege more than any other group of people worries about any other common financial concern. And it’s no small concern; as a na- tion, we have a collective student loan debt of $1.2 trillion.

Most students know exactly how much money is going to St. Olaf in the form of tuition and room and board. But how else does St. Olaf receive money, and how does the college spend it? Here is a breakdown of St. Olaf ’s revenue and expenses.

In the 2014-15 fiscal year, St. Olaf ’s total operating revenue was $187,085,304. The largest chunk of that income comes from

tuition and fees, bringing in $127 million, or 68% of the revenue. The second larg- est source is auxiliary revenue, which is a fee-for-service category that includes room and board, parking and the bookstore. This makes up 15% of the college’s revenue.

The next largest source is the money St. Olaf makes off of its endowment. An endowment is the sum total of an institu- tion’s investments. St. Olaf ’s endowment is valued at around $430 million. It is col- lege policy to spend no more than 4.7% of the endowment annually, which during the 2014-15 fiscal year amounted to $14 mil- lion. Private gifts make up 5% of revenue, and the smallest but growing section of rev- enue comes from government grants, con- tributing about 2%.

The college’s Office of Governmental Grants works to identify potential grant opportunities and collaborates with faculty interested in pursuing a grant. All other

sources combined make up the last 3% of annual revenue. Whenever there is a rev- enue surplus, as there was in 2014-15 and in the previous four years, that money is re- invested into St. Olaf ’s endowment.

In 2014-15, St. Olaf’s total operating ex- penses came to $177,489,329. There are two ways to look at the breakdown of expenses: functional classification and natural classi- fication. Functional classification breaks a budget down by department. Say that one is looking at the budget of Willy Wonka’s Chocolate Factory. Functional classification would entail looking at how much money is spent just in the Chocolate Department— this would include ingredients, machinery and the oompa loompas’ salaries. All this would fall under the “Chocolate” expense.

Although St. Olaf does not have a Choc- olate Department, here’s how the bud- get looks from a functional classification

standpoint. The biggest chunk of spend- ing is academic-related expenses, totaling 37%. Close behind are scholarships and

grants at 34%. Auxiliary services, including services such as Bon Appetit and the book- store, spend 11%. Student services, like residence halls, student organizations and athletics, spend 10%. The last piece of the pie is administration, which encompasses offices like the President’s Office and Hu- man Resources.

The other way to examine a budget is by natural classification. Returning to the Willy Wonka analogy, a natural classifica- tion would look at all the money spent on the wages of all oompa loompas, the cost of all candy ingredients and the cost of all machinery throughout the factory.

The St. Olaf counterpart looks like this: 37% of the budget is spent on wages and benefits for all faculty and staff. Scholar- ships and grants—same under both clas- sifications—comprise 34% of expenses. Non-compensation expenses, including supplies, utilities and meal plans, are 21% of the budget. The last 8% goes to interest and depreciation of St. Olaf’s debt, which was taken out for projects like Buntrock Commons, Regents Hall and the upcoming renovation of Holland Hall.

Janet Hanson, St. Olaf’s Chief Financial Officer, is one of the many people in charge of the budget. Hanson said that St. Olaf, like all academic institutions, is tuition de- pendent. The administration is very con- scientious of the rising cost of tuition and the amount of debt that students face when they graduate.

“That’s one of the things that I think is the biggest stress on us as administrators: how do we set the tuition? We know that there is pressure from the students. We know that we have pressure as far as offering financial aid discounts,” Hanson said.

Hanson emphasized the administration’s focus on making a St. Olaf education as af- fordable as possible. She also noted that she thinks St. Olaf is worth the price tag.

“The value and the experience that I think the students have once they are here is one that we need to share more broadly,” Hanson said. “Yes, we’re expensive. But I think the experience you have here is worth it.”

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