The Board of Regents approved the College’s final operating budget for the 2019-20 school year during their October meetings on campus. The budget resembles those of recent years, with few major changes.
Final approval from the Regents completes the annual budget review and implementation process.
“We start our budget process late fall, by putting together a number of assumptions,” Chief Financial Officer Jan Hanson said. “It’s our responsibility to present a budget for Board approval.”
Over the next several months, staff in the Finance Office gather budget requests from College departments and programs, making budget assumptions based on the previous year’s enrollment, and modeling scenarios as tuition increases or decreases. They present these reports to the Finance Committee, a committee of the Board of Regents. The group then creates a preliminary budget which is presented to the Regents for approval in May.
There is a four-month hiatus between the Regents’ approval of the preliminary budget in May and the construction of a final budget in October. During this time, enrollment and financial aid figures shift as students choose whether or not to enroll over the summer. The College takes these changes into account when constructing the final budget, altering revenue estimates based on actual enrollment figures, Hanson said.
“We budget, I would say, very conservatively,” Hanson said. “This is so that we don’t have to make dramatic shifts.”
Part of this budget conservatism is maintained through endowment income. The College’s overall endowment income rests at approximately $20 million, which has risen from around $17 million in 2016-17. Part of this endowment is held in quasi-endowments, which are endowments made to the College whose use is determined by the Board of Regents. In the 2019-20 budget, the College holds about $2.2 million in these quasi-endowments and contingency funds.
“Money that we put into the endowment generates earnings every year that supports the operating budget,” said Angela Matthews, assistant vice president of budget and auxiliary operations. “This has enabled us to give more scholarships and do more with the operating budget without having to take it from students’ tuition dollars.”
The College’s ability to balance revenue and expenses has been a continued challenge in recent years, Hanson and Matthews wrote in an email. Fluctuating net tuition revenue fuels these challenges. It has dropped in recent years and is projected to continue falling until the 2022-23 fiscal year, according to the Finance Office’s five-year projections.
Conversely, salaries paid to employees for wages are anticipated to continue increasing through the five year projection period. These salaries account for approximately 42 percent of the College’s total operating expenses.
“We estimate what our enrollment will be and modest wage increases, kind of in line with what we’ve done in the past,” Matthews said. “The two big components that change in the budget are the tuition dollars that we bring in and our wage amounts that go up if we give raises.”