Trustees set College spending target at $77.4M for 2010-11

October’s Board of Trustees meeting set the College’s spending target for 2010-11 at $77.4 million out of the total endowment of $1.5 billion. About 37 percent of the College’s operating expenditures will be covered by the endowment.

The 2010-11 spending target comes with an asset use rate of 5.1 percent. The College had previously hoped to maintain an asset use rate of 5 percent for the year but needed to raise the number due to one-time expenditures from the Early Retirement Program (ERP).

Provost Bill Lenhart said that the College will continue to cover the College’s share of health insurance for retirees under 65 years of age, but the ERP will not have a significant place in the budgeting process.

Although the Board did not initially slate the Stetson Sawyer project to recommence this year, the Board revised its expectations, leading to President Falk’s announcement of construction beginning in the spring (“Construction to begin on new library in spring,” Oct. 20, 2010).

“The board was regularly reviewing our ability to move forward on the Stetson-Sawyer Project,” Lenhart said. “There were enough happy circumstances to make them comfortable restarting the project. These included a somewhat faltering but still improving economic recovery; better than projected return on financial assets; good management of operating expenditures; and very importantly new philanthropy to support the project.”

The College’s financial plan generally models a 7-percent earnings rate on the endowment, but projections were lowered in recent years due to the unstable economy. However, the College projected a return of 6.2 percent on the endowment for the 2009-10 fiscal year and instead received an 11.9 percent return.
“The take-away message is that we continue to plan to hit the target the Board had set,” Lenhart said. “Achieving the 5-percent asset use rate is still going to be a challenge because financial aid expenditures continue to grow, and we want to be able to provide at least modest raises for our employees.”

Lenhart mentioned a target of keeping managers’ spending flat from this year to next. Managers’ spending encompasses the spending of all departmental budgets – from academic departments to departments such as Facilities and Dining Services – but does not include workers’ compensation. The managers’ budget is now just over $40 million, or about 20 percent of the College’s total spending on operations, and this number will remain steady into next year.

The budgeting process for 2011-12 begins in December, and according to Lenhart, “We’d like to continue to manage carefully the level of expenditures covered by the endowment.”

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