Acorn

Issue date: 2/7/06 Section: News

The board of trustees voted on the budget at 9 a.m. in Mead Hall to determine whether incoming freshman will pay $47,000 in tuition and fees next year. At press time, the outcome was unknown.

The fiscal year 2007 budget for Drew University was presented by the University�s budget committee in an Open Town Meeting on Wednesday in Learning Center room 28 at 7 p.m. to 18 interested community members.

The presentation, given by Vice President of Finance and Business Affairs Mike McKitish, Associate Vice President of Finance and Treasurer Joseph Kelly and Associate Vice President of Finance Christopher Van Wyk, outlined �the [committee�s] work of the entire fall semester,� according to McKitish. �We are presenting this budget to the community for their understanding and hopefully their questions,� he said.

But of the 18 attendees, Director of Health Services Katherine Nottage, five Acorn staff members and three other students were the only ones not on the committee.

�This is a fair budget,� McKitish said. �Drew is still tuition-dependent and under capitalized,� he said.

Two separate committees complete the budgetary process � the Resource and Revenue Committee and the Expenditure Committee.

University President Bob Weisbuch made two �signal changes to the long-standing instructions for budget submissions,� McKitish said. �Everyone has been challenged by President Weisbuch to rethink the way we�re spending money here and rethink the programs.�

Weisbuch urged �bold reallocations to support new initiatives,� that he wanted to pursue and also requested that he review each submission by the vice presidents and deans before they went to the committees, according to McKitish. �I don�t believe that [Weisbuch made many changes to the budget], he had a lot of conversations with each one of those groups prior to their submissions,� he said.

�The process of the revenue committee was to invite members of the community to give presentations,� Kelly said. �The charge of the revenue committee was to � come up with reasonable and achievable revenue. We don�t want to have a budget that puts some very nice numbers on a piece of paper but is not realistic.�

The highlights of the revenue committee include the 5.75 percent tuition increase for the college. Almost 60 percent of the University�s gross revenue, before financial aid, comes from college tuition. In a table of Drew and its comparison schools, the University ranks 14 out of 18 in total tuition at $39,698. Trinity College has the highest total fees at $42,220 and Juniata College has the lowest at $33,130.

�That is about the position we have maintained over the last five to six years,� Kelly said. To offset the cost of tuition, Forty-seven percent of the net tuition will be returned to incoming students in the form of financial aid in the sum of $22,220,000 and returning student�s discount rate will go up 2 percent to 37.8 percent.

Room and board will also increase 7 percent, each due to the increased price of utilities, which includes energy costs.

The expenditure committee estimated energy costs to increase next year by $700,000 due to Hurricanes Katrina and Rita. �It was expected that energy cost this year would be over budget by half a million dollars,� Van Wyk said.

Another major aspect of the budget is enlarging Drew�s summer programs for high school students. �What we are interested in is getting more high school students in,� Kelly said. �By timing these programs in the right part of the summer and offering programs we believe the students are interested in, we hope to increase the enrollment from 370 this past summer to 560.�

The University will also be increasing its rate of endowment spending from 5 percent to 6 percent to a total of $12 million. �The additional funds [will be used] to support some of the investments we are making to increase quality and diversity.�

According to McKitish, Drew�s endowment is �not sufficient and under-capitalized.� Drew�s endowment, according to McKitish is a little over $200 million. However, about half of the endowment is dedicated to the theological school.

�There have been a lot of conversations to increase the endowment � and I believe they are thinking about a capital campaign but that is certainly in the very early discussion stage,� McKitish said. �But [the administration] understands that we need more capital in order to be the school we want to be.�

�When we put the budget together we are looking, as financial people to minimize the risk, or at least recognize the risk,� Kelly said as he outlined some of the concerns of the revenue committee. Concerns with enrollment include the lower yield on Dean�s Choice, lower retention of students from fall 2005 and staff turnover in Admissions. However, the revenue committee is most concerned with the higher rate of spending on the endowment and uncertain state aid to the University and also individual student, according to the presentation.

�The expenditure concerns that were raised [by the committee] � include the uncertainty of utility costs increase,� McKittish said, citing the unknown price of oil or natural gas in the future.

�Healthcare is also very similar to utility costs,� he added. �Healthcare in this country has been going up very rapidly,� he said. McKittish also added that he has been asked by Weisbuch to chair an ad hoc committee to look at the University�s healthcare �to see if there is anyway of reducing that healthcare over time,� he said.

There are also capital expenditures included in the budget, among these is $2 million dollars earmarked by the federal government for Hall of Sciences laboratories which will be done this summer, according to McKitish. There is also $1.6 million in pay-as-you-go capital, $1.3 million for Seminary Hall and $700,000 in a deferred-maintenance bond.

�We do have other financial concerns � but these are not insurmountable concerns,� McKitish said. �We do believe that everything that has been put forth in these documents are advisable and that they have not been overestimated to the point where you cannot achieve results.�

�Our resources per college student, in our comparison group, rank 25 out of 25,� McKitish said. �So that is pretty much at the bottom.� Drew also ranks 19 out of 25 in gifts per University student and 11 out of 12 in expenditures per student, according to the presentation.

�We are budgeting right to the end,� McKitish said. �There is nothing that is really being saved. That is called thinly margined in our business.� McKitish added that the committee would like to see a larger margin to allow for more flexibility in spending if something unexpected occurs. Higher discount rates also affect this margin.

�This budget process is a very open process � I think it is the best way to do budgeting,� McKitish said.

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