FINANCIAL REPORT FOR THE SECOND QUARTER OF FISCAL YEAR 2007
Dear Colleagues,
At the mid-point of our fiscal year, our financial picture is solid and stable, thanks to a conservative budget plan, increased revenue from enrollment and investments, and greater expense discipline. This report covers July 1, 2006 to Dec. 31, 2006.
A conservative budget plan
We began the fiscal year in July with a conservative budget plan, owing to the recent pattern of declining state support and higher costs for benefits and utilities. Built into our plan were several tactics designed to contain costs and enhance revenue. For instance, we formed a Strategic Position Review Committee to assess each open position and its effect on student success and institutional goals. To increase revenue, we introduced a revenue-sharing plan intended to encourage academic departments to develop credit-bearing coursework off-campus or via distance learning. This endeavor is expected to have a greater impact on our finances in future years.
Improved revenue
As we reported in the first-quarter financial update, fall enrollment increased 4.4 percent, and the number of credit hours that students took increased by even more, with credit-hour production up 5.5 percent. Enrollment has strengthened further in the spring semester (an increase of 4.9 percent over spring of 2006, with credit hours up 6.6 percent); those gains will be reflected in our third- and fourth-quarter financial results.
Our investment income since July has been higher than anticipated because of gifts received, fund transfers, income on principal and market gains. For the first six months of the fiscal year, the University's endowment increased $3.9 million to $57.8 million. Separately, The University of Akron Foundation endowment increased $8.5 million to $140.9 million.
Expense discipline
On the expenses side, faculty salary variances led to temporarily lower instructional costs than anticipated. We expect this line item to come in closer to our budget estimate in the third-quarter report.
The Strategic Position Review Committee continues to study each position that comes open. Concurrently, we are studying:
- the elimination of overtime expenses when possible,
- the renegotiation of goods and services contracts when the opportunity exists, and
- the steps necessary to increase efficiency and end duplication in our business practices.
Benefits costs and the unpredictable nature of energy prices will continue to challenge our budget, especially in the next fiscal year when a new contract for medical benefits will be in place.
As always, I welcome your questions and input. Please use the e-mail address or the box below for your messages.
Thank you.
To our continued success,
F. John Case
Vice President for Finance and Administration/CFO
