This is one article in a series explaining changes at Gordon College, called Define: Gordon
By Liam Adams ‘17
The painful measures of recent years have helped restore the college to a more solid fiscal footing, according to new financial reports made available by the administration after a request from the Tartan.
The documents cover the fiscal year that ended June 30, 2016.
Net tuition revenue — the amount of funds collected from students and their families, fell to $35,517,313 from $36,872,882.
At the same time, total operating revenue increased to $64,746,668 from $62,396,915.
Also, total operating expenses fell to $63,809,712 from $64,195,837.
When asked about the faculty and staff cuts of 2015, Vice President of Finance and Administration Michael Ahearn said that though they were painful, the cuts accomplished their purpose.
That summer 2015 financial re-set, a response to low enrollment, followed several years of growth under President Lindsay. Simultaneously, the school experienced growth in its endowment and a decrease in long-term debt, according to the most recent financial documents.
Programs at Gordon, both extra-curricular and co-curricular, have dealt with many challenges because of the loss of faculty and staff members. In the summer of 2015, Gordon lost 15 faculty and staff members. Many of them parted with Gordon because of a budget “prioritization” process that occurred during a period of financial “reset.”
The financial reset of the summer of 2015 was spawned from two “off years” in net tuition and fee revenue. For the fiscal year of of June 30, 2015 to June 30, 2016, Gordon took in $35.5 million in net tuition and fee revenue, which was a 3.68 percent decrease from the previous fiscal year, according to the college’s audited financial statements for the fiscal year that ended June 30, 2016. The previous fiscal year, 2014-2015, the college’s net tuition and fee revenue was $36.8 million — a 2.41 percent increase from the 2013-2014 fiscal year.
Tuition and fee revenue is the amount paid by students and their families after any discounts from the college. Tuition and fee revenue is essential to Gordon’s financial health considering that it makes up 77 percent of Gordon’s overall revenue, according to data provided by the federal government’s Integrated Postsecondary Education Data System (IPEDS). Thus, when the college experienced two years of low enrollment, the net tuition and fee revenue was hurt and the overall financial stability of the college was threatened.
When understanding the financial status of Gordon, it is important to analyze other financial components of the institution. The total operating revenue for the fiscal 2014-2015 was $62.3 million, which was a 2.23 percent increase from the previous year and the total operating revenue for 2013-2014 was $64.7 million, which was a 3.77 percent increase from fiscal 2012-2013.
Gordon’s overall operating expenses for fiscal 2014-2015 totaled $64.1 million, which was a 2.02 percent increase from the previous year. For fiscal 2015-2016, Gordon’s overall operating expenses were $63.8 million, which is was a .60 percent increase from the previous year, demonstrating that the college was able to decrease their expenses after the budget prioritization process of the Summer 2015.
Another important aspect of Gordon’s financial makeup is the endowment, which has been growing steadily throughout the past five years. In fiscal 2015-2016, Gordon’s endowment was $44.1 million. This endowment produced $1.5 million in investment income appropriated, which is the money used mostly for scholarships. Gordon’s investment income appropriated makes up 2 percent of the school’s overall revenue, according to financial documents made public by the college.
Gordon’s endowment will see an astronomical increase of about 50 percent as a result of the forthcoming $25 million donation that was anonymously given to the college recently. Twenty million dollars of this donation will be invested into Gordon’s endowment, allowing the college to provide more scholarships to students.
The remaining $5 million will be going toward the construction and upkeep of a new Fine Arts building, which will house the college’s honors programs.
Similar to the endowment, almost all of the pieces of Gordon’s overall finances have seen progress over the past five years. Long-term debt has decreased, and the total operating revenue has increased faster than the increase of the total operating expenses.
In fiscal 2011-2012, the net tuition and fee revenue was $30.7 million. The next year saw a significant increase of 7.11 percent as the amount climbed to $32.9 million. Fiscal 2013-2014 saw an even larger increase in net tuition and fee revenue, the amount accumulating to $36 million, which was a 9.27 percent increase from the previous year.
In fiscal 2014-2015, the net-tuition and fee revenue was an anomaly to the previous years. The cause of the 2.41 percent increase for that year was an enrollment goal shortfall. The college had set a goal for 540 new students for the fall of 2014 and had set a budget according to that goal. Those who had set the goal thought it to be reasonable considering the success in previous year’s enrollment.
Unfortunately, the college only enrolled 460 new students for the Fall 2014, thus missing its internal goal by 80 students. The result was less tuition and fee revenue than forecast, dealing a difficult financial challenge for the college.
The financial stress that the college experienced in fiscal 2014-2015 happened again in fiscal 2015-2016, when there was a 3.68 percent decrease in net tuition and fee revenue. The college had set a goal for 525 new students for the fall of 2015, but only enrolled 474 new students.
A frightening component of low enrollment for first year students is that the college will experience financial challenges for the four years following the new students’ admission.
Gordon Vice President of Communications Rick Sweeney said that the administration and Board of Trustees decided that because of two consistent years of low enrollment, the college would have to “find ways to make a 6 percent cut in the school’s roughly $60 million operating budget before the start of the new fiscal year on July 1, 2015, since we knew our revenue projection would fall short,” according to an email from Sweeney.
Sweeney added, “One “off year” in enrollment could be an aberration, but two consecutive “off years” is a trend. At that point, we had to reevaluate assumptions about student recruitment which we had built into long-term budget planning…we had no choice but to cut back on the expense side of the operating budget.”
In addition to the budget prioritization process and the letting go of some professors, administrators took cuts in compensation in an effort to aid the financial status of the school. In fiscal 2014-2015, Lindsay was paid $307,806, while in 2015-2016, he was paid $208,296 after he voluntarily worked without pay for three months. Between the years of 2014-2015 and 2015-2016, Vice President of Finance Michael Ahearn took a 4.70 percent pay decrease, Dan Tymann took a 7.51 percent pay decrease, Janel Curry took a 4.85 percent pay decrease and Sweeney took a 10.25 percent pay decrease.
Other financial details of the the college are as follows:
– Gordon’s long-term debt has been decreasing over the past five years. As of June 2016, Gordon’s long-term debt was $35.4 million.
– On average, Gordon has spent $50,000 on legal fees annually. The fiscal year of 2015-2016 was an anomaly in that the college spent $234,240 on legal fees.