Friday, March 16, 2012

PLU’s budget explained

By Amelia Heath, Copy Editor

As students are forced to reach deeper into their pockets to pay for tuition, many are left wondering where that money goes.

Vice President for Finance and Operations Sheri Tonn said the IRS form 990, an annual reporting return filed by nonprofit organizations, has not yet been filed for the 2010-2011 fiscal year because of issues with the IRS website.

According to GuideStar, a website that provides information on nonprofit organizations, 990s are generally available about two months after the nonprofit has filed with the IRS.

However, Tonn said documents published by the university, such as the endowment annual report and budget information compiled as part of the New Regent Orientation more accurately reflect how university money is spent.

“990s are done by all nonprofits,” Tonn said, “so they’re really not designed to work the way universities work.”

The university’s fiscal year runs from June 1 to May 31 the following year.

Expenses

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Faculty and staff salaries are PLU’s largest expense. Director of Human Resources Teri Phillips said salaries range from the highest faculty salary, $155,000, to minimum wage for some staff, which rose this year to $9.04 per hour. The university spent almost $34 million on faculty and staff salaries in the 2011-2012 fiscal year.

Services and purchases are the next largest expense, at almost $13.5 million for the 2011-2012 fiscal year. Tonn said services and purchases include “everything we buy,” including operating funds for administrative and academic departments, university insurance, software, legal fees, telecommunications, networking, travel, events and training.

Over the next one to two years, the university will discuss transferring the Banner system to a new operating system. (CORRECTION: PLU does not plan to stop using Banner, but has changed its operating system from VMS to UNIX.)

The university also plans to enhance academic advising and career development services under a new Educational Planning and Career Planning initiative.

Employee benefits include tuition remission benefits, unemployment insurance, worker’s compensation, life insurance and medical, dental and vision benefits. The university’s medical insurance carrier is Alliant.

Equipment and Maintenance covers facilities, utilities, equipment, capital improvements and repairs and maintenance, such as repairs to the university pool after the January snow storm.

Debt service expenditures are the principal payments and interest on the 2006 bond. Unlike other universities, the interest rate on the bond is fixed, making payments predictable.

The Board of Regents will meet in May to approve the operating and auxiliary budget for the 2012-2013 fiscal year.

Revenue

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For the 2011-2012 fiscal year, PLU had a total operating income of more than $105 million. The net operating income - total operating income minus money used for financial aid - for the university was almost $70.5 million.

Tuition and fees are PLU’s main source of income. Revenue from tuition and fees includes tuition from fall semester, J-term and spring semester, including tuition for study away terms, course, lab and activity fees and other student fees.

Less than two percent of PLU’s total operating income comes from investments.

Tonn said this is because of the 2008 stock market crash and “you just don’t make any [money] on short-term investments right now.”

However, according to the 2011 Endowment Annual Report, the PLU endowment is “invested in highly diversified asset classes, providing sustainability in principal [which] has allowed the university to continue to provide a five percent payout each year even during the volatile markets.”

Types of investments include hedge funds, domestic and international equities, real estate, fixed income, venture capital and private equity, real assets and cash and other non-pooled investments.

Government grants consist solely of federal work study.

Gifts and grants are made up of all contributions to the university’s annual fund.

“Other” revenue includes indirect cost recovery, parking fines, drama and music receipts and money made at athletic events and the family counseling center.

Auxiliary revenue includes student housing, din.ing services, catering, conferences and events, charges for replacement ID cards and income from Kelley Cafe, Old Main Market, Tahoma Bakery and Cafe, the Hauge espresso stand, Garfield Commons Coffee, Garfield Bookstore and the PLU golf course.

The golf course closed in October. Tonn said the university budgeted around the closing.