Indicators point to stability that could help with future investments
By JOHN McCALLUM
Editor
Despite tough economic times and the potential for continued reductions in state funding, Eastern Washington University remains in stable financial condition, is growing and is in a good position to plan and manage future investments and resources.
This is the summation of a preliminary 2010 year-end financial review presented to Eastern's board of trustees by university chief financial officer Toni Habegger at the board's final 2010 meeting Nov. 19. A complete report will be delivered at the trustee's first 2011 meeting in January.
Habegger said key balance sheet indicators show the university is in pretty good financial shape when compared with other Washington and national public institutions. Eastern's net assets have grown by 2.6 percent, from $290.38 million in 2009 to $297.86 million with the university's available cash on hand and investments up 9 percent to just over $89 million over the same period.
Preliminary 2010 figures indicate Eastern's total financial resources per student have risen to $9,310, up from 2009's $9,130 and higher than the $8,751 and $8,272 median for other Washington public universities and national public universities. Eastern also has 195.15 days cash on hand capability to cover operation expenses, compared to the 2009 state median of 112.4 days and national median of 122.57 days.
Eastern's liquidity remained steady above the accounting industry baseline, providing just over $3 in current assets to cover every $1 of current liabilities. The financial status indicates Eastern has twice the capability to cover debt than other public universities.
“You have room to borrow money to cover future projects if you choose to do so,” Habegger told trustees.
But despite the positive balance sheet indicators there were some troubling signs. Even though Eastern's revenues exceed expenses, $182.3 million to $181.6 million in 2010, those revenue sources are shifting more onto students.
State operating funds are expected to drop to $48.3 million this year from last year's $59.3 million while tuition revenues increase from $58.8 million in 2009 to $62.9 million. Grants and contracts are also up, $44.5 million from $40.7 million, with auxiliary and other funds dropping $5.1 million overall to $26.7 million.
While the university's enrollment increased to 10,831, a 3.7 percent jump from 2009, so did its students' reliance on various forms of financial aid. Federal assistance jumped $10.3 million to $74.6 million, amounting for most of the overall aid increase of $10.9 million and making up about 41.4 percent of financial aid revenue sources. Pell Grants increased by $5 million over 2009 numbers with loans up $4.5 million to $58.8 million.
With across the board state spending cuts expected in 2011 to attempt to balance the budget, Habegger expects state funding to account for less than half of Eastern's operating budget in 2011, the first time that will have happened. It creates a situation where Eastern's net tuition and fees per full-time equivalent students and its state appropriations per student have now fallen below state and national medians, almost 12 percent in the case of state funding.
“We don't have a lot of control over this,” Habegger said.
To help keep expenses below revenues, Eastern has made decreases in many functions over 2009 levels, including cuts in instruction, academic support and public service, with significant reductions in maintenance and operations from 13.09 percent of expenditures in 2009 to 9.38 percent in 2010. Staff reductions in 2009 have led to a $3.6 million decrease in salary and wages, while benefits costs have increased $985,000 and unemployment claims have skyrocketed to just under $450,000 from $100,000 in 2009.
Habegger also noted that the unreserved fund (operating fees) had a June 30, 2010 balance of just over $27.23 million. After committing $9.9 million to budget reductions, $266,009 to inventory and encumbrances and maintaining a policy required 10 percent of fiscal year 2011 expenses in reserve, the account had $6,882,805 in unassigned balance.
“Those funds are available for future decisions at the discretion of the president and the board as we look at future funding decisions,” Habegger said.
John McCallum can be reached at [email protected].
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