Getting budget facts straight

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Budget cuts across all departments led to the cancellation of the original headliner for Mallapalooza last weekend. Photo by Anthony Garnier

This article has been corrected to reflect the accurate budget cuts to SPUD and RHA and clarified to include response from an April 6 SG meeting involving UD chief financial officer Brian Murray and director of finance Leonard Robertson.

In light of current discussions surrounding the financial difficulties of the school, it is more important than ever to have a clear understanding of the University of Dallas’ budget.

According to Vice President Dr. John Plotts, UD is currently running a deficit of $1.7 million.

Plotts attributes this deficit to a lower-than-expected enrollment rate in the College of Business.

This deficit has caused there to be budget cuts across the board, including in aspects of Student Life. The budgets for both Student Programming at UD (SPUD) and the Resident Housing Association (RHA) were cut, the latter by 75 percent.

As a consequence of this budget reallocation, a $10,000 contract with the headliner band for last weekend’s Mallapalooza was cancelled a few weeks prior to the event without the consultation of SPUD staffers. Meanwhile the budget for the Resident Housing Association (RHA) was frozen until a decision could be made as to what RHA events were essential to student life.

According to Plotts, all departments have been asked to make cutbacks.

Plotts also emphasized that funds for the new administrative building came from the sale of lands behind the rugby pitch, that used to be adjacent to the old Cowboys stadium.

The university sold this land for $15 million, which went into its endowment. It then borrowed this same amount from the endowment to build the coming Cardinal Farrell Hall.

According to a report given by Treasurer Mike Woodrum to Student Government in March, the deficit is $1.9 million. Woodrum met with school officials to discuss the budget and conducted his own evaluation of the school’s 990 forms, which are tax return documents made publicly available by the IRS for tax-exempt organizations, from 2014.

Though this report is from three years ago, it is the most recently available information about the operating costs for the university.

Woodrum summarized his examination of the 990 with several key points.

First, he noted that “around $10 million in tax-exempt bond liabilities were restructured into higher interest rate unsecured taxable debt.”

On April 6, Dr. Brian Murray, CFO and VP for Administration, and Mr. Leonard Robertson, Director of Finance and CPA spoke to Student Government about the current budget situation, where SG asked them about the decision to restructure the school’s debt.

Robertson responded that when he has focused on trimming debt and lowering cost for the university.

The next area of the 990 form that stood out to Woodrum in the March SG meeting was a $4,632,665 unspecified foreign transaction in Central America; twice the $2,198,080 investment in the Rome Campus, the university’s only other foreign investment. The form provides no information about this transaction.

“The university’s endowment holds alternative investments,” said Murray, during the April 6 meeting. “Some of those investments are in the form of hedge funds, and some of them are located internationally. The university actually has in its investment policy statement a requirement that we hold some international securities.”

Robertson said that he believed that the transaction was indicative of the movement from a foreign investment in the Caribbean to cash in the endowment.

“That one moved directly into cash at that moment and then later they decided where they wanted to put it,” Robertson said.

The endowment of the university in 2014 was $58,826,000, which, according to Woodrum, only amounts to about 60 percent of the university’s receipts each year.

Woodrum also pointed out that the major fundraiser of 2014, a golf tournament, generated $125,591 in donations, but ran a net operating loss of $38,795.

The final take-away from the 2014 990 was that the university had only $8,775,510 in non-government grants, contributions and gifts.

The total amount of contributions and grants for that year was around $10 million, compared to $75 million from program services like tuition and fees.

“We’re mostly funded by tuition, with a very small portion of that coming from grants and contributions,” Woodrum said.

Woodrum performed his own regression analysis of the tax return data from UD and 47 peer institutions.

Endowment is a reliable indicator of the long-term financial viability of a University.” Woodrum said. “I have found statistically significant relationships between alumni participation rate, contributions, the salary of the advancement officer, and endowment. I have not found a statistically significant relationship between program revenue and endowment.”

According to Woodrum’s findings, what really matters for improving the long term financial viability of the university is grants received and alumni participation.

1 COMMENT

  1. I just made a modest donation as part of the Cor challenge. I am happy and proud to support UD. as an Alumni, and current parent, i’d like to thank Mike Woodrum for correctly points out the need for an explanation of the switch to a higher interest, taxable position from the bonds. And the unexplained ‘investment’ of $4 million in central america, while running a deficit approaching $2 million needs explanation. I am concerned that my donations are not being well used, and that some of these decisions may be endangering the Core and the Mission of the University.

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