2.11.1 Financial Resources
The institution has a sound financial base and demonstrated financial stability to support the mission of the institution and the scope of its programs and services.
The member institution provides the following financial statements: (1) an institutional audit (or Standard Review Report issued in accordance with Statements on Standards for Accounting and Review Services issued by the AICPA for those institutions audited as part of a system-wide or statewide audit) and written institutional management letter for the most recent fiscal year prepared by an independent certified public accountant and/or an appropriate governmental auditing agency employing the appropriate audit (or Standard Review Report) guide; (2) a statement of financial position of unrestricted net assets, exclusive of plant assets and plant-related debt, which represents the change in unrestricted net assets attributable to operations for the most recent year; and (3) an annual budget that is preceded by sound planning, is subject to sound fiscal procedures, and is approved by the governing board.
Audit requirements for applicant institutions may be found in the Commission policy “Accreditation Procedures for Applicant Institutions.”
Judgment of Compliance
Compliance
Narrative of Justification
As outlined in the Board of Trustees By-Laws 2005 of Bennett College, the ultimate responsibility for the financial stability of the college resides with the Board of Trustees and the President. The Area of Business and Finance, headed by the Vice President for Business and Finance, is responsible for overseeing the college’s day-to-day financial affairs.
The required documentation for this core requirement, as well as the evidence provided to substantiate compliance to Comprehensive Standard 3.10.1 and Comprehensive Standard 3.10.2, demonstrate a pattern of financial stability over the past three years. The Restatement of Revenues, Expenses, and Changes in Unrestricted Net Assets will show an increase in net tuition growing from $6.1 million in FY 2005 to $8.4 million in FY 2007. That growth was fueled not only by annual increases in tuition and fees, but by exceptional enrollment growth.
BENNETT COLLEGE
FIVE YEAR ENROLLMENT TREND
|
|
Fall 2003 |
Fall
2004 |
Fall
2005 |
Fall
2006 |
Fall
2007 |
Total Enrollment |
429 |
504 |
572 |
607 |
678 |
Full Time |
426 |
502 |
566 |
590 |
655 |
Part Time |
3 |
2 |
6 |
17 |
23 |
FTE |
428 |
504 |
570 |
599 |
665 |
Office of the Registrar
During the four years presented in the financial statements, the overall financial health has been good as evidenced by the financial ratios. The College considers the following ratios to be key indicators of its financial health:
- The Viability ratio has increased from 0.61 to 1.15 for the years 2004-2007. For the most recent two fiscal years, the ratio has been 1.15 and .77 respectively. The increase in this ratio can be attributed to the reduction in debt of the College. An improvement in this ratio signals that the debt of the College can be covered by its expendable resources.
- Over the four years presented in this narrative, the College’s Net Asset Ratio has increased by 8%. In fiscal year 2004, the Net Asset Ratio stood at approximately 73%. As of June 30, 2007, the ratio stood at approximately 81%. This ratio measures whether or not the institution’s financial health improved over the immediate prior fiscal year.
- The Net Income Ratio of the University stands at a steady 21% for the fiscal year ended June 30, 2005. A positive Net Income Ratio depicts that the University operated in a surplus position. The Net Income Ratio was 5% as of June 30, 2004, however, the actions of the University in the last three years has seen it grow to 21% as of June 30, 2005.
- The Primary Reserve Ratio of the College stands at an impressive 0.64. It shows that the College is financially strong when you compare the expendable net assets to the total expenses on an annual basis.
- As of June 30, 2007 the Current Ratio of the University stood at 6.09. Over the four years presented in this narrative, this ratio has never fallen below 1.53. This ratio demonstrates that the University is able to meet it current obligations from current assets.
The College’s endowment grew by 47% (8.4 as of June 30, 2004 and $12.2 as of June 30, 2007) over the past four years. The most recently concluded fiscal year resulted in $1.9 million dollars of expandable earnings based on the Board of Trustees approved investment spending policy. (
Endowment Investments Rollforward)
Bennett College has also demonstrated financial stability as evidenced by the unqualified audit opinions that the College received over the last three fiscal years (Financial Management Letters (
FY 2005,
FY 2006,
FY 2007). The most recent audit of finances (
Audited Financial Statements FY 2007) reveals that from all indicators, the financial health of the College is stable. Some of the key indicators are as follows:
- Unrestricted cash is positive. For the most recent fiscal year ended June 30, 2007, unrestricted cash and cash equivalents were $1,225,819 (Audited Financial Statements FY 2007).
- Unrestricted net assets (exclusive of plant assets and plant related debt) continue to increase. For the most recent fiscal year ended June 30, 2007 unrestricted net assets was $10,926,794(Audited Financial Statements FY 2007).
- Over the three year period encompassing fiscal year 2005 through 2007, unrestricted revenues from operations have increased by a significant 7%.
Annual Budgets
The College prepares an annual budget that is preceded by sound planning, subject to sound fiscal procedures, and approved by the Board of Trustees. The institution’s current strategic planning objectives are considered during the planning and preparation of the institution’s annual budget. The process of planning, preparing, implementing, and monitoring the budget is outlined in the Institutional Effectiveness Cycle.
Development of the annual budget begins in December of each year when the budget information and instructions are developed. The Business Office provides assistance to all unit managers in preparing budgets. The division heads develop their estimated expenditures, and documentation to support their budgets. Each area holds internal budget meetings to develop a preliminary budget. The preliminary budget is forwarded to the Vice President for Business and Finance for review by the Senior Staff. Area heads present and defend their budgets to the Senior Staff.
The final proposed budget is submitted to the Finance Committee of the Board of Trustees. The board’s Finance Committee reviews the proposed budget and makes a recommendation to the full board for approval. The Board of Trustees Minutes dated June 22, 2007 attest to approval of the operating budgets for fiscal years 2008. (Bennett College Operating Budget FY 2007-2008)
Supporting Documents