The Collegian

Issue date: 11/15/07 Section: News

Media Credit: Will Olthouse

Hillsdale College's several departments are trying to decide how much money they will need to operate from July 1, 2008 to June 30, 2009.

Preliminary budgets from each department for next year are due to Associate Vice President for Finance Sheri Piper by mid-December.

"I'm asking people to budget 18 months in advance," Piper said. "That's hard to do."

Compiling a yearly budget usually takes about eight months of number crunching and report running between departments.

Piper said that 75 people, from secretaries in the business office to the president himself, work on the college's budget each year. Her own job is dedicated almost exclusively to making sure everything adds up, year after year.

President Larry Arnn said the college is about even or slightly ahead of its expenses this year.

"That is a good year," Arnn wrote in an e-mail to The Collegian. "When I say we are ahead, I mean we are ahead of budget. If everything comes together on the budget, we will have the money to do what we must."

This will be the first year departments have used Colleague, software from Datatel, Inc., to write their budgets, Vice President of Administration Rich Pewéesaid. The program allows department heads to specify exactly what each expenditure is for, and replaces thick stacks of forms printed in triplicate and stashed in large blue binders.

How Hillsdale gets money

The college's total budget for July 2007 to June 2008 was $67,668,473, Piper said. This amount varies from year to year, depending on the total revenue available to the college from donors, students and the college's endowment.

Tuition, room and board and student fees form 39 percent of the current budget. In 2003, student payments made up 35 percent of the college's budget, increasing a cumulative 17.7 percent in the past four years, Piper said. Inflation was 12.1 percent over the same
period.

"If the college is healthy, then the students will benefit," Arnn said. "The college is an excellent bargain compared to its peers. Our tuition has not been going up as fast as that of our competitors, and it begins from a lower base. As long as we are successful with the budget, this will likely continue."

The college uses non-tuition monies from students only for their intended purpose.
Technical support fees pay for things like Internet connections, and student fees pay for student ID cards and Student Federation dues.

"We try to keep student fees down," Piper said. "We are very careful that fees only cover student expenses and support what we've told students they're supporting."

It is the same with donations. Whenever someone gives money to the college, the finance office is meticulous about using the money for what the donor intended. Piper said. It keeps and submits reports to donors detailing how the college has used their money.

"That takes a lot of paperwork," Piper said. "We have a huge sheet of accounts to track these expenses. At least three people in the finance office are responsible to make sure the money goes where it should."

The college endowment, at $257,127,942 in December 2006 according to the college's 2007 self-study report, fluctuates based on the markets in which it is invested. This means that, in some years, the college may have several extra hundred thousand dollars to spend and, in other years, the college has to take money from its investments to pay the bills.

Where the money goes

The self-study also reports that the college spent an average of 82 percent of its budget over the past 10 years on student services and academic support, which means paying for the three academic divisions, the provost's office, Mossey Library, external affairs, the deans' offices, financial aid, the registrar's office, the health service and athletics.

Since 2003, the self-study says, financial markets and Hillsdale's fundraising campaigns have done well enough that the college has made more money than it needs just to cover operating expenses. In the three years prior, the college had been making less money than it spent because the endowment's returns were so low that the college had to withdraw money from the endowment to cover the deficit.

Extra money goes quickly. When it is available, the board of trustees takes recommendations from the president and decides what to do with it, Piper said.
The college has used surplus money to help build Moss and Delp halls, improve the north and south ends of Strosacker Science Center, put new shelves in the library, buy new network servers, purchase local property, renovate the Dow Leadership Center and build the colonnade between Mossey Library and Grewcock Student Union.

The college also uses extra money to stock its emergency fund and build the endowment, Pewe said. Emergency funds pay for unexpected expenses - such as if a boiler breaks or if a department must hire a new professor suddenly mid-semester.

How the money gets there

Right now, department heads are creating preliminary budgets for their department and entering their funding requests into Colleague.

They will send this to their division dean if they are the head of a faculty department or to their budget supervisor if they are a non-academic department. The dean or supervisor either approves this budget or sends it back to the department head for revision, Piper said.

The dean or supervisor then sends the budget to either the provost's office (for academic departments) or the appropriate vice president (for non-academic departments). Once a provost or vice president approves it, he sends the budget to Piper.

Piper reviews the budgets and compiles a report of the college's total projected expenses. This she sends to the college president.

Next, the president, chief administrative officer and treasurer determine next year's tuition and board increase.

Piper calculates the expected number of students and money that will come into the school during the next fiscal year, than matches the expected revenue with the projected expenses to determine how many gifts the college needs to make revenue match or exceed expenses.

This is all compiled into another report for a meeting of the college's board of trustees in mid-February. Piper said the college's finance committee usually asks that the budget be decreased, and suggests ways of doing so.

"We all know what the expectation is for our department's budget," said Pewe, who sits on the board of trustees in addition to leading the department of administration. "By the February meeting, reports are pretty tight."

These suggestions go back to department heads and vice presidents, who make the changes and present the final budget to another trustee's meeting in May during commencement.

The budget is then approved and moved into action at the beginning of the college's fiscal year on July 1.

"It's no different than the way you set up a budget at your house," Pewe said. "It's the same process."

Hillsdale College Collegian, 2007

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