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Journalists Can’t Count
At least half of the eight Ivy League schools ran budget deficits in the past fiscal year, reflecting cuts to federal research funding and difficulty in controlling operating costs.
Of the seven schools that have released audited annual reports, Harvard University, Yale University, Cornell University and Dartmouth College posted gaps in the year that ended in June…
Harvard, the world’s richest school with a $32.7 billion endowment, said last month it posted a $33.7 million deficit in the year ended in June, up from a $7.9 million shortfall a year earlier…
Yale, whose $20.8 billion endowment makes it the second-wealthiest university, said it had a $39.2 million gap in fiscal 2013 following a surplus the prior year…
Cornell University, based in Ithaca, New York, posted a $31 million deficit, according to its annual report. It said more than $20 million of the shortfall came from paying for interest-rate swaps that it used in an attempt to lock in the borrowing cost for bonds that it later decided not to sell…
While Dartmouth posted the smallest gap of $1.8 million, the college in Hanover, New Hampshire, is “committed to a cultural shift toward rigorous financial discipline” based on expectations that “federal funding for education will diminish, endowment growth will slow, and the cost of tuition must stabilize,” Justin Anderson, a spokesman, said in an e-mail.
The papers are missing an important point. Running a deficit or a surplus at these schools is in no way a measure of financial health. College financial reports are not akin to a corporate profit and loss statement; after all, the goal is not to make a profit. The bottom line figure in an academic institution’s financials merely reflects how a school did relative to its budget forecast. As the start of the year, certain estimates were made about revenue: tuition, financial aid, alumni giving, the draw from the endowment, etc.; and forecasts were also prepared about expenditures on everything from faculty and staff compensation to outside services, purchases, taxes and depreciation. As you can from the College’s below figures, its is impossible to hit these estimates spot on.
In fiscal 2013, the College had a deficit of $1,782,000 out of total expenses of $835,273,000 — a deficit in percentage terms of a minuscule 0.21.%. I’d say that this is pretty good forecasting:
Note also, despite Dartmouth’s ongoing parlous financial situation, the College had a surplus of $27,417,000 during the previous year.
The respective percentage deficits of the other in-the-red Ivies were as follows: Harvard: 0,79% ($33,700,000 of out expenses of $4,248,371,000); Yale: 1.3% ($39,254,000 of out expenses of $2,976,132,000); and Cornell: 2.8% (actually $89,351,000 — Bloomberg got this figure wrong — out of expenses of $3,232,192,000)
More incisive reporting would have noted the real story: total expenses at Dartmouth jumped 7.7% last year (from $775,788,000 in 2012 to $835,273,000 in 2013; see above); at Harvard 5.5%; at Yale 5.8%; and at Cornell 3.8% — all figures well above the consumer price index’s growth of 1.51%, which means that college costs once again far outstripped families’ ability to pay for education.
Addendum: To his credit, Phil Hanlon set the context correctly in a comment to Jim Kenyon, quoted in the latter’s column in the Valley News:
“Obviously, we’d love to have revenues exceed expenses, but a ($1.8 million loss) is not a concern,” Dartmouth President Phil Hanlon, who arrived in Hanover this summer, told me in an interview Friday. “A whole bunch of predictions go into (budgeting). We never expect to hit it on the dollar.”
However, Phil did not comment on the unsustainable growth in the College’s spending in 2013, and Kenyon did not ask about it.
October 18, 2009
When Love Beckoned in 52nd Street
We were at San Francisco’s BIX last evening, enjoying prosecco, cheese, and a bit of music. A full year of inhabitation in Northern California has unraveled to me no decent venue for proper lounging, but…
October 9, 2009
D Afraid of a Little Competish
So our colleague and Dartblog writer Joe Asch informed me that the D has rejected our cunning advertising campaign. Uh-oh. The Dartmouth is widely known as a breeding ground for instant New York Times successes,…
September 4, 2009
How Regents Should Reign
As Dartmouth alumni proceed through the legal hoops necessary to defuse a Board-packing plan—which put in unhappy desuetude an historic 1891 Agreement between alumni and the College guaranteeing a half-democratically-elected Board of Trustees—it strikes one…
August 29, 2009
Election Reform Study Committee
If you are an alum of the College on the Hill, you may have received a number of e-mails of late beseeching your input for a new arm of the College’s Alumni Control Apparatus called…
August 23, 2009
Fare Thee Well, Tom Crady
And now Dean Tom Crady has precipitously announced his departure from the College after only 20 months on the job. How to read this? By way of background, prior to coming to Dartmouth, Crady had…
May 31, 2009
Kangaroo Court, Indeed
In an interview with The Dartmouth, alumni-elected trustee T.J. Rodgers ‘70 explained his reasons for declining to participate in future evaluations of trustees up for “re-election,” namely the “kangaroo court” nature of such discussion in…