Linda Wagner, Vice President for Finance and Administration
Gannon University completed Fiscal Year 2017 with a positive financial performance. Net assets increased by $5.1 million. This increase included approximately $1.1 million from operating activities and $4 million from non-operating activities. Approximately $2.6 million of the non-operating increase in net assets was due to positive endowment results. Another $1.4 million of the increase was due to non-operating contributions, including gifts to the endowment.
Net tuition and fees decreased by approximately $2.4 million, or 3.5%, versus the prior year. The overall tuition discount rate was 37%. Auxiliary enterprise revenue grew by approximately $300,000 or 2.3% over the prior year.
Enrollment for Fall 2016 totaled 4,343 students, which was a slight decrease of 73 students from the prior year. The total number of undergraduate students totaled 3,098 and included 626 first-year students. Graduate enrollment was 1,245 students, which was down 56 students from the prior year. The main area of decline was in the School of Business and the School of Engineering and Computer Science with a decrease of 88 students. This resulted from a reduction of international students primarily from India due to a VISA issuance problem not related to the University. The Occupational Therapy Doctorate Program in Ruskin, Fla. welcomed its second class of students this past fall. Enrollment grew to 53 graduate students at that site. The third class of Occupational Therapy Doctorate students will start in Fall 2017 along with the first class of Physical Therapy Doctorate students.
Unrestricted contributions totaled approximately $8 million and temporarily restricted contributions added another $1 million, totaling approximately $9 million. Included in unrestricted contributions was a $6.8 million in-kind donation of software from Siemen’s Industry, a global technology company. The product lifecycle management software will give Gannon engineering students access to software used by today’s top manufacturing companies around the world. The University also received grants from the American Heart Association to fund simulated intubation research, and from the Erie Community Foundation to support the Our West Bayfront Neighborhood Revitalization Initiative. Federal and state grants totaled $2.7 million. Gannon received its third National Science Foundation: S-STEM grant, Scholars of Excellence in Engineering and Computer Science. The purpose of this grant is to provide financial and academic support for low-income, academically talented engineering students.
The total return on the endowment was 12.3%. The Endowment Fund increased from $56.6 million at the end of FY16 to $60.2 million at June 30, 2017. This increase of $3.6 million included positive returns from FY17 as well as gifts to the endowment, net of spending. In FY17, a voluntary early retirement incentive program was offered to a selected group of tenured faculty based on specific parameters. Thirteen tenured faculty members accepted the offer at a cost of $1.6 million, which was funded from a 3% extraordinary draw from the endowment. The savings in the first two years will cover the cost of the program.
Total Expenses increased by $9.8 million, however, $6.8 million of this increase was due to the software gift that was also recognized as revenue in contributions. The increase in expenses without the software gift was $3 million or 3.5% over the prior year. Compensation increased by approximately $4.7 million, however, about one-third of this increase was due to the voluntary early retirement incentive program. The compensation pool for faculty and staff was 3.4%, which included both salary increases as well as faculty promotions in rank and staff promotions.
Operating expenses for FY17 were $5.2 million higher than FY16 but included the $6.8 million in the software gift. Removing the cost of the software from operating expenses resulted in a $1.6 million decrease from the prior year. Other expenses remained relatively consistent from the prior year in total. The administrative unit and academic program review process continued for the fourth year in an effort to contain operating costs and improve efficiencies.
Several investments were made either through reallocation or new funding to ensure continued strategic enhancements for academic, athletic and administrative programs. Investments for new and existing programs were made in Mechanical Engineering, Forensic Science, Criminalistics, Healthcare and Supply Chain Management and Public Health. The University moved away from a partnership with a third party to offer one undergraduate and two graduate online programs. Investments were made to support and grow online degree programs in-house. Lab technicians were added in the Human Performance, Biology and Chemistry Laboratories. The University has contracted with a firm who will provide Gannon comprehensive services focused on obtaining federal grants and private foundation funding.
Investments made in the division of Student Development and Engagement included a position to provide psychiatric services on campus for students in need. Many students are entering college with pre-existing psychological/psychiatric conditions requiring ongoing treatment and are increasing on both the national and local levels. Additionally, funds have been added to the Recreation and Wellness Center for operating expenses such as supplies, programming, professional development and student employees.
Gannon University continued its commitment to sustaining competitive NCAA Division II intercollegiate sports programs for women and men. A growing number of student athletes were accommodated by increased roster sizes for Men’s and Women’s Cross Country, Acrobatics and Tumbling and Competitive Cheer. Developmental squads were also formed for Men’s and Women’s Soccer. To support this growth, funds were added for personnel, recruiting and operating expenses.
The University will continue to exercise prudent fiscal management, invest in strategic initiatives to sustain and grow the University and allocate financial resources to ensure that students receive the best possible experience both in and out of the classroom.