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STEADY AND STRONG By Andrew Dorantes, vice president for administration and finance and treasurer

H its

Harvey Mudd College and its Business Affairs Office have been buzzing with activity during the construction of the teaching and learning building. Global markets have been active as well, though not in a positive way. Tough global markets have recently experienced volatility and negative returns, the College remains steady in its goal of providing a superior education for

students. Following are highlights of the

2011–2012 fiscal year. Te College ended the fiscal year with assets in excess of

$373 million. Tis total is composed primarily of investments of $280 million and of land, buildings and equipment assets of $63 million. With the ongoing construction of the teaching and learning building, the College had an increase in plant facilities expenditures. Liabilities of $33 million consist primarily of long-term bonds payable and of payables

to annuitants and

trust beneficiaries. During the 2011–12 fiscal year, total net assets decreased

by $3.8 million. Tis decrease in net assets resulted from a decrease in the value of the investment pool from both realized and unrealized losses

in the value of investments,

partially offset by gifts to the teaching and learning building and to various endowments. As of June 30, 2012, net assets totaled $340 million, comprising three net asset categories: unrestricted (those over which the College has full discretion) of $106 million; temporarily restricted (those given to the College for a specific purpose) of $123 million; and permanently restricted (those given to the College to be held in perpetuity) of $111 million. Total revenues were $69 million for fiscal year 2011–2012,

compared to $57 million for fiscal year 2010–2011. Tis was due to increases in net student revenues and gifts. Total expenses for 2011–2012 were approximately $52 million. For the year ending June 30, 2012, the College experienced

an operating surplus of approximately $159,000 after a number of transfers to high priority areas, as approved by the Board of Trustees Budget and Financial Planning Committee, including $500,000 of additional support for the Renewal and Replacement Reserve fund, $275,000 for enhancements to the College’s financial aid program and $70,000 of additional support for administrative needs. Te key factors influencing the positive operating surplus were lower financial aid needs than anticipated, additional grant and Clinic revenues and savings from unfilled administrative positions. Te endowment produced a negative return of 3.59

percent for the fiscal year ending June 30, 2012. Te investment performance was impacted by volatility in global financial markets. Te S&P 500 index return was 5.45 percent and the Barclays Aggregate Bond index return was 7.48 percent. Te

MSCI EAFE index, a benchmark used to measure a portion of

of (13.83) percent for the same period. Market value of the endowment was $226 million at year end,

the international stock market, reported a negative return representing an

equivalent of $290,230 per student. Endowment payout provided 21 percent of the College’s

operating revenues during the fiscal year. Te College employs a formula that governs the annual payout of endowment earnings to support operations. Endowment payout will decline in fiscal year 2012–2013 as a result of recent declines in the endowment. Te formula is designed to balance the need for endowment resources to support current activities with the equally important goal of preserving the value of endowment funds for the future. As you are probably aware, there continues to be uncertainty

in global financial markets, which has impacted the College’s investment returns. HMC has been monitoring the economy, the volatile stock market and their effect on the College’s investment pool and operating budget. Te College’s administration and trustees have prepared and will continue to prepare for various scenarios that may occur as a result of economic uncertainty. Te College eagerly awaits the completion of the teaching and learning building. We are excited for what this facility will do to enhance the already outstanding educational experience at Harvey Mudd College.


44 Har vey Mudd College FALL/WINTER 2012

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