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Fiscal 2010 in Review

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This article originally appeared in the Bentley Magazine.

Fiscal 2010 in Review

Healthy operating surplus, comfortable liquidity

"Financial planning for FY 2010 occurred during the depths of worldwide financial crisis. Prudent financial management – a Bentley tradition – set the course for conservative budgeting and a plan that would permit maximum flexibility should enrollment drop substantially while the financial need of continuing students increased."

 

The resulting budget called for a tuition increase that was lower than anyone could remember, as well as no salary increases for faculty and staff. The Board of Trustees approved the FY 2010 budget on February 27, 2009 – 10 days before the stock market bottomed.

I am pleased to report that FY 2010 ended with a healthy operating surplus and comfortable liquidity. Dire predictions of declining enrollment did not materialize; financial aid remained stable; and the endowment grew, ending the year substantially above its lows. The university closed the fiscal year with far better results than could have been expected when the budget was approved. Compared to fiscal 2009, when we were forced to manage the many complications presented by the financial crisis, FY 2010 was a breath of fresh air.

It is clear that major financial obstacles remain, however, and we must continue diligence in assuring that the university stays strong.

A Look at the Numbers

Bentley ended FY 2010 with another positive performance, reporting an operating surplus of $4.3 million. This supports the university’s A3 bond rating, which was reaffirmed by Moody’s in June 2010.

Operating performance included an increase of 2.7 percent ($4.2 million) in net tuition, room, board and fees, compared to a rise of 4.4 percent in 2009. The decline in net tuition was driven by a smaller tuition increase of 3.5 percent (as compared to 5 percent in 2009), while financial aid continued its upward climb; aid rose by 7.2 percent ($3.8 million) as compared to 9.5 percent in 2009. Undergraduate enrollment grew modestly to 4,079 from the previous year’s 4,073, and graduate registrations increased to 7,345 from 7,022.

Total operating expenses were virtually unchanged from 2009, owing to the absence of salary increases as well as our conservative operation in the anticipated hostile financial environment.

The year-end endowment market value increased by $15.2 million, up from $158.4 million in 2009 to $173.6 million; the net return in FY 2010 was 14 percent. The increase, net of distributions for operations, can be credited to excellent performance, coupled with a $2 million reduction in the university’s distribution for operations.

Cash ended the year at $14.5 million, more than doubling the $7.2 million balance of 2009. Net property, plant and equipment decreased for a second consecutive year, dropping by $4.2 million, net of depreciation; completion of many planned projects enabled the university to reduce capital investments. The “mark to market” net value of interest rate swaps increased from $17.4 million to $22.9 million, as long-term interest rates continued to decline.

During the summer of 2010, Bentley refunded its Massachusetts HEFA series J fixed debt – a move that will save $6 million over the remaining 18 years of this debt.

Going Forward

Although FY 2010 was another positive year, many factors are converging to raise concerns for the future.

The financial crisis continues unabated for many families unable to find employment, and the Bentley endowment – although growing – remains well below pre-crisis levels. The demographic decline, combined with a weak economy, will likely bring challenges to maintain student quality as well as substantial increases in financial aid. The university has a limited ability to increase tuition, even as many costs continue to rise. Another challenge is finding sufficient resources to support strategic initiative expenses, which are planned to begin in earnest in FY 2012.

Your help can make a big difference. The generosity of Bentley alumni, parents and friends is critical to achieving our strategic objectives and keeping the school at the forefront of business education.

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