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NTIOCH UNIVERSITY
REPORT TO THE
BOARD OF TRUSTEES
1997-98 Year End Financial Statements
1998-99 First Quarter Performance
October 16-1 7, 1998
TABLE OF CONTENTS
Introduction
1997-98 Year End Financial Statements
1997-98 Year-End Budget Performance
Antioch University Summaries
Antioch College
Glen Helen
Antioch New England
Antioch Seattle
Antioch Southern California
The McGregor School
University Administration
Antioch Review
WYSO Radio
University-Wide Expenses
Change in Carryforward and Liquidity
1998-99 First Quarter Budget Performance
1998-99 First Quarter Performance
Antioch University Summaries
Antioch College
Glen Helen
Antioch New England
Antioch Seattle
Antioch Southern California
The McGregor School
University Administration
Antioch Review
WYSO Radio
University-Wide Expenses
Receivables Aging Report
Cost Centers
Line Items
REPORT TO THE BOARD OF TRUSTEES
OCTOBER 16-17,1998
I. INTRODUCTION
The first section of this report contains financial information concerning the performance of the University, its campuses
and associated units during 1997-98. The second section contains financial information on how the University and its
components have performed in the first quarter of the 1998-99 fiscal year. The Datatel Management System and the
cooperation of Campus personnel allow us to present the full first quarter of information shortly after the close of the
period.
The information contained in this report is presented using the Financial Accounting Standards Board (FASB) 11 7
reporting standards that became mandatory for independent colleges and universities on July 1, 1995. The objective of
this FASB reporting standard is to enhance the relevance, clarity and comparability of financial statements issued by not-
for-profit organizations, regardless of the nature of their operation or mission. The information on the 1997-98 fiscal year
expands and supplements the material presented in the Audited Financial Statements prepared by Ernst & Young LLP.
The material presented in this document provides a more detailed view of the revenues and expenses of the University
and is intended to promote the understanding of University operations as a whole and of each of its units. If you are
familiar with the terms and format of this Report, you may want to begin reading the 1997-98 Year-End Budget
Performance Section on page 1 and then read the summary of the 1998-99 First Quarter Performance on page 52.
11. FORMAT AND CONTENT
The 1997-98 Year-End Financial Review section and the 1998-99 First Quarter Performance section contain summary
schedules for the entire University and similar schedules for each campus, the Central Administration, Glen Helen,
WYSO Radio, the Antioch Review, and University Wide accounts. Each campus and operating unit has prepared
narrative descriptions of the significant events that caused the unit to deviate from its budget. The purpose of the
narrative is to provide an overview of how each Campus performed during the prior fiscal year and how well it is
managing during the first quarter of the current year. The narratives also provide an opportunity for the President or unit
manager to describe the problems he or she has dealt with during the previous year and the opportunities that are being
exploited during the current fiscal year.
Revisions to the 1998-99 Capital Budget may be necessary. Under Board of Trustee policy, Trustee approval is required
for any non-personnel expenditure of more than $1 OIOOO. The Capital Budget that was presented to the Board at the
June meeting contains plans for capital expenditures, but during the first quarter of the fiscal year, some Campuses have
identified changed conditions as well as unanticipated needs that require changes to their capital improvement plans. In
some cases, a campus may need to acquire additional equipment? particularly technology, while in other cases repairs or
improvements to the physical plant may be needed.
Ill. THE FUNCTION SCHEDULE
For the University as a whole and for each of the Campuses and units, both sections of this Report contain two
schedules. he first is the Summary by Function. This schedule provides information about Revenues by Type and
Operating Expenses by Function. The purpose is to show what happened during the prior fiscal year and what is
happening during the current quarter to the various revenue and expense categories. This schedule shows how prior
year experience and the budget compare with what has actually happened during the two reporting periods.
In both the Revenues and Operating Expenses sections of this schedule is a reference to “E&G1′. This abbreviation .
stands for Educational and General and the Total E&G lines show the Revenues and the Operating Expenses of all
functions other than those that are classified as Auxiliary Enterprises. The E&G subtotals are provided to simplify
comparison of the revenues and expenses of the primary missions of the University while excluding iisupport functions”
that are not part of the primary missions. Auxiliary Enterprises include support functions such as dining servicesl
housing, bookstore, and similar iibusinessesl’.
An additional Revenues item that appears below the Total E&G Revenue totals is Released from Restrictions. The
amounts on this line reflect funds that were initially received by the University or Campuses for specific purposes and held
until they could be spent to further the specific purpose, Most of this money represents gifts or bequests that have been
provided for such things as scholarships or specific program initiatives. Much of the funding of this type is expended in
the year it is received but Restricted Funds are often held for several years until they can be expended in accordance with
the conditions set out by the donor. For example, scholarship funds that provide for students with certain types of abilities
or needs will not be expended until such students can be identified. Restricted Funds do not become part of the
Operating Budget until released. Prior to being transferred to the Operating Budget, Restricted Funds are carried in the
accounts of the University and invested in accordance with University policy.
Because restricted revenues do not become part of the unrestricted operating funds of the University until they are
Released from Restrictions, the amounts shown for Gifts and Grants may vary from the figures reported by the
Development Offices for the same period. The Development Offices report gifts on a cash basis, or, as they are
received: the Accounting Offices report gifts on an accrual basis, or, when they are received g first pledged. Pledges are
commitments that will be realized at a future date and are not expendable until the funds are actually received. Funds
that are given for a restricted purpose are invested until they can be expended for the purpose specified by the donor.
Several years may pass before a campus can expend a restricted gift as the donor intended, but the restricted gift is
recorded by the Development Office when it is received. The financial schedules contained in this report do not reflect
restricted revenue until it is expended. Therefore, reports from the Development Office may show higher or lower giving
levels than will appear on these schedules.
Restricted Funds should not be confused with Endowment Funds. Endowment Funds are also separated from
unrestricted revenues and are also limited to specific purposes as provided by their donor. The primary difference is that
the principal of Endowment Funds must be retained in perpetuity and only the annual income can be expended to satisfy
the purpose of the donor, On the other hand, the principal amount of a restricted gift can be used as soon as a valid
purpose has been identified. Income from the Endowment Funds appear as a Revenue Item on the Endowment Income
line.
The schedules in this Report for Antioch University as well as the schedule for Central Administration and the University
Wide Expenses contain an additional line, “Net Overhead for Central Ops.” This line has been added on these three
schedules to more clearly display the cost of central operations. Ordinarily, the Overhead used to support the Central
Administration and the University Wide Expenses budget would appear as a “negative expense” entry, but the Board of
Trustees has requested that central operations be displayed more in keeping with the way the budgets of the individual
Campuses are displayed. Accordingly, this line has been added to these three schedules and appears as a quasi-
revenue entry. It shows how much is transferred from the operating units to meet the costs of central operations and it
clearly separates the “revenue” of the central operations from their expenses and makes it easier to see the true cost of
these units.
The Operating Expenses section of the Function schedule provides financial information for each of the primary activities
or programs. Each operating department of the University is classified in accordance with its primary function. For
example, the Languages Department of the College is classified as Instruction and all of its expenditures will be
combined with those of other teaching departments and reported on the Instruction line of the Function schedules. A list
of the Cost Centers that comprise each of the Functions is presented on page 90.
In the first section of this Report, the columns of the Summary by Function schedules present information about the
actual activity of the two prior years, the budget for 1997-98 and the actual experience for 1997-98. The last four
columns provide comparisons of the 1997-98 actual experience with the budget for that year and a comparison of how
the 1997-98 actuals compare with the actuals from 1996-97. The dollar variance is given for these comparisons and a
percentage of variance is also provided. Similar information is provided in the second section of this Report, but the data
and comparisons are for the first quarter of the fiscal year.
FASB 11 7 requires the presentation of information on an accrual basis, but the actual management of the University also
depends on maintaining an appropriate cash flow so that current obligations can be met. The schedules in this Report
contain a Conversion to Cash Basis section which identifies those expenses and revenue sources that must be
considered when adjusting from an accrual basis to a cash basis. These items are primarily concerned with equipment
and facilities which, although occurring in one fiscal year, are depreciated over their useful life. Accumulated depreciation
is shown as an offset to the Depreciation Expense that is included as a part of the Plant Maintenance function. Borrowing
proceeds, if any, associated with the expenditures shown are reflected on a separate line as are the Principle Payments
necessary to retire the loans of previous years.
The Conversion to Cash Basis section also shows the use of any Prior Year Reserves. Prior Year Reserves are
maintained by the University as “funded” or “unfunded”. Whenever a campus ends the year with an operating surplus,
this sum is recorded and carried forward on the books. If the University has sufficient surplus cash at year-end, the
surplus is funded and invested in an interest bearing account for the benefit of that campus. If there is not sufficient cash
to cover the surplus, the uncovered portion becomes a credit to the unfunded reserve. Campuses may propose the use
of their Funded Prior Year Reserves in the annual budget, or they may request the Chancellor’s permission to use
Funded Reserves to meet unexpected expenses during the year.
IV. THE CATEGORY SCHEDULE
The second major schedule used in both sections of this Report is the Summary by Category. On this schedule, the
Revenues reported on the Function Schedule are condensed to a single line. For the University as a whole, the Central
Administration and the University Wide Expenses schedules, a second line is added to show the Net Overhead for
Central Ops. Although technically not a revenue item, it is treated as a quasi-revenue on this schedule so that these
three units and the Campuses can be presented in similar ways.
Operating Expenses from the Function schedule are presented by category (e.g., Salaries & Wages, Benefits, Supplies).
These categories show how expenditures have been made by the kinds of goods and services purchased. The
components of each of the Expense categories is listed in detail on page 91.
A section of these schedules shows the ContingencyIReserves that the Campuses are required or encouraged to
budget. The “Campus Contingency, Mandatory” amount is budgeted at 2% of net student-derived revenue and this sum
can be released by the Chancellor during the year in order to meet unexpected expenses or to offset lower than
– anticipated revenues. Campuses that are meeting their revenue targets may also request release of these funds to pay
for special capital improvements that they might not otherwise have been able to make. These requests can be honored
only when the University as a whole is performing well.
The “Campus Program Contingency, Discretionary” is a reserve amount determined by the individual campus.
Depending on the volatility of its programs, a campus may elect to hold an additional sum above the Mandatory amount
to offset possible revenue fluctuations. The amount of this Reserve is determined by the Campus, and the Campus
determines when this Revenue should be released for expenditure. Not all Campuses elect to place funds in this
Reserve.
The Liquidity Reserve is equal to 1.25% (1.5% for Seattle) of the net tuition and fee Revenue of each Campus. The
Liquidity Reserve is not available for expenditure for any purpose, but the amounts budgeted are added to the Liquidity
Reserve each year and allowed to accumulate in order to restore the financial integrity of the University. The bond issues
that have financed facilities at New England, Seattle, and retired debt for the College require the University to operate
with an excess of revenue over expenses in each year. In order to satisfy this ratio requirement and to build for the time
when the University can satisfy Moody Investors Service requirements for a bond rating, this money is accumulated
during the year in a University-wide account. At the end of 1997-98, the second year in which the Liquidity Reserve has
been in operation, the University accumulated $653,770. This sum is identified with each campus through a series of
sub-accounts and has been invested in accordance with University policy. A schedule showing the Funded and
Unfunded Reserves as well as the Liquidity Reserve balance for each of the Campuses is contained on page 51.
The Overhead section of the Summary by Category schedule shows the assessments that are made against each
Campus in order to support operations of the University. The assessments are made at the rate of 13.75% of net student
revenue. Net student revenue excludes tuition generated by new programs less than two years in operation, tuition
discounts and waivers, and uncollectable tuition and fees. From the overhead, Rebates from the University are
transferred to the individual campuses as is the Subsidy from Overhead. Campuses which receive Rebates and
Subsidies will show negative amounts in these schedules because the transfer is shown as a negative expense rather
than as a Revenue. Although these transfers are income to the receiving campus, from the standpoint of the University
they represent only the reassignment of revenue from one campus to another.
Depreciation is a major expense for the University, and is carried centrally because all facilities are held in the corporate
. name of the University. Both the Depreciation Expense and the Add Back Depreciation entries appear in the University
Wide Expenses section on pages 87 and 88.
The columns for 1997-98 and for the first quarter of 1998-99 on the Category schedules are identical to those on the
Function schedules.
1997-98 YEAR END-END BUDGET REPORT
The financial performance of Antioch University in 1997-98 did not match its performance in 1996-97, even though the
College performed better than it has in several years. As a whole, the Total Increase in Net Assets (Excess Revenue
over Expenses) was $827,400 compared with an increase of $1,817,344 in 1996-97. Performance in 1997-98 was not as
good on this measure as the average increase of the three years between 1993-94 and 1995-96, $1,025,167. Still, it is
appreciably better than the $21 0,269 increase recorded in 1995-96.
Of the six operating units, only Southern California showed a decrease in Net Assets for the year. The College posted an
increase in Net Assets of $1,531,238, more than double the $728,934 reported in 1996-97. The 1997-98 increase for the
College reflects the use of $600,000 of realized gains from the endowment fund for the purchase of capital equipment
and improvements.
For the University as a whole, tuition and fee income was $1,650,564 (4.25%) below budgeted levels due to soft
enrollments, although tuition income increased by $966,268 (2.67%) over the preceding year.
On a Total Increase in Unrestricted Cash basis (Net Cash Basis Budget) the University ended 1997-98 at $71 8,959
compared with $440,171 in the prior year.
UNRESTRICTED STATEMENT OF ACTIVITIES
The Statement of Activities is most comparable to the Income Statement of a for-profit organization. The purpose of the
Statement of Activities is to summarize operations of the 1997-98 fiscal year. The full Statement of Activities for the
entire University is contained in the Audited Financial Statements prepared by Ernst & Young. Their statement contains
the Unrestricted, Temporarily Restricted, and Permanently Restricted funds and thereby provides a complete picture of
the entire “bottom line.” The schedule contained in this report focuses on Unrestricted funds because they constitute the
operating revenues and expenses of the campuses and the University as a whole. By looking at the increase or
decrease in Net Assets it is possible to get a quick understanding of how well the University performed during the fiscal
year. Last year the “bottom line” showed an increase in Net Assets of $1,817,344. This year, the Statement of Activities
shows an increase in Net Assets of $827,400
The interaction of two components play a major role in the annual change in Net Assets; one is depreciation and the
other is gains on the endowment. Because all assets are held in the name of the University, depreciation is presented in
the University Wide section of this Report. Deprecation accounts for 80% of the University Wide operating expenses and
depreciation increased this year by $51 1,158 primarily because of the Seattle building. The expenses in University Wide
are offset by unrealized gains in the value of the University’s Endowment and other investments. In 1997-98, unrealized
gains were $781,500 less than in 1996-97 and this means that there was less revenue to offset the additional
depreciation. Revenue in University Wide is $600,000 lower than in the prior year because this amount was converted to
realized gains and transferred to the College, as authorized by the Board. Because of these factors, University Wide on
the Statement of Activities shows a decrease in Net Assets in 1997-98 of $-1 ,I 64,534 compared to a decrease of $-
189,705 in 1996-97. The key point is that the performance of the stock market has significant influence over the change
in Net Assets.
STATEMENT OF FINANCIAL POSITION
The Statement of Financial Position presents information similar to what can be found on the Balance Sheet of a for-profit
organization. The official Statement of Financial Position is contained in the Audited Financial Statements prepared by
Ernst & Young, but that schedule does not provide detail for the individual campuses. The Statement of Financial
Position contained in this Report shows the Total Assets, Total Liabilities, and Total Liabilities and Net Assets. Because
depreciation and most physical assets are recorded on a University-wide basis, the Total Assets and Total Liabilities and
Net Assets do not balance except at the Total University level.
The Statement of Financial Position is only a snapshot of the condition of the University at one particular moment in time,
June 30, 1998. However, it does provide insight into the financial status at the close of business for 1997-98 and when
compared to the Statement from the prior year can be a useful indicator of the financial direction of the University. On
June 30, 1997 the Total Liabilities and Net Assets of the University was $73,254,887. At June 30, 1998 this figure had
increased by $2,642,734 to a total of $75,897,621
UNRESTRICTED REVENUE
The 1997-98 Total Educational and General (E&G) Revenue for the entire University was $-180,894 below the budgeted
level. In 1996-97 we were $-225,352 below the budgeted level. Tuition revenue was 4.25% below budget but 2.67%
above tuition received in the prior year.
Net Tuition and Fee income was 81.7% of all E&G Revenues in 1997-98. Although Total E&G Revenue was only
$1 80,894 below budget, the Tuition and Fee income was $1,650,563 below budget. Three of the five Campuses had
tuition income below their budgets and the sum of the negative variance for these three was $1,953,619. The following
table compares budgeted and actual Tuition and Fee income.
Tuition and Fee Income
1997-98 Year-End
1997-98 1997-98
Budgeted ActualRevenue Variance
Revenue
Antioch College 10,578,843 9,598,204 -980,639
Glen Helen 128,425 121,709 -6,716
New England 8,100,325 8,224,966 124,641
Seattle 6,900,577 7,085,708 185,131
Southern California 7,941,605 7,439,528 -502,077
McGregor 5,183,834 4,712,931 -470,903
TOTALS $38,833,609 $37,183,046 $-I ,650,563
Tuition Discounts are the scholarship and aid assistance funded by the campuses. The College awarded more than 87%
of the $2,484,257 given to students in 1997-98. Tuition Discounts at the College grew 6.1 9% over 1996-97, but this rate
was below the 7.92% increase in College Tuition and Fee Income. Had the College realized its budgeted Tuition and Fee
income level, the difference in the growth rates would have been considerably greater.
The enrollment decline in Southern California has been discussed in previous reports, but income levels there are of
major concern because the 1997-98 tuition shortfall was only partially covered from funded reserves. The deficit at
Southern California was not approved and the Campus has no remaining funded reserves to cover any future tuition
shortfall. Continued low tuition income will require additional spending reductions in order to balance the budget.
New England and Seattle were able to exceed their budgeted Tuition and Fee levels.
McGregor was significantly below its budgeted Tuition and Fee target, but was able to limit spending to avoid a deficit.
Grants revenue declined 9% from budget and 8.37% below the level of the prior year. Total Contracts income was up
$92,746 over budget due to increases of $61,335 at Seattle and $80,998 at McGregor which more than offset a drop of
$54,896 at New England.
Other Income was up 106.38% above budget but was down 16.92% from the prior year. The major portion of this
additional revenue is from realized and unrealized gains on University investments and reflects the positive activity of
Wall Street during the past year. Much of the additional revenue is unrealized and therefore, not available for
expenditure although it does add to our assets. The transfer of $600,000 of realized gains provided considerable relief
for cash operations although we continue to operate during periods of the year with insufficient cash.
UNRESTRICTED OPERATING EXPENSES
For the University as a whole, E&G Expenses were $1,172,717, or 2.4374, below budget but 2.79% above prior year
expenditures. E&G Expenses were above the level of the prior year at all campuses although the percentage increases
range from nearly flat at New England (.03%) to 12.13% at Seattle, due to costs associated with the new building.
Overall, the increase in total year-to-year expenditures tracked inflation. The growth in the percentage increase for
faculty and staff salaries (2.56%) from 1996-97 to 1997-98 was below the overall year-to-year growth percentage for all
expenses. The total Cost of Salaries and Wages was .6O0I0 lower than budgeted.
