University looks to donors to help erase deficit, tuition

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The national conversation surrounding the United States' 13 trillion dollar debt has turned the population into a swarm of economists with their own opinions about how to handle the budget.
But here at DePauw, those same problems with balancing the budget sheet also exist.
DePauw reported an unrestricted operating deficit of $4.8 million at the end of the 2011-2012 academic year. A number Brad Kelsheimer, vice-president of finance and administration, said is large in comparison to DePauw's peer institutions.
DePauw has an operating budget around $85 million a year that is funded through a number of resources such as tuition, endowment draw and donations. A deficit means that at the end of the year, DePauw is reporting a loss of revenue spent and revenue earned.
A number of different factors play into the costs and revenue of the university. In '08-'09, when the deficit reached its highest ever at $12.6 million, a national recession stunted market growth as well as made potential donors think twice about giving gifts. That raises costs which in the end raises the deficit.
Kelsheimer stressed that deficit is not a "cash flow" problem and that DePauw is "paying its bills." He said that the problem is only alarming in that it is not sustainable year after year. The major concern of the deficit for Kelsheimer is that it means depreciation costs are not being met and the physical DePauw - the academic equipment, the actual buildings, the campus - is not being invested in.
"We're not in this to make money," Kelsheimer said. "But there has to be a financial model that works."
Kelsheimer said that while the deficit is high compared to similar universities, DePauw does have a significant advantage in that has a "strong balance sheet" ­- meaning it has the potential donors and resources to cover the deficit.
The university has been able to cut controllable costs, but raising revenue, as opposed to spending less and less, is the intended plan.
That means donations and that is where Jason Petrovich and the advancement office come in. Petrovich was recently named interim vice president of advancement - to go along with an executive director of development title - after former VP Marcia Latta announced she would be leaving her position at the end of the calendar year for family reasons. Petrovich has taken more responsibility in running the university's massive comprehensive campaign. The campaign, currently in the quiet phase, will be charged with raising money through donors to fund the capital projects on campus as well as collect assets to erase the university's budget deficit.
Petrovich explained that the single biggest part of campaign is to raise money for student scholarships. The idea is the university can focus funds in other areas as it handles less of the actual cost of supporting students. The money covered by the campaign can also go into the endowment. A healthy endowment means a strong percentage can be pulled from year to year and less of a financial burden is placed on students. Kelsheimer said DePauw's current endowment is $485 million and that we are currently pulling 5.5 percent of it yearly.
Petrovich expects to see "sustained growth" in DePauw's annual giving program. Last year, the annual giving program, which consists of the annual fund, the tiger club and the faculty and staff campaign, collected $5.4 million.
Kelsheimer is confident in the administration's financial plan the university's "loyal" donors. He said if DePauw can continue to increase revenue sources, the administration's current financial model has the university operating with a budget surplus by 2017.
"It's only a reason for concern if we didn't have a plan to get out of it," Kelsheimer said.