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Shepherd College

Meeting of the
SHEPHERD COLLEGE
BOARD OF GOVERNORS
February 13, 2003
Agenda Item No. 5

QUARTERLY FINANCIAL MANAGEMENT REPORT

EXECUTIVE SUMMARY

Net Assets
Accounts Receivable and Deferred Revenues increased because students were billed in December for the Spring Semester. Accounts payable decreased because the billings for construction projects declined from the summer period. Construction activity and equipment purchases contributed to the increase in Capital Assets.

State Budget Reduction
The Governor ordered a 3.4 percent reduction in the Collegešs State Appropriations. The total decrease is $419,000. The reduction will be absorbed through unfilled vacancies and the additional revenue realized through increases in the fall enrollment.

Revenues
As of December 31, 2002, total operating revenues were 34.8 percent of the total fiscal year 2002 budgeted revenues. This is 3.8 percent more than the percent of budgeted revenues collected for the prior fiscal year. Tuition and fees, federal grant revenues, private grants, and other revenues increased. State appropriations decreased 3.6 percent because the Department of Administration decreased the second quarter allotment from the previous year. Investment income decreased 14.1 percent.

Expenditures
Operating expenditures were 50.2 percent of the total fiscal year 2002 budget as of December 31 versus 46.9 percent for the prior year.

EXPLANATORY NOTES

Net Assets

Assets
1. Accounts Receivable: Students were billed in December for the Spring Semester, resulting in a $6.6 million increase in Accounts Receivable.
2. Appropriations due from Primary Government: Funds allocated for capital projects were expended.
3. Inventories: Inventories increased $167,000 because the bookstore purchased books and supplies for the spring semester.
4. Capital Assets: The $1.7 million increase in Capital Assets was caused by equipment purchases and building construction

Liabilities
1. Accounts Payable: Accounts Payable decreased because the billings for construction projects declined from the summer period.
2. Accrued Liabilities: The Accrued Liabilities were $139,000 more at the beginning of the year because the annual increment is paid in July.
3. Deferred Revenues: Deferred Revenues increased $7.7 million because students were billed in December for the spring semester, and deferred revenues from the HUD grants increased.
4. Long-Term Liabilities: One-half of the current obligation for the system debt was paid in the second quarter.

State Budget Reduction
The Operating budget was reduced by $168,700 in the following programs to reflect the savings from vacant positions:
Instruction $91,998
Academic Support 23,052
Student Services 19,363
Institutional Support 27,584
Operations and Maintenance 6,703

Operating Revenues
1. Federal Revenues: Library HUD grant revenues totaling $167,000 that were expended for furniture that did not exceed the $1,000 capitalization threshold were recorded as operating revenues. The Federal Grants budget was increased $167,000. Federal Pell Grants increased from last year.
2. Private Grants and Contracts: The Community College received $90,000 from its funds held by the Shepherd College Foundation.

Operating Expenses
1. Academic Support: Several Community and Technical College grant expenditures were made earlier than in the prior year.
2. Operations and Maintenance: Most of the planned renovations were completed during the first half of the year. Expenditures for furniture paid from the Library HUD grant revenues that did not exceed the $1,000 capitalization threshold were recorded as operating expenses. The Operations and Maintenance budget was increased $167,000.

Nonoperating Revenues and Expenses
1. State Appropriations: The Department of Administration decreased the allotment available for the second quarter of fiscal year 2003. The revenue will be received in the fourth quarter.
2. Investment Income: Investment income declined because the College expended interest-earning funds to cover the shortfall in the quarterly allotment of appropriations. Interest rates were lower than they were during fiscal year 2002.

Other Revenue, Expenses, Gains or Losses
Transfer to CLS: HUD grant revenues for the operations of the CLS were transferred to the Shepherd College Foundation.