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Higher Education Policy Commission

Shepherd College

Meeting of the
SHEPHERD COLLEGE
BOARD OF GOVERNORS
November 14, 2002
Agenda Item No. 4

QUARTERLY FINANCIAL REPORT

EXECUTIVE SUMMARY

New Format

The Governmental Accounting Standards Board (GASB) issued new directives for the presentation of college and university financial statements. The previous reporting format presented financial balances and activities by fund groups, whereas the new format places emphasis on the overall economic resources of the College. Fiscal Year 2002 was the first year for this new format, and several changes required by GASB have been incorporated in this report.

This report presents the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and nonoperating, and certain other nonoperating revenues and expenses.

Generally speaking, operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Revenues received for which goods and services are not provided are reported as nonoperating revenues. State appropriations, for example, are nonoperating revenues because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Expenditures for equipment and other capital items are not included in the operating expenses because they are treated as an increase in assets. The deprecation on assets is included in operating expenses.

Revenues

As of September 30, 2002, total unrestricted revenues were 32.1 percent of the total fiscal year 2002 budgeted revenues. This is .9 % more than the percent of budgeted revenues collected for the prior fiscal year. Grants and Contracts Revenues increased because additional funding was received for Promise Scholarships, Pell Grants and West Virginia Grants.

Expenditures

Operating expenses were 21.4% of the total fiscal year 2003 budget as of September 30. This is .6% more than the percent of the budget expended for the prior fiscal year. Scholarship and Fellowship expenses increased 13.9 percent because of the increased funding for financial aid provided by the Promise Scholarship program, the Pell Grant program, and the West Virginia Grant program.

EXPLANATORY NOTES

Operating Revenues

Federal Grants and Contracts changed because Pell Grant Revenues increased $262,000.

Operating Expenses

1. Academic Support: Technology funds were expended earlier than in the prior year.

2. Operations and Maintenance: Asbestos was abated in Knutti Hall during the summer, and $75,000 was spent from fiscal year 2003 funds for this project.

3. Transfers and Other Additions: The Higher Education Policy Commission will transfer the amount due each quarter from the Collegešs funds to the Commissionšs funds. In previous years, the College transferred funds as they were collected. Approximately 40% of the fees would have been collected during the first quarter in previous years.

4. Fees assessed by the Commission for Interest and Reserves: For fiscal year 2003, the amount transferred to the Commission does not include the portion used to retire the principal related to the Collegešs share of the System debt. The Commission transferred $4.8 million in System debt to the College during fiscal year 2002. Part of the quarterly payment reduces the debt on the Collegešs Statement of Net Assets. The rest of the payment is used to pay interest and fund the Commissionšs debt reserves.