As the dimensions of the recession of 2008-2009 were becoming evident, some employees in Old Main watched admission numbers; others were monitoring and managing key financial numbers: operating cash, operating expenditures and the declining value of the endowment. The careful work and guidance of the institution’s business affairs staff during 2008-2009 positioned the College to weather the economic storm that dramatically increased the need for student financial aid, for a time eroded the endowment by one-third and put the credit market in a stranglehold.
“Last October, the Board of Trustees made some important decisions—to ‘stay the course’ with our investment portfolio in light of the market downturn, and to not draw down cash from the endowment, which would normally have supplied about $3 million during the fiscal year,” explains Beth Laken, assistant vice president for finance/comptroller. “Needless to say, it made our year very challenging.”
At the same time, construction was underway on the Residence Hall/Recreation Center, which required major outflows of cash. While the residence hall portion was funded by bonds, the track/recreation center depends on donor gifts for funding.
Poised to also impact the College’s 2009-2010 budget was a reduction in the Monetary Award Program (MAP) by the Illinois General Assembly. State aid to 600 North Central students was to be cut from $3 million to $1.5 million, presenting another gap to fill by summer. (Fortunately, state MAP funding has been restored for 2009-2010.)
To manage the cash shortfall in 2008-2009, the first step was to reduce expenses throughout the organization while avoiding layoffs and hiring freezes. “All vice presidents were asked to trim expenses and identify cost savings in their areas,” Laken continues. “We also tapped into contingency funds and at times our lines of credit, the first time since 1981. Cash flow was—and continues to be—monitored very closely.”
She emphasized that all endowed scholarships were awarded to students by using accumulated earnings and other College operating funds.
At its February low point, North Central’s endowment was down 34 percent from a high of $79.4 million in June 2008. By the end of the fiscal year, the endowment rebounded to $71.3 million, with the help of an upswing in the financial markets, the infusion of nearly $5 million from the Schneller Sisters estate and the strategic decisions of the Board of Trustees. The $3 million not drawn from the endowment was worth more than $4 million by fiscal year end.
North Central remains among the most fiscally healthy private colleges in the Midwest. The operating budget was again balanced for the 38th consecutive time and the College received a clean audit report. “The accounting team members deserve praise for their extra efforts and hours in the most challenging of audit years,” adds Laken. The team includes Pat Perkins, assistant comptroller; Jen Baur ’05, senior accountant; Nick Scumaci ’06, accountant; and Jessica Elliot, accounting analyst.
Annual Report 2009