Financial Highlights: Fiscal Year 2014-2015

Peter Michell, Vice President for FinanceThe operating results for the fiscal year ended June 30, 2015 indicate a continued multi-year trend of improvement for the finances of Saint Mary’s College. Primary evidence of this trend is the $3.5 million increase in total net assets that occurred during the year.

As shown in the accompanying graph, the College’s total net assets of $239.6 million as of June 30, 2015 is a record level. Total net assets are also well above the pre-recession high of $223.9 million that was recorded on June 30, 2007.

The $3.5 million increase in net assets can be primarily attributed to a $3.4 million increase in the market value of the College’s endowment investments. As shown in the accompanying graph, the fiscal year-end market value of endowment investments has grown to $172.7 million as of June 30, 2015. This market value level exceeds the pre-recession high fiscal year-end market value of $166.0 million recorded on June 30, 2007.

It is noteworthy that the $3.4 million increase in the market value of endowment investments is much smaller than the $22.8 million increase in the prior year that was driven by market value appreciation. The negative impact of the Greek credit crisis on global equity valuations that began in June 2015 eliminated most of the increases in the market values of endowment equity investments that had occurred over the past fiscal year. Despite this fiscal-year end decline in global equity valuations, the one-year total return on the College’s Endowment Pool investments of 4.2% exceeded the Investment Policy index return of 3.0%.

It is also noteworthy that College operations, although positive, did not make a significant contribution to the increase in total net assets. Total operating revenue of $129.0 million was actually $0.2 million or 0.1% less than the prior year’s total. This slight decline is primarily attributed to a decline in total student headcount enrollment of 148 from fall 2013 to fall 2014. Two thirds of this decline is attributed to a 97 student decrease in undergraduate headcount enrollment that resulted from a smaller freshman class in fall 2014 and a large graduating class in spring 2014. The remaining one-third of the decline is attributed to a 51 student decrease in graduate headcount enrollment that resulted from fewer students entering graduate and professional programs at Saint Mary’s and nationwide. Graduate program enrollments tend to be countercyclical to the economy and recent declines have been ascribed to improving regional national economies.

Total operating expenses excluding depreciation, the other major component of College operations, totaled $124.3 million and increased by $4.2 million or 3.5% over the prior year’s total. This increase is attributed to planned increases in faculty and staff compensation and to strategic expenditures including investments in programs and technology.

A final noteworthy item for the fiscal year ended June 30, 2015 was the opening of the new Joseph L. Alioto Recreation Center that serves all of the College’s students. The construction of this new project was funded by the College’s donors.

In summary, the fiscal year ended June 30, 2015 presented challenges related to increasingly competitive student recruitment environments at the undergraduate and graduate levels as well as to challenges related to declines in the valuations of global equities. Despite these challenges, the College was able to continue to grow its net assets to an all-time high of $239.6 million as of June 30, 2015 through purposeful expenditure management, targeted investments in programs and facilities, and the prudent investment of endowment investments.

The fiscal year that ended June 30, 2015 also marked the completion of a new institutional strategic plan for Saint Mary’s College. The six strategic goals outlined in the plan will be implemented over the next five years and should further secure the financial position of Saint Mary’s College and enable it to achieve its vision of becoming the leading Catholic comprehensive university in the western United States.