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STANDARD
9 - FINANCIAL RESOURCES
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1 of 4
Prior to discussion of the financial resources issues of
the period since the last campus self study, it is important
to briefly review the Commonwealth of Massachusetts mandated
reversions that took place during the late 1980s and the early
1990s. In FY89, funding from the Commonwealth was $34,653,000.
(State appropriation funding between FY89 and FY93 included
Tuition Retention funds, tuition collected and retained by
the campus.) The appropriation for FY99 was $43,239,625. The
table below shows the history of the State Appropriation from
FY89 through FY99.
Using a discount factor of 3% per year, the $43,239,625 appropriation
for FY99 was actually equal to $32,170,281 in FY89 dollars.
Comparing the $32,170,281 to the FY89 State Appropriation
of $34,653,000 a net loss in spending power of $2,482,719
has taken place during this ten year period. In order to offset
this decline in support from the Commonwealth, the Dartmouth
campus has been forced to increase its student fees. The annual
per student Curriculum Support Fee (originally, the Academic
Services Fee), the major non-state source of funds for general
operations, was $100 in FY89 and is $2,270 for FY00.
The nine years since the last campus self study
have been a period of transition for the operations of the
campus. This transition has severely strained the resources
of the campus. In 1991, Southeastern Massachusetts University
was incorporated into the University of Massachusetts system
and became the University of Massachusetts Ð Dartmouth (UMD).
During a period of declining enrollments and eroding state
support, the campus needed to respond to its new and broader
mission as a member of the University of Massachusetts system.
Although the institution was and is a Carnegie Master's (Comprehensive)
I campus, an increased emphasis was now being placed on research
and graduate school activities. These changes required adjustments
to strategic priorities and campus commitments, and, either
additional resources or the reallocation of campus resources
This consolidation into the University system brought with
it substantial changes in the financial operations of UMD.
In addition to internal reporting requirements and reporting
mandates derived from the campus's relationship with the Commonwealth
of Massachusetts, the campus now has an additional array of
reporting to the University of Massachusetts' President's
Office. This change had a positive impact on the financial
operations of the campus. The campus had to evolve from a
cash-based financial system and culture to a more sophisticated
and professional planning, budgeting, and reporting model.
Historically, the campus's financial system allowed a dollar
of budget to be approved for each dollar of revenue that the
campus received. The model was mechanical and did not include
the provision of resources for accrual-based accounting. Each
new fiscal year, trust funded cash balances were rolled forward
into the new year and budgets were set up equal to the amount
of these rolled forward cash balances. As additional revenues
were received, additional and equivalent budgets were added
to the rolled-forward amounts. Projected potential spending,
viewed from an annual revenue versus expenditure basis, always
displayed deficits. This budget model did not and does not
work as the tool for prediction that a budget should be. It
is not useful in predicting a year-end financial surplus or
deficit. It always only predicts the worst case scenario.
A new budget model has been approved by the campus and is
being implemented for FY00. The campus is still in the process
of the transition from the cash budget model to the new budget
model. It is expected that this transition will be incremental
and loaded with issues related to ownership of the rolled-forward
cash balances.
With the merger into the University of Massachusetts system,
the Dartmouth campus experienced the value-added impact of
becoming part of a large university system. From a financial
standpoint, this new partnership created the need to finance
and bring to completion planned incremental campus activities
such as the Electrical Engineering Ph.D. program, the accreditation
of the College of Business and Industry and the new Center
for Marine Science and Technology. These activities would
not have been possible without the financial strength gained
from becoming part of the system and the system pressure to
incorporate more traditional university level activities into
the ongoing campus operations. These campus activities represented
major strains on the cash reserves and operating revenues
of the campus. Although additional resources were allocated
to the campus from the University and raised through fundraising
and entrepreneurial activities, the campus was not completely
successful in its internal reallocations and resources were
not available both to maintain ongoing operations and fund
incremental activities. Reserves were spent down in this process.
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