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Wesleyan’s budgeting and control procedures have been effective.  In 2005/06 the University had a balanced budget for the 14th consecutive year. 
Assets and Revenue Sources
Total Assets
As of June 30, 2006, the date of the most recently audited financial statements, Wesleyan had $998 million in total assets, comprised of $261 million of liabilities and $738 million in unrestricted, temporarily restricted and permanently restricted fund balances.  Net assets have increased since 2003 reflecting improved financial market conditions.
 
The major component of these assets is the Wesleyan endowment, which had a market value of $620 million at the close of the fiscal year. Of this, $552 million, or approximately 90 percent of the endowment, were unrestricted, permitting significant flexibility in identifying and implementing institutional priorities.
The Endowment
The Wesleyan endowment is invested for a long-term maximum return with appropriate consideration to controlling risk and providing for the University’s cash needs.  The investment policy is implemented by the Finance Committee of the Wesleyan Board of Trustees and its Portfolio Subcommittee.
Professional staff now supports the activities of the Portfolio Subcommittee consisting of alumni/ae who are investment professionals and charged with the task of overseeing investments out of endowment funds, overseeing investment managers and private investment funds, reporting regularly to the trustees, analyzing relevant market information and bringing current information to the subcommittee to enable informed decision-making.  The University has made a sizable investment in the Investment Office by doubling the number of professional staff from two to four and moving the office to a renovated facility.
These efforts have paid off; as the endowment grew 19 percent since 2001. As the graph indicates, endowment returns were above market indices and peer benchmarks for similarly sized university endowments. We also note that the endowment has increased 105% in real value since 1981 when our goal was set to maintain the real value of the endowment.
Debt Management
As of June 2006, the University issued $206 million in tax-exempt debt through the Connecticut Health and Educational Facilities Authority (CHEFA).  Bonds were issued at a 35-year variable rate with the interest rate reset every 35 days. Of this total amount, $12 million remains variable rate, with the remainder fixed based on swap agreements with Lehman Brothers.
The capital markets received this debt issuance favorably, granting Aa3/AA+ credit ratings, respectively, from Moody’s and Standard & Poor’s. Further analysis and review of relevant ratios indicates that the University has reached maximum debt capacity at these credit ratings and must increase its net assets and endowments to generate additional debt capacity.
Revenue
The endowment provides approximately 20 percent of the support for operations, ensuring that Wesleyan is not overly dependent upon tuition. Gifts received and unexpended endowment gains in prior years provide over 10% in operating revenues, while private gifts and grants contributed 8% of the operating revenue.
 
Expenditures
Over half of Wesleyan’s $167 million operating budget is spent on its central academic mission, instruction and research. Instructional expenditures ($75 million) increased 3%.  In addition, Wesleyan spends proportionately more on academic priorities and less on support activities than peer institutions.

 

The Wesleyan Campaign
Successful completion of The Wesleyan Campaign.  The Campaign closed in January 2005 at $281million, easily surpassing our $250 million goal.  $194 million of that total was received in cash during the campaign, with $87 million in outstanding pledges.  A total of nearly $96 million of the $281 million total (34%) was directed to the endowment.  

Cash gifts received in a single fiscal year increased from $12-$14 million pre-campaign to $31 million in fiscal year (“FY”) 2001, $27.3 million in FY 02, $27.9 million in FY 03, and $29.5 million in FY 04.  

Similarly dramatic improvement was made in the participation rate, the percentage of alumni donating to Wesleyan annually.  Pre-campaign our annual participation rate was [39 %]; by the close of the campaign the annual figure was 55% , and over the course of the campaign [67%] of Wesleyan alumni made donations.
The continued vitality of the University will depend on its ability to maintain a significantly higher level of giving after the campaign has concluded. One important goal of the current campaign is to raise Wesleyan’s visibility among alumni/ae, friends and other potential donors, so that a high level of support will continue after the formal campaign. To ensure continued success, long-term plans include maintaining a well-staffed, professional fund-raising organization throughout the foreseeable future.
In an effort to ensure that the fundraising success of the Campaign would continue post-campaign, in 2002 Wesleyan engaged the CORE group, a consulting firm that has done extensive quantitative benchmarking studies of colleges and universities, to determine the level and type of investment that Wesleyan should make in its University Relations area.  CORE’s study highlighted the critical importance of strong investment in both front-line fundraising and organizational “infrastructure” (alumni programming, communications, research and operational support) and concluded that the University Relations budget should be increased by 50% over [four] years. With this investment, CORE believes that Wesleyan’s fundraising totals will increase dramatically. The Board authorized the expansion of University Relations at this level, with the bulk of the investment to be raised from fundraising.  

Post-Campaign (January 2005—present)

The campaign ended mid-way through fiscal 2005 and we ended the fiscal year with $31.3 million in cash gifts.  Even more affirming was our fiscal year 2006 total of $35.2 million, a record high, in our first full year post-campaign.  Wesleyan’s fundraising success has received national recognition: in 2005 we received the “Wealth Engine—Overall Performance”award from CASE (Council for Advancement and Support of Education), a distinction shared with only 8 other institutions (out of 970 eligible), and received the same award again in 2006.

The primary fundraising focus in this post-campaign period has been on unrestricted gifts to the Wesleyan Fund (which includes support for facilities and for our “investing in University Relations” initiative).  Our goals have been steadily and aggressively increasing in this area, with a goal for fiscal year 2007 of $16 million.  We are on track to achieve this goal, largely because we have been able to raise funds in honor of the successful presidency of Douglas Bennet ($x.x million).  We also had a highly successful benefit gala in New York featuring Bill Cosby that yielded $2.5 million for financial aid.

The other crucial fundraising priority is the endowment, and the University’s long-range projections contain goals for new gifts to the endowment:  In 2007 the goal is an amount equal to 1.5% of the endowment’s value.  The percentage goal will increase to 3% by 2014, and represents the minimum that we plan to contribute to the endowment.  In fiscal year 2006 the actual amount contributed was $11 million, exceeding the stated goal by $4 million. 

During this period a key University Relations focus is capacity building, increasing the breadth and depth of our prospect pool by engaging even more alumni in the life of the university with new initiatives, such as affinity councils comprised of alumni with specific areas of interest at Wesleyan (e.g. athletics, admission, career resources).  These efforts, and the fact that alumni from the large graduating classes of the late ‘70s and ‘80’s are now entering their prime earning years, are cause for optimism that we have significant untapped capacity available for the next campaign.

Current challenges

Wesleyan’s fundraising success has been considerable over the past 10 years, and our annual cash totals now place us in the top ranks of our peer schools [define].  In 2006 we raised more in unrestricted funds than all but ____ of our peers, which is both a success and a challenge.  Our aggressive Wesleyan Fund goals combined with an average gift size that is lower than [most] of our peers means that we must solicit a number of high-level gifts ($100,000-$200,000) to the Wesleyan Fund that would more appropriately be directed to the endowment.  As a result, our unrestricted gifts represent a larger percentage of our total fundraising than is the case with any of our peers, who are able to fund their endowment more aggressively than we can. 

The next campaign

The timing, size and scope of any new campaign will be determined by the new president, but we currently anticipate that a new campaign could kick off as soon as 2010.  Priorities will likely include a $1XX million science facility in addition to significant unrestricted and endowment giving goals.
Resource Management
Maintaining Fiscal Equilibrium
Historically, Wesleyan has had a high endowment draw.  In 2005/06, the endowment draw was at 7.4%.  The Board of Trustees asked the administration to develop a five-year plan to bring endowment spending to within 4.5% to 5.5% of the 12 quarter average endowment market value.  The plan requires both spending reductions and redirecting gifts for the Campus Renewal Fund to the operating budget rather than running it through the endowment.

 
Wesleyan’s commitment to planning for the long term has enabled the University to address fiscal problems and initiating changes across campus.  With a coherent vision articulated in three strategic plans over the past twelve years, culminating with Engaged with the World (2005), Wesleyan allocate its financial resources according to clearly specified strategic objectives.  Even with its focus to reduce the endowment draw, Wesleyan will make major investments in financial aid, additional faculty, diversity, student services, and fund raising initiatives over the next five years.
Financial Planning
Wesleyan’s annual budget is developed based on the key elements of the University’s long-range planning model.  The Finance Office works with the President and Senior Officers to refine planned sources and uses of funds and to achieve a balanced budget, which is then presented to the Board of Trustees for approval.  During the annual budget process, senior management is asked to reallocate resources for new initiatives before requesting additional funding.

Wesleyan utilizes a computer-based budget system which incorporates decentralized responsibility for departmental and program budgets with regular, centralized monitoring and control.  Each academic and support service department, program, and facility has a line item budget against which revenues and expenditures are controlled.  On a daily basis the Finance Office makes available on the University’s intranet budget to actual reports to department heads and to the Vice Presidents or Deans responsible for each functional area.  The reports indicate actual revenues and expenditures versus budget for the period and year to date for each line item, with an indication of the percentage of budget received or expended.

This past year a Budget Working Group consisting of senior level administrative staff was created to review all vacant administrative positions before allowing replacement.  The efforts of this group with the partnership of senior staff, Wesleyan has focused its resources and eliminated __ staff FTE.
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