In order to keep students and faculty fully aware of the financial state of the college, the Gustavus Student Senate sponsored a Financial Transparency Forum on Nov. 21 hosted by Vice President of Finance Ken Westphal. Student Senate Co-Presidents, Matt Timmons and Danielle Cabrera, invited Westphal to speak after the successful turnout at last year’s event.
Key points of the meeting included how Gustavus generates revenue, where that revenue is spent, and why.
“Gustavus generates revenue from tuition, donations, gifts from alumni, things like that,” Timmons said. “We strongly rely on donors and alumni.”
Westphal explained how the budget was managed, and summarized financial information from the May 31, 2013 audit. Westphal stated that the endowment had risen to $121 million, an increase of several million dollars from last year, and the College had $55 million in debt. These figures gave Gustavus a stable A3 rating in the latest financial rating by Moody’s Investors Service.
The formation of the Gustavus budget was also a topic of conversation.
“The Internal Budget Committee creates an internal budget, then sends it to the President’s Cabinet for approval. Once it’s approved, it’s sent to the budget committee, then on to the Institutional Resources group, and finally to the Board of Directors for final approval,” Cabrera said.
Additional topics included operating revenues, operating expenses, and investments. Around half of all College revenue is generated from tuition, 25 percent from housing, 14 percent from gifts, and 5 percent from endowment returns. The majority of this revenue—60 percent—is directed to workers’ compensation for faculty, staff, and administrators.
Gustavus employes around 100 individual managers to invest its endowment in approximately 30 different mutual funds. Last year, the return on investment was about 16 percent. Westphal broke down the College’s investments to 26 percent domestic equity (stock in the United States), 22 percent international equity, 17 percent private equity, 10 percent long/ short equity (high risk-high gain investment), 15 percent fixed income, and 10 percent real assets.
Westphal opened the forum to an extended question-and-answer session at the end, answering students’ economic-related questions. One student inquired about the possibility of moving investments in mutual funds to exchange traded funds (ETFs), which are sector-based investments. Another student expressed interest in adding a position for a student representative on the Internal Budget Committee.
Many questions were also posed on fossil fuel divestment by members of environmental justice organizations on campus, including Gustavus Greens, Divest Gustavus, and Power Shift. These students have been collaborating to divest Gustavus from fossil fuel investments and educate the student body on the issue.