We are pleased to report that for the fiscal year ended June 30, 2003, New School University achieved a balanced budget for the 23rd consecutive year. Unrestricted net assets increased by more than $7.5 million to $118.8 million, an increase of 39% over the last five years. These results are remarkable in an era when many institutions, beset by poor endowment performance and declines in gifts, are struggling to balance their budgets. A number of factors, including an increase in enrollment, contributed to the increase in unrestricted net assets, but none more so than unrestricted and capital contributions from Trustees and friends.
There has been concern in the not-for-profit community that overall contributions may be down because of weaknesses in the economy and the stock market, and an announcement in the
Chronicle of Philanthropy reported that charitable giving has fallen for the first time in years. Despite these trends, net contributions to the University for the year totaled $26.5 million, an increase of $5 million over the prior year. Further good news is that a significant portion, $3.8 million, of the increase was from unrestricted contributions. The University’s enrollment plan encourages growth in a number of divisions.
Enrollment growth combined with strategic planning and coordination of capital investments to support the growth should ensure future balanced budgets. The number of students in degree programs increased 15% from fall 1998 to fall 2003. The growth was greater at the undergraduate (17%) than graduate (12%) level. A number of the University’s divisions have met or exceeded growth objectives. The particularly strong undergraduate growth comes from The New School (66%) and Eugene Lang College (68%). The growth in these two divisions alone resulted in 878 more students. Continuing education enrollment declined by 28% over the same five-year period. The number of students living in University housing grew by 56% during that time.
The University continues its efforts to generate revenue from non-tuition sources such as fundraising; local, state, federal and foundation support; and auxiliary programs. Considerable progress has been made in each of these areas and we expect more in the future.
The preliminary results of a study of endowments at nearly 720 colleges and universities undertaken by the National Association of College and University Business Officers (NACUBO) show an average return from investments of 3%. We are pleased to report that the University’s return was 6.8%. Once again, the University surpassed the national average, and is likely to place near the top of the group in terms of returns. The previous year, endowments turned in their poorest performance since the study was first published in 1974. The average negative 6.0% return for fiscal 2002 came on the heels of a negative 3.6% return for fiscal 2001. This record of two consecutive years of losses was unprecedented since 1971, the first year the study was conducted. In response, some institutions cut budgets, reduced financial aid, imposed hiring freezes, and delayed planned capital projects, and we suspect this continued in fiscal 2003.
Though the University’s endowment of $114.9 million at June 30, 2003, is modest by comparison to other institutions of our size (269th out of 716), our returns from investments during the past 10 years were remarkable. For example, when combined with the past year’s return of 6.8%, the University’s returns of 5.7% and 8.0% in fiscal 2002 and 2001, respectively, give it a three-year average return of 6.8%, and place the University well above the three-year average of the group, which was a negative 2.2%.
Balanced budgets, remarkable endowment returns and enrollment growth are responsible for Moody’s Investors Service’s affirmation of New School University’s A3 rating and stable outlook. The rating is based on financial performance, improved market position, diversified programs, desirable location and valuable real estate. A-rated institutions are considered upper-medium grade with adequate investor security, and therefore enjoy more options and lower costs when issuing long-term debt.
These excellent results are due to the extraordinary dedication and service of the University’s Trustees and volunteers. In particular, New School University expresses its profound appreciation to the members of both the 2002-03 and 2003-04 Trustee Audit Committee:
Bevis Longstreth, Chair, Walter A. Eberstadt, Michael Froman, Nancy Garvey, Peter Gross, Robert B. Millard, Stanley Nabi, Philip Scaturro and Malcolm B. Smith, and the members of the Trustee Investment Committee and Investment Advisory Group:
Robert F. Hoerle, Chair, Henry H. Arnhold, Walter A. Eberstadt, Michael E. Gellert, George W. Haywood, Eugene M. Lang, Bevis Longstreth, Philip Scaturro, Malcolm B. Smith and George Walker.
James Murtha
Executive Vice President
Frank Barletta
Associate Vice President and Treasurer
