The reports, compiled by Robert Toutkoushian, professor and economist at the University of Georgia, and Athens State accounting faculty, Josh Zender and John Berzett, focused on identifying financial indicators and comparing those to indicators of other similar institutions. Dr. Toutkoushian’s report focused primarily on overall financial resources and distribution of those resources, cost and student pricing as well as salaries. His report indicated that, although highly dependent on tuition and fee revenue compared to other revenue sources, the University’s tuition and fee rates were lower than those of comparator institutions. The supplemental report from Zender and Berzett examined financials for the past seven years and found the University maintained healthy ending net position reserves, experienced favorable financial trends, avoided massive reliance upon a single external funding source, and received no significant audit findings. The reports were shared with the University’s Board of Trustees today.
”These reports along with our annual audits show the University is on strong financial ground and that we compare very favorably with other institutions of like size,” said University President Bob Glenn. “The reports confirmed our belief that Athens State is doing well but they also identified areas that we need to monitor to maintain this strong position.”
The authors compared Athens State to “peer” institutions which were comparable in size, mission and budget. Based upon the financial statements and data analysis and review of audit reports, the researchers could find no evidence of any immediate threats to Athens State’s ability to endure over an extended period. In fact, the University’s financial condition was stronger than several of its peers.
The Zender and Berzett report noted that the University’s overall financial condition had improved since 2013. It also noted that the institution’s financial position met or exceeded its peers for 62 percent of the financial indicators evaluated. Additionally, the long-range trend for over 66 percent of the financial indicators measured is favorable.
Auxiliary services was one area that was identified for caution. Currently, five of the seven auxiliary enterprise units operate at a deficit. Overall, auxiliary services faced an $85,000 net operating loss for the 2014 fiscal year. While operating at a loss, the Zender and Berzett report found this to be manageable given the institution’s total net financial position. Auxiliary services include the Center for Lifelong Learning, food services, coffee shop operations, vending, print services, student activities and bookstore operations.
”This is an area that we need to monitor closely,” said Mike McCoy, Vice President for Financial Affairs. “We believe these are areas where we can evaluate our business model and make changes to improve our operating efficiency.”
The report also found that the University’s debt load of $18 million was at a sustainable level, but advised that the institution should carefully review the impact of issuing additional debt. The University most recently issued debt of $5 million towards construction of Phase II of the Alabama Center for the Arts.
”I intend to work with our Budget Advisory Committee to assist us not only with our annual budget process but also to participate in the development of the University’s capital budgeting plan,” said McCoy. “I believe this will help us further develop a strategy that will keep the institution on sound financial ground.”
Zender and Berzett also suggested that the University create a financial dashboard of key indicators that could be followed regularly and used to further compare Athens State’s performance with its peer institutions. Their report noted that Athens State should be encouraged to recognize that financial and performance benchmarking provides an opportunity to reassess goals and objectives, establish priorities, engage employees and students, influence performance improvements, and document the institution’s progress.
”We really like the dashboard suggestion and believe it is a great way to keep our faculty, staff, students and the public informed on the University’s finances,” said McCoy. “We’ll go to work on identifying those key components as well as developing a format that is easy to follow and understand.”