Financial Report to the Faculty

1
Financial Report to the Faculty

• Committee on Administrative Financial Policy
  (FAP)
• Professor Allen Hoffman, Chair
• Provost ad interim John Orr
• Vice President CFO Jeffrey Solomon

March 22, 2007
2
Agenda

• 1. Overview of FAP Activities 2006-07 Professor
  Hoffman
• 2. Benchmarking of Faculty Salaries Provost ad
  interim Orr
• 3. Financial Update for FY07 FY08
• Vice President Solomon
• 4. Questions

3
FAP Membership 2006-2007

• Allen Hoffman, Chair
• James Hanlan, Chair FBC
• Suzanne Weekes, Secretary
• Jeffrey Solomon, VP Finance CFO
• Judith Trainor, Budget, Planning IR

4
FAPs Charge

• To inform the Faculty on administrative and
  financial policies affecting the Faculty and the
  academic affairs of WPI
• To ascertain the interests and views of the
  Faculty concerning such policies and represent
  these interests and views to the Administration

5
Major FAP Activities 2006-07

• Staff Opinion Survey
• Faculty Phased Retirement Program
• Faculty Salary Benchmarking
• Fringe Benefit Issues
• Budget Status Development

6
Report on Faculty

• Investment in New Faculty for FY08
• Benchmarking of Faculty Salaries
• Determination of Peer Group
• Data Comparison by Rank
• Development of Compensation Philosophy

7
Investment in Faculty

• 19 searches authorized for FY2008
• To replace faculty who retired in FY2005
• To build areas of strategic importance
• To support enrollment growth
• To establish new robotics program

8
The WPI Faculty-Fall 2006

• Instructional Faculty 205
• Tenured 159 (78)
• Assistant Professors 44 (22)
• Associate Professors 74 (36)
• Full Professors 87 (42)

9
The WPI Faculty-Changes
10
New Approach for Salary Analysis

• Identification of broader peer group
• Benchmarking based on AAUP data
• Development of salary philosophy plan

11
Sources of Faculty Salary Data

• Association of Independent Technological
  Universities
• Fall 2006 AITU data now available
• Limited group of 20 schools
• Includes RPI, CMU, MIT, RIT
• Reported by faculty rank and by discipline
• American Association of University Professors
• Fall 2006 AAUP data not yet available
• Covers most institutions
• Not segregated by discipline

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Reminder of 2006 ReportEngineering and CS
Salaries, Fall 2005 - Professors
High
WPI
Low
13
Engineering and CS Salaries - Professors
Max
WPI
Min
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Peer Group Characteristics

• Number of Institutions 34
• Doctoral I 27 (80)
• AITU Schools 15 (44)
• Public Institutions 11 (33)
• New England 9 (27)
• Average Enrollment 14,500

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Peer Group

• Boston College
• Boston University
• Brandeis University
• Brown University
• California Institute of Technology
• Carnegie Mellon University
• Case Western Reserve University
• Clarkson University
• Cornell University-Public
• Cornell University-Endowed
• Drexel University
• Embry-Riddle Aeronautical University
• Georgia Tech
• Harvey Mudd College
• Kettering University
• Lehigh University
• Michigan Tech

• Milwaukee School of Engineering
• Massachusetts Institute of Technology
• New Jersey Institute of Technology
• Northeastern University
• Penn State University Park
• Polytechnic University
• Purdue University-West Lafayette
• Rensselaer Polytechnic Institute
• Rochester Institute of Technology
• Rose-Hulman Institute of Technology
• Stevens Institute of Technology
• Tufts University
• University of Connecticut
• University of Illinois at Urbana-Champaign
• University of Maryland at College Park
• University of Massachusetts-Amherst
• Virginia Tech

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Average Salaries-Assistant Professors
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Average Salaries-Associate Professors
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Average Salaries-Full Professors
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CFO Report

• FY07 Financial Status
• FY08 Approved Budget Parameters
• The Structural Deficit
• New Debt Structure
• Endowment Update
• New Building at Gateway Park
• Other Major Capital Projects
• Green Campus

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The Budget Status of FY07

• Projected surplus of 1M at 6-30-07
• Projected total revenue to equal budget
• Undergraduate net tuition at budget
• Shortfall in graduate tuition
• Increase in Corporate Education
• Increase in short-term investment income
• Projected total expense to be below budget
• Vacancy savings
• Utilities savings
• New building at Gateway Park to open in April

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The FY08 Budget Themes Objectives

• Prudently continue growth of net revenues
• Provide faculty support by authorizing searches
  for 19 tenure/tenure-track faculty
• Provide adequate salary increases and affordable
  health insurance for faculty and staff
• Fully integrate Gateway Park life sciences
  building into operating budget
• Constrain the rate of tuition increases

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The FY08 Budget Approved Parameters
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The FY08 Budget Sources of Revenue

• Net undergraduate tuition fees 67.3M
  59
• Net graduate tuition 8.7M 8
• Summer session tuition 2.8M 2
• Subtotal net tuition fees 78.8M
  69
• Auxiliary operations 13.1 M 12
• Endowment/investment income 10.2 M
  9
• Corporate/professional education 4.6 M
  4
• Indirect cost recovery 3.4
  M 3
• Unrestricted gifts 2.5 M
  2
• Other revenue 1.6 M
  1
• Total revenue 114.2 M 100

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The FY08 Budget Uses of Funds

• Salaries 52.6M 46
• Health insurance 4.2M
  4
• Other benefits 10.2M 9
• Subtotal compensation 67.0M 59
• Other operating expenses 25.8M 22
• Debt service/depreciation 11.9M 10
• Utilities 5.6M 5
• New building at Gateway Park 2.9M
  3
• Contingency 1.0M 1
• Total 114.2M 100

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The Structural Deficit

• In a balanced budget, the structural deficit
  refers to items that are not being fully provided
  for or the use of resources to a greater extent
  than what might be ultimately sustainable.
• Examples
• Inadequate deferred maintenance funding
• Too high endowment spending rule
• Not funding faculty salaries to adequate levels
• Insufficient financial aid to meet tuition
  increases for upper class students
• Develop plan to address structural deficit over
  time

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Debt Structure

• Restructuring of existing debt
• More strategic debt structure
• Extend average life
• Create level debt service
• Create additional debt capacity
• New debt for residence hall (40M)
• To be issued June 2007
• Rates locked in at 4.7 for 40 years
• Total debt at approximately 145M
• Overall annual debt service cost not increased
  significantly
• Public Credit Ratings
• Standard and Poors A (Outlook upgraded
  to stable)
• Moodys Investors Service A1

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Endowment-Market Value History
381M as of Feb 28, 2007
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Endowment-Market Value Comparison
For private institutions to which the greatest
number of WPI students apply for admittance
Values as of June 30, 2006 per NACUBO
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Endowment-Performance History
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Endowment-Asset Allocation
Fixed Income 10.6
Fixed Income 12
Real Assets 4.6
Public Equity 40
Real Assets 18
Public Equity 50.3
Hedge Funds 27.4
Hedge Funds 25
Private Equity 5
Private Equity 7.1
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Life Sciences Building at Gateway

• Scheduled to open April 2007
• 31 faculty to have labs in new facility
• Operations committee determined initial level of
  required support
• 11 new staff to be hired in FY2008
• Transportation to be provided
• Corporate professional education
• Café

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Major Capital Projects-FY07 FY08

• New residence hall garage
• Alumni Field renovation
• Salisbury Goddard Hall renovations
• Founders Hall
• restaurant/pub convenience store
• Alden Hall air conditioning
• Recreation center planning to continue

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The Green Campus

• Why Go Green?
• Trends in Higher Education
• Cost/Benefit Analysis of Going Green
• Green Buildings at WPI
• Bartlett Center
• New Residence Hall
• Policy Adopted by WPI Board

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Questions
This presentation is available on the Office of
Faculty Governance web page http//www.wpi.edu/Cam
pus/Faculty/