Vice President for Finance and Treasurer Patrick Flannery said the college plans to use the surplus money for dorm renovations, contributions to its endowment, and investment in its reserves. The board of trustees will determine the details of how the surplus will be used on Sept. 12 and 13.
For fiscal year 2016, which ended in June, the college predicted a much smaller surplus because the stock market performed so poorly. Approximately one third of the college’s budget comes from its endowment, so when the market is down, the college earns less return on its investment. The endowment consists of gifts from donors in the form of investment funds. These investment funds earn interest over time, which provides the college with a source of income.
Flannery said the endowment “underperformed” this year. Although the college earned less from the endowment, it received so many gifts that the surplus was 15 times larger than expected.
“We didn’t have to make any major cuts,” Flannery said. “It was a real blessing.”
Chief Administrative Officer Rich Péwé said the college has operated on a budget surplus every year since 2010 because it is run so economically and expects to stay within its budget. The budget surplus for fiscal year 2015 was $19 million.
“Dr. Arnn runs a pretty tight ship,” Péwé said.
Before Larry Arnn became president of Hillsdale College in 2000, the college received approximately 19,000 charitable gifts per year. Now, the college receives more than 400,000.
“What’s been done in terms of outreach and fundraising has been remarkable,” Péwé said.
The college used 2015’s surplus funds to help finish Simpson Residence and the Searle Center and contribute to the ongoing Mauck Residence renovations.
Other colleges that rely more heavily on their endowments aren’t always able to keep up with the market, Péwé said, adding that the colleges not on top of their budgets are are “crumbling.”
“They don’t know what surplus is,” Péwé said.
According to data compiled by Nancy Johnson, executive director of institutional advancement, the number of gifts Hillsdale received over the past five years increased by 45 percent, and the number of donors increased by 20 percent. In fiscal year 2012, the college received $76.1 million in gifts. In fiscal year 2016, it received $114.9 million.
Johnson said it’s difficult to compare Hillsdale’s fundraising to other colleges because most other colleges receive federal funding, so it’s hard to say whether Hillsdale receives more gifts than other colleges. But because other colleges receive federal funding, Hillsdale has to make up the difference by raising more funds in the form of charitable gifts.
“The burden on us is much greater,” Johnson said. “We have to raise from private sources what nearly every other school in the country receives from the federal and state taxpayers.”
Péwé said the college never expects a surplus, but he is always very thankful when there is one because it means the college can get a head start on the next big project.
“It’s really a blessing, that’s something a lot of places aren’t used to,” Péwé said.
