Part 3 - Comprehensive Standards
  

3.10.1  The institution’s recent financial history demonstrates financial stability. (Financial stability)

Compliance
Partial Compliance
Non-Compliance

Narrative

Despite a challenging external environment, the financial history of University of New Orleans demonstrates financial stability.  The University continues to successfully accommodate reduced revenues from state appropriations and tuition and fees by right-sizing the university to ensure that expenses match revenues. Additionally, the university strives to allocate its resources strategically and position it for future growth by prioritizing the use of its financial resources in a manner appropriate to its status as an Urban Research University.

Revenue History

The university is contending with declining revenues as a result of three events, declining state support, increased admission standards, and changing demographics in its primary service area. 

As in many states, state support for public higher education in Louisiana has diminished due to financial constraints and the fact that higher education is one of the few remaining discretionary parts of the state’s budget. Please see Funding History for Higher Education in Louisiana.

The University of New Orleans has had as its historic mission to serve as the mechanism for access to higher education for the citizens of the Greater New Orleans area. Post- Hurricane Katrina, the demographics have shifted and the university’s primary service area has experienced a decline in population.  The population of Orleans Parish (county), where New Orleans is located, declined by 29% between 2000 and 2010. Further, increased standards for admission required by state policy have been enforced, leading to a further decline in student enrollment.  Given that historically, as well as currently, over 80 percent of enrolled students reside in the two parishes (counties) of Orleans and Jefferson, the result of these changing demographics has been a reduction in the size of the university.

Additionally, the University increased its admission standards, effective Fall 2012, in an effort to enroll students with a greater chance of success and graduation. This was done to improve both retention and graduate rates. Since Fall 2012 retention rates have, indeed, improved. For the first time students who enrolled in Fall 2013, the retention rate for first time, full time freshmen increased 2 percent to 64 percent, and the increase in retention for transfer students increased 4 percent to 69 percent.

The Fall 2012 entering class was approximately 700 students smaller than what has occurred, on average, the previous 4 or 5 years. Since Fall 2012, which created a new baseline, the University has experienced an increase of 200 new first time students in Fall 2013 and 250 new first time students in Fall 2014. However, the number of students graduating, based on the larger enrollments in 2007-2011 when the lower admission standards were in place, is greater than the number of new first time students since 2012. The phenomenon will begin to dissipate in Fall 2015 due to recruiting students From different markets and the continuing improvement in retention rates, with an expected increase in total enrollment expected in Fall 2016.

Table 1 below documents the University enrollment and revenues of the Unrestricted Operating Budget over the past five years:

Table 1: University Enrollment and Revenues 2010-2014

  University of New Orleans Enrollment and Revenues, AY 2010-2014
Academic Year Fall Headcount Enrollment [1] Fall FTE Enrollment [2] Total Revenues (Actual) [3]

State Appropriations (Actual)
 

Self Generated Revenues
 (Actual)

2009-10 11,724 11,464 $114,598.030 $59,703,377 54,894,653
2010-11 11,276 10.971   125,753,651   65,745,495 60,008,156
2011-12 10,903 10,561   107,340,096   44,334,821 63,005,275
2012-13 10,071   9,875   102,922,935   38,325,759 64,597,176
2013-14   9,323   9,112     97,661,808*   33,907,104* 63,691,704*

*Budget value

Actions Taken to Maintain Fiscal Stability

The university has matched declining revenues by reducing expenses to maintain fiscal stability. Budget Task Forces have been utilized as the primary process to ensure that the necessity for expense reduction is well understood and to develop and implement reduction plans. The focus of expense reduction efforts has been to limit the impact on the core instruction and research mission of the university. 

The University has taken several actions to manage the FY2013 and FY2014 budget reductions so that core missions would be minimally impacted.  For FY2013, the President created two budget reduction committees (academic and administrative) and for FY2014 the President created a Cost Reduction and Revitalization Committee.  All committees were charged with researching and developing cost-cutting and revenue-generating proposals.

Membership of these committees included representation from faculty, administrators, students, and staff.  Minutes of the Cost Containment and Revitalization Committee are provided. The Committee was provided multiple sources of data to assist their efforts, including a presentation by the Commissioner of Higher Education (Dr. Purcell), a presentation on personnel reduction measures, and a presentation on the University's operating budget. 

In addition, the University has been asked by the President of the University of Louisiana System to prepare and submit budget reduction plans to meet the anticipated reductions.  Throughout its preparations for revenue reductions the University remains committed to maintaining the quality of its educational operation.

Hiring and spending freezes have been utilized as effective mechanisms to reduce expenses.

In addition to the freeze mechanisms, recent major reductions included:

  • A Reduction In Force (RIF) of 28 staff employees, reducing payroll by $2.1 million;
  • Elimination of vacant positions; and,
  • Elimination of The Children’s Center, which required a $.3 million subsidy to operate.

While the university has had to endure many reductions to ensure fiscal stability on its Income Statement, the Balance Sheet remains robust, given the strength of its two foundations.      

At the present time the University is enacting a fiscal stability plan which has been approved by the University of Louisiana Board of Supervisors.  This three-year plan is closely monitored by the Board of Supervisors and has begun in July 2014.  The major aspects of the fiscal stability plan are a) a reorganization of the administrative structure at the University (one vice presidential position has been eliminated and the support staff for this function; the executive assistant to the President position has been eliminated; the position of Director of Enrollment Management has been eliminated and the function/responsibilities  have been assigned to the Vice President for Student Affairs and Enrollment Management; the position of Executive Director of the Graduate School has been eliminated and the functions/responsibilities have been assigned to the Vice President for Research and Economic Development), b) legacy expenses have begun to be eliminated, c) staff reductions will occur, and d) a faculty-led academic restructuring is underway to identify programs of strategic importance, as well as programs that no longer serve the students, community, or the University’s mission. As the plan is being implemented, any savings will be re-invested in to both academic and non-academic programs to ensure a student success and faculty development.

The Louisiana State Legislature enacted in June 2014 the Workforce and Innovation for a Stronger Economy (WISE) Act which provides funding for target academic programs in the disciplines of engineering, computer science, education, accounting and finance, and film.  This recurring fund will strengthen the academic programs in the targeted areas, which will help to ensure financial stability for those areas.  The University of New Orleans will receive each Fall, beginning in 2014, $1.8M.  A requirement of the WISE funding is the University receiving a 20 percent match of funding from business and industry.  This results in a total of at least $2.16M of new funding each year.

University of New Orleans Foundations

The University of New Orleans foundations provide assurance of stability in the University’s financial position.  The University of New Orleans Foundation and the University of New Orleans Research and Technology Foundation Inc., are the two primary foundations supporting the University.  The University of New Orleans Foundation serves as the primary recipient of private donations and contributions to endowment funds which are held, invested and expended in support of University programs.  Funds from the Foundation’s endowment are used to supplement faculty salaries, provide research and faculty development support, underwrite scholarships, support the athletics program, and the like.  The University of New Orleans Foundation's assets have a market value of $62.69 million, as of July 1, 2014. The University of New Orleans Research and Technology Foundation, Inc. was founded to support the University of New Orleans in its research, property and facilities financing, technology transfer and acquisition and management functions. The Research and Technology Foundation owns and manages a six building research park adjacent to the University campus. This 583,506 square foot complex has an estimated market value of $81 million.

The Foundation’s investment policy ensures conservative, fiscally-prudent investment practices aimed at producing long-term growth.

Table 2: UNO Foundation Rate of Return 2009-2013

University of New Orleans Foundation Rate of Return, FY 2009-2013
Effective Date Rate of Return on Investments (APY) Annual Payments or Spending Rates Total Net Assets
June 30, 2009 15.95% 5.00% $54,250,900
June 30, 2010 18.56% 5.00%   61,565,707
June 30, 2011   0.50% 5.00%   58.931.418
June 30, 2012 10.98% 5.00%   64,859,980
June 30, 2013 13.12% 4.23%   70,766,640

As a result of the university’s efforts, the balance sheet of the university and its foundations has remained stable.

 

Table 3 shows the University’s net assets during the last five fiscal years, as reported annual to the Board of Regents. Tables 4-6 provide other fiscal data for the same time period.

Table 3: UNO Net Assets 2009-2013

  University of New Orleans Net Assets, FY 2009-2013**
Effective Date Current Assets Non-Current Assets Current Liabilities Non-Current Liabilities Total Net Assets
June 30, 2009 $30,892,588 $225,044,983 $ 18,436,447 $103,087,989 $134,413,135
June 30, 2010   30,247,937   232,523,900     16,325,479   109,800,233   136,646,125
June 30, 2011   42,012,496   233,300,044     17,392,789   114,104,550   143,815,201
June 30, 2012   35,561,292   227,717,605     15,420,677   113,468,686   134,389,534
June 30, 2013   27,617,833   213,832,731     13,853,472   116,232,741   111,364,351
June 30, 2014   22,787,971   213,473,810     13,947,204   120,223,719   102,190,858
** University Only, does not include component units

Table 4: UNO Foundation Net Assets 2009-2013

  University of New Orleans Foundation Net Assets, FY 2009-2013**
Effective Date Current Assets Non-Current Assets Current Liabilities Non-Current Liabilities Total Net Assets
June 30, 2009 $ 6,459,862 $ 59,457,267 $ 3,544,953 $15,062,824 $47,309,352
June 30, 2010    9,005,285    65,891,819    3,721,563   16,924,641   54,250,900
June 30, 2011    9,965,777    73,960,649    3,406,280   18,954,439   61,565,707
Dec. 31, 2011  10,237,057    69,788,803    3,079,831   18,014,611   58,931,418
Dec. 31, 2012  12,289,639    75,267,867    3,467,872   19,229,654   64,859,980
Dec. 31, 2013 11,615,242    86,595,852    7,863,203   19,581,228   70,766,663
** UNO Foundation changed its fiscal year end to December 31 during FY2011

Table 5: UNO Foundation Net Assets 2009-2013

  University of New Orleans Foundation Net Assets, FY 2009-2013**
Effective Date Current Assets Non-Current Assets Current Liabilities Non-Current Liabilities Total Net Assets
June 30, 2009 $11,852,643 $110,984,058 $ 6,008,025 $46,601,035 $70,227,641
June 30, 2010   11,243,636   111,595,856    9,754,187   41,395,349   71,689,956
June 30, 2011   13,689,148   114,583,492    9,207,926   45,243,978   73,820,736
Dec. 31, 2011  12,311,484    112,701,331    7,960,128   45,209,513   71,843,174
Dec. 31, 2012  12,885,357    111,849,822    8,216,433   44,581,966   71,936,780
Dec. 31, 2013 12,920,787    109,967,697 11,761,334 43,359.457   67,767,693
** UNO Foundation changed its fiscal year end to December 31 during FY2011

Table 6: UNO Summary of Gifts and Expectancies 2009-2013

  University of New Orleans Summary of Gifts and Expectancies, FY 2009-2013 **
Effective Date UNO Foundation Total Gifts and Expectancies UNO R&T Foundation Total Gifts and Expectancies
June 30, 2009 $4,647,563 $10,114,221
June 30, 2010   5,668,516     7,049,451
June 30, 2011   4,949,792     6,124,704
Dec. 31, 2011**   1,795,606     2,322,216
Dec. 31, 2012   4,975,302     3,827,550
** UNO Foundations changed its fiscal year end to December 31 during FY2011

 

Discussion of Composite Financial Index

Administration of Finances

The President has ultimate responsibility for the fiscal health of the University, but immediate management and oversight of the University’s budgets is under the purview of the Vice President for Business Affairs.  The Business Affairs area is responsible for the preparation of the Annual Operating Budget, which is submitted to the Board of Supervisors of the University of Louisiana System for approval.  Further approval by the Board of Regents is also required.  The comprehensive budgeting process ensures that revenues (state appropriations, self-generated income, and other funding sources) are sufficient to meet approved projected expenditures.  Funds expended during the fiscal year are made according to the approved budget plan.  In adherence to Louisiana Revised Statute 39:77, the University exercises rigorous control over expenditures.  The University has not experienced a year-end deficit in its entire history.

The Vice President for Business Affairs and other chief administrators in Business Affairs are well-qualified to manage the University’s budgets.  The educational and experiential qualifications of the leadership team in this division provide evidence of their suitability for the positions they hold.

 

Supporting Documents

Document Description
Document IconCCRC_present_budget_overviewPresentation to Cost Containment and Revitalization Committee on UNO Budget
Document IconCCRC_present_personnel_reducPresentation to Cost Containment and Revitalization Committee on Personnel Reduction
Document IconCost_Contain_Revit_MinutesSample Minutes of Cost Containment and Revitalization Committee
Document IconFiscal_Present_ULSPresentation to University of Louisiana System regarding UNO Fiscal Plan
Document IconFunding_History_for_Higher_Ed_LAFunding History for Higher Education in Louisiana
Document IconPresent_Comm_Higher_EdPresentation by Commissioner of Higher Education on Fiscal Matters
Document IconR&T_Foundation_Audit_Rpt_06_30_2009R&T Foundation Audit Report 06/30/2009
Document IconR&T_Foundation_Audit_Rpt_06_30_2010R&T Foundation Audit Report 06/30/2010
Document IconR&T_Foundation_Audit_Rpt_06_30_2011R&T Foundation Audit Report 06/30/2011
Document IconR&T_Foundation_Audit_Rpt_12_31_2011R&T Foundation Audit Report 12/31/2011
Document IconR&T_Foundation_Audit_Rpt_12_31_2012R&T Foundation Audit Report 12/31/2012
Document IconR&T_Foundation_Audit_Rpt_12_31_2013R&T Foundation Audit Report 12/31/2013
Document IconStaff_Qualif_Bus_AffairsDescriptions of Qualifications of Key Personnel in Office of Business Affairs
Document IconUNO_Found_Inv_Endow_PolUniversity of New Orleans Foundation Investment and Endowment Annual Spending Activities Policy
Document IconUNO_Foundation_Audit_Report_06_30_2009UNO Foundation Audit Report, 6/30/2009
Document IconUNO_Foundation_Audit_Report_06_30_2010UNO Foundation Audit Report 06/30/2010
Document IconUNO_Foundation_Audit_Report_06_30_2011UNO Foundation Audit Report 06/30/2011
Document IconUNO_Foundation_Audit_Report_12_31_2011UNO Foundation Audit Report 12/31/2011
Document IconUNO_Foundation_Audit_Report_12_31_2012UNO Foundation Audit Report 12/31/2012
Document IconUNO_Foundation_Audit_Report_12_31_2013UNO Foundation Audit Report 12/31/2013