2011 Annual Report - USNH Financial Services - University System ...

USNH 2011 ANNUAL REPORTManagement’s Discussion and AnalysisI. IntroductionThe following unaudited Management’s Discussion and Analysisincludes an analysis of the financial condition and results of activitiesof the University System of New Hampshire (USNH) for the fiscalyear ended June 30, 2011. This analysis provides a comparisonof significant amounts and measures to prior periods and, whereappropriate, presents management’s outlook for the future.USNH is a Section 501(c)(3) corporation organized under the lawsof the State of New Hampshire to serve the people of the stateas the premier public provider of higher education, research andpublic service. USNH accomplishes its mission by operating foureducational institutions that collectively offer a full array of highereducation options for the state. These institutions include theUniversity of New Hampshire, with campuses in Durham (UNH)and Manchester (UNHM); Plymouth State University (PSU); KeeneState College (KSC); and Granite State College (GSC). While USNHperforms public service and conducts scholarly research across theglobe, most of USNH’s activities take place at the three residentialcampuses (UNH, PSU and KSC), the urban campus (UNHM), thenine regional sites of GSC, and the Cooperative Extension andSmall Business Development Centers located throughout thestate. The accompanying financial statements also include theactivities and balances of the state’s only public television station,New Hampshire Public Broadcasting (NHPB); the University of NewHampshire Foundation, Inc. (UNHF); and the Keene EndowmentAssociation (KEA) - three legally separate but affiliated entities.These statements do not include the activities and balances of theUNH School of Law, a legally separate corporate entity for whichUNH is the sole member, since majority control over the operationsdoes not currently reside with UNH.II. Financial Highlights and EconomicOutlookThe state economic environment has been a major concern for USNH,particularly over the past year. State general appropriations haveprovided a small, but stable, revenue stream for the past twenty-five +years. For 2012 and 2013 USNH’s general appropriation will be reducedto $51.7 million and $54.7 million, respectively. USNH has taken anumber of steps to address this unprecedented reduction including(1) modifying fringe benefit programs, (2) offering early retirementincentives, (3) reducing staffing levels, (4) increasing tuition rates forNH residents, and (5) making strategic investments that will enhancerevenue or reduce costs over the long-term.USNH has a positive long-term outlook, despite its near-term budgetchallenges. For this reason, the Board of Trustees has made strategicdecisions that will strengthen USNH and enable it to thrive beyond2012. Importantly, the 2012 budget does not reduce our commitmentto funding deferred maintenance needs in existing facilities, nor does itincrease tuition to levels where we are no longer competitive with othercolleges and universities. Instead, the Board took difficult cost cuttingmeasures while also increasing funding for campus strategic initiativesthat will ultimately strengthen USNH for the long-term. The Board alsoincreased USNH’s commitment to need-based financial aid as well toensure continued access and affordability for our students.The remainder of this report describes the results of financialoperations for the year ended June 30, 2011 as compared to prior years.USNH management and trustees are determined to build on thesesuccesses to address the challenges we face, and to meet our fiduciaryresponsibility to provide the state with high-quality educationalresources.2011 Revenues = $911 Million(not including capital additions/deductions)(shown here at gross amounts, not netted for student financial aid)($ in millions)Chart 1: 2011 Revenues by SourceSales of auxiliary services$192 (21%)Resident tuition$167 (18%)Chart 2: 2011 Revenues by InstitutionPSU$120 (13%)GSC$19 (2%)NHPB and other$17 (2%)Gifts, investmentincome andother revenue$57 (6%)Nonresident tuition$193 (21%)KSC & KEA$130 (14%)General appropriations$100 (11%)Federal PellGrants$24 (3%)Grants andcontracts$147 (16%)Student fees$31 (4%)UNH(includes UNHM & UNHF)$625 (69%)15