Standard 9. Financial Resources - Description
Stonehill's Strategic Plan includes a five-year financial plan that provides the funding for strategic initiatives that advance the mission of the College. Our financial plan incorporates reasonable assumptions pertaining to enrollment, tuition, room and board, endowment returns, endowment spending, fundraising, and economic conditions. The financial plan is the starting point for the annual budget development process and serves as a guide in resource allocation decisions, helping to ensure consistency with the College's strategic priorities.
Stonehill has a strong management team that approaches budgeting and financial planning responsibly. The President, the Vice Presidents and the Strategic Planning Committee manage the budgeting process. This process, which is directed by the Assistant Vice President for Planning, is well organized with clear guidelines and timetables. The budget process is also very participatory and is well integrated with the College's strategic plan. Each April, the Board of Trustees reviews and approves the coming year's budget. For instance, the financial plan, and thus the annual operating budget, includes a contingency fund equal to 1% of total operating expenses for each year covered by the plan. The purpose of the contingency is to allow the College to address emergencies as well as to take advantage of unforeseen opportunities. The College also budgets for an annual operating surplus in order to ensure that the institution is able to live within its means from year to year. Conservative budgeting practices such as these are helping Stonehill to manage in the difficult economic environment in which the global community is operating and will be critical during the upcoming fiscal year.
The Board of Trustees reviews and approves our strategic and financial plans. In addition, the Board's Finance Committee reviews the annual budget recommended by the President and subsequently submits the budget to the full board for approval. The Finance Committee also monitors the College's financial results on a regular basis. Moreover, the Board provides financial oversight throughout the year. For example, the Board's Investment Committee oversees the College's endowment and other financial investments. The Board's Audit Committee is responsible for overseeing the College's financial reporting as well as the College's annual financial statement audit.
Stonehill College managers and the Board of Trustees regularly review the College's financial aid policy. From a governance perspective, Stonehill's financial aid policies and practices are the responsibility of the Enrollment Management and Marketing Division, which was formed by the President and Board of Trustees in 2008 and combines the functions of admissions, financial aid, and institutional marketing. The Division is led by a Vice President who works closely with the Vice President for Finance and the Provost to define and implement financial aid policies which are consistent with the mission and objectives of the College. The Enrollment Management and Marketing Division benefits from the oversight of the Planning Committee of the Board of Trustees, to whom it provides regular reports.
Stonehill's Enrollment Management Committee (a subcommittee of the Strategic Planning Committee) monitors performance against the College's enrollment objectives. The committee is led by the Dean of Admissions, and includes the Assistant Vice President / Director of Student Financial Services-both of whom report to the Vice President for Enrollment Management and Marketing. The College seeks to balance a number of enrollment objectives, including student academic profile, program of study, gender, and ethnic and economic diversity while simultaneously controlling the discount rate.
In keeping with its planning principles, the College monitors annual financial results against its annual budget. The Financial Planning Committee, which is a subcommittee of the College's Strategic Planning Committee, keeps the Stonehill Community informed of the College's financial performance through its Quarterly Financial Report. The report, which is issued to academic department chairs as well as mid- and senior-level managers, also contains a snapshot of key historical financial indicators and features a Quarterly Focus section that is designed to explore a different financial topic with each report. Each department has on-line access to its budget through the College's administrative computing system. This access enables departmental managers to monitor their spending on a real-time basis.
In addition, in fiscal year 2008, the Treasurer's Office began distributing Divisional Quarterly Financial Reports, which provide more detailed "budget vs. actual" analysis at the divisional level for each of the respective divisional vice presidents. These reports also include commentary. A new budget manager position that was created and filled in October of 2008 will further strengthen the College's budgeting and financial management. The College is also currently implementing a new administrative technology system that will improve the College's financial reporting.
We also examine performance against peer and aspirant institutions with the help of an information database maintained by Moody's Investor Services. In addition, the College observes progress against the goals (programmatic and financial) outlined in the strategic plan each year. Vice Presidents and others with responsibility for implementing the plan document their progress throughout the year; this progress is then reviewed by the Strategic Planning Committee, the President, and the Vice Presidents. An executive-level progress report was shared with the Board of Trustees in January 2008, the mid-way mark for the current strategic plan.
The progress reports include a review of financial results. The College's financial condition and credit quality is periodically reviewed by Moody's Investors Service. In October 2005, Moody's upgraded Stonehill's credit rating from A3 to A2 and assigned a stable outlook. Moody's affirmed the rating and outlook in October 2007 and in March 2008, citing Stonehill's consistent positive operating performance, the "solid cushion" that the College's financial resources provide, and Stonehill's healthy market position. The College also analyzes its performance relative to a benchmark set of schools in addition to Moody's A-rated institutions. The College subscribes to the Moody's Municipal Financial Ratio Analysis Database for this purpose. We also monitor our endowment performance against other colleges and universities via the annual NACUBO (National Association of College & University Business Officers) endowment study. Most recently, in July 2009, Moody's again reaffirmed the College's A2 rating with a stable outlook in relations to our existing debt and our new $22M debt issuance for the new 250 bed residence hall.
Financial planning continues to play a critical role as the College develops its next strategic plan, which will span fiscal years 2011 through 2015. Our planning efforts are grounded in a sound understanding of the College's strengths and weaknesses (financial and otherwise) as well as external factors that could have a financial impact of the College. An evaluation of these factors (strengths, weaknesses, opportunities and threats) has been instrumental to the College's efforts to develop the existing strategic and financial plans, as well as the upcoming plan.
The Office of Advancement, led by the Vice President for Advancement, is responsible for fund raising efforts at Stonehill. The College engages in a comprehensive fund raising effort by soliciting gifts for our annual fund, endowment, capital and programmatic purposes. The College solicits alumni, parents, friends, corporations, foundations and staff for gifts. Stonehill solicits donors through personal visits, phone calling, direct mail and electronic mail. The Office of Advancement employs a professional staff of 14 with expertise in annual fund raising, major gift fund raising, planned giving, donor research, gift stewardship, corporate and foundation fund raising.
As we prepare this self-study, the College is in the midst of a major comprehensive fundraising campaign; the goal is $55 million. The campaign will support a new science center, scholarships, academic programs, athletic programs and the annual fund. The Campaign began in September 2004 and has reached over $42,500,000 as of August 1, 2009, with an expected completion date of June 30, 2010. Campaign priorities were determined through the strategic planning process and approval by the College's Board of Trustees. Campaign readiness was determined through a feasibility study conducted by philanthropic consultants, and Stonehill retains the services of the consultants for campaign planning and counsel.
In addition, volunteer leadership for the campaign is organized through the Campaign Executive Committee, an ad hoc committee of Stonehill's Board of Trustees. Periodic updates and reports are provided to the Trustees, Campaign Executive Committee and donors on the progress of the campaign and other fund raising efforts. Stonehill's Director of Stewardship and Special Events, in conjunction with the Vice President for Advancement, provide annual reports to scholarship donors on the awards, student scholarship recipients, and value of endowed scholarships on an annual basis. Major gift officers are responsible for stewardship of major gifts and informing donors as to the use and impact of donations.
Solicitation and campaign materials reflect the impact that philanthropic gifts will have at Stonehill. The campaign brochures and videos give first-person evidence of the impact of the campaign objectives at Stonehill — new science center, athletics, scholarship, annual giving and academic initiatives. The materials are presented using donors, students, staff, and trustees — each offering insight into the impact of philanthropy at Stonehill. In soliciting major gifts, the College often uses individualized proposals to prospective donors indicating the request, use and stewardship of the gift. Scholarship gift agreements and endowed chair agreements are signed by each donor and the President of the College indicating the use and stewardship of these gifts by Stonehill.
In addition to the College's Gifts and Grants Acceptance Policy, Stonehill adheres to charitable gift policies and procedures set forth by the Internal Revenue Service, the Council for the Advancement and Support of Education's Management and Reporting Standards and applicable standards set forth by the National Association of College and University Business Officers (NACUBO) and the Financial Accounting Standards Board. The Office of Advancement works closely with the Controller's Office to determine the necessary accounting procedures and gift classification that needs to take place in order to accept and acknowledge a charitable contribution and make it available for its intended use.
We use our campus throughout the year to augment revenues in support of our primary mission. Indeed, there has been substantial growth in Conference & Event Services revenue over the past several years. The majority of the department's programming occurs during the summer. The College also recently initiated a modest Athletic Summer Camps program in an effort to increase resources for the Athletic program. The program was launched in the summer of 2008. These efforts and the Comprehensive Campaign represent new sources of revenue for Stonehill.
It should be noted that Stonehill decided to drop two programs that contributed modestly to the College's operating surplus: the Master of Science in Accounting program (the program's final year was in 2007-2008), and an evening-intensive Part-time Studies program (formerly the division of Continuing Education), which has been dramatically scaled back in recent years. We continue to allow students to complete degrees on a part-time basis, but no longer offer a special program for part-time students. These actions were taken in order to place greater focus on our primary academic program (see Standard Four, Academic Program).
Risk management is performed by Stonehill's Associate Vice President for Finance (who oversees the College's insurance), the General Counsel (who oversees contracts and legal matters), and the Business Manager (who oversees purchasing and vendor relationships). In addition, the College hired a temporary internal auditor who helped us to further strengthen internal controls in the area of financial reporting.
The College engages an independent accounting firm to perform its financial statement audit each year. The accounting firm is hired by, and reports to, the Audit Committee of the Board of Trustees. As part of its audit, the firm prepares and issues a management letter containing recommendations for areas of improvement pertaining to financial reporting practices and internal controls. The College also employs other outside organizations in a consultative role when additional expertise is needed in certain areas (enrollment management; investment advisory services; etc.).
All responsibilities and fiscal policies are clearly stated and consistently implemented in compliance with ethical and sound financial practices. Stonehill's bylaws and ordinances outline the College's governance structure, including the role of the Vice President for Finance & Treasurer. The College documents its policies in an on-line policy manual. This manual has policies covering a range of areas of the College, including finance. It should be noted that there are some key finance policies that are not included in the on-line policy manual, though they are policies nonetheless. Examples include the College's investment policy and debt policy.