Financial Summary and Highlights

There are two major elements of WPI's financial operation. One is the day-to-day activity of the university; WPI finished the year with a surplus of approximately $14,000. The other major component is what is commonly referred to as WPI's endowment. Durin g the fiscal year the market value of assets managed under the umbrella of the endowment grew by $25 million, to $177 million.

Considerable appreciation must be extended to the faculty and staff for their management of the university during the year. A solid budget was developed, reflecting a thorough attempt at including all expected revenue and expense, and the faculty and staf f managed those resources well, conserved when and where possible, and brought the budget in on balance. In an organization as diverse as WPI, this does not happen unless everyone is focused on achieving financial success.

The university's endowment is managed by the Board of Trustees with specific responsibility delegated to the Investment Committee, chaired by F. William Marshall Jr. The trustees engage a variety of money managers to manage the assets. WPI's total return of 18.5 percent in FY96 placed us well ahead of the national average for college and university endowments (17.2 percent). The Investment Committee's objective for allocating the endowment's assets was that 70 percent would be invested in equities; at yea r end, about 71.5 percent of the assets was invested in domestic and international equities.

During the year we executed an interest rate swap that will produce significant interest savings on our debt of approximately $40 million over the next 2.5 years. The swap was made possible by the favorable interest rate scenario that emerged during the y ear.

One measure of the strength of an institution is its calculated endowment per undergraduate. At approximately $63,000, WPI compares favorably in this regard and is likely to be in the top 100 of the 3,600 U.S. colleges and universities at year's end.

Each year the university approves a spending rule that applies a percentage of the assets of the endowment to the operating budget. For many years, the spending rule has been 5.5 percent, about average for colleges and universities throughout the country. The amount available is based upon a moving average of the total market value of the endowment at the conclusion of the previous two fiscal years. While it would be good to reduce this rate as we go forward, the operating budget is partly dependent on th is income, making such a move difficult. Still, the endowment is the flywheel that keeps the university moving forward; the growth in the value of the endowment is positive for the future of WPI.

For the last fiscal year approximately 30 percent of tuition income was returned in the form of financial aid, which was budgeted at $12.5 million. This continues to be a source of concern and little comfort is taken from the fact that most of our peer in stitutions are experiencing the same pressures as they recruit students who have a higher need for financial aid than do students at typical liberal arts-oriented colleges and universities. While WPI is fortunate to be able to balance the budget despite f inancial pressures, considerable effort must be exerted to find ways to alleviate these pressures so that investments may be made in new programs and facilities.

Please refer to the itemized Financial Report for the years ended June 30, 1996 and 1995.