Financial Summary and Highlights

By Stephen J. Hebert.

On June 30, 1997, WPI marked the conclusion of a highly successful fiscal year, as the operating budget finished with a surplus of approximately $14,000. It was a year that saw WPI with a full enrollment, with an expanding reputation, and with a caring group of faculty and staff who worked diligently to enhance the overall quality of the University's educational experience.

The total revenue for the fiscal year was $75,064,000. When financial aid is discounted from that figure, the net revenue for the year was $61,366,000. There was less dependence upon tuition as a source of revenue, which continues a positive pattern that has extended over the last three years (actual dependence dropped from 41.6 percent in FY 94 to 39.3 percent in FY 97). WPI's Waltham Campus, in its first year of operation, turned in a net contribution of $218,000.

As the University entered the early stages of a comprehensive capital campaign, gift income increased slightly from the previous year as the base was set for the development of the campaign nucleus fund. The return on endowment from the spending rule of 5.5 percent produced a net change in revenue for the year of $4,675,000.

While it's not reflected in the numbers for FY 97, there was a positive turn of events in May 1997, as 73 percent of the Class of 2001, which matriculated in August 1997, required need-based financial aid, down from 77.8 percent, which has been the case for several years. The average award was actually down from the previous year, as well. While one year does not make a trend, this change in financial aid is viewed as quite positive, for as was noted in last year's annual report, the continued growth of financial aid, which represents approximately 30 percent of tuition income, has been a major source of concern to universities such as WPI.

The investment performance for the year was outstanding and generally reflected the overall growth in equity markets throughout the world. At year end, the endowment portfolio was slightly above its targeted asset allocation of 70 percent in equities, which was reflected in the total return net of fees for the year - 22.9 percent. This places WPI in the top quartile of colleges and universities as measured by the National Association of College and University Business Officers. The Investment Committee of the Board of Trustees is to be commended for its oversight and management of this portfolio, which in many ways is the flywheel that drives the University from year to year and allows it to offer innovative programming and to undertake forward-looking initiatives.

During the course of the year, WPI refinanced approximately $30 million of debt at an average all-in rate of 5.46 percent. The University also acquired $29.6 million of new debt late in June, again at a competitive rate of 5.5 percent. The proceeds from this new issue will be used to fund the renovations of three residence centers - Daniels Hall, the Ellsworth/Fuller Residence Complex and Morgan Hall - over a three-year period. It will also provide approximately $5.6 million for the planned construction of a campus center, $1.9 million for parking expansion, $2 million for computer system enhancement, $2.5 million for the acquisition and renovation of a major property adjacent to the campus, and approximately $7.4 million for the retirement of an additional segment of debt that was not refinanced in February. The positive ratings of WPI by Moody's and Standard & Poor's (A2 and A+, respectively) speak well of the strength of the financial base of the University.

All in all, it was a strong year for WPI, financially.