For the first time, William & Mary has prepared a comprehensive report that provides a consolidated view of the financial statements of the university and its related foundations. While this requires a merging of William & Mary’s unaudited statements with the audited statements of the various foundations, it provides the most timely possible assessment of revenue, expense, assets and liabilities due to the state’s audit schedule for the university. William & Mary’s statements remain subject to audit by the state auditor of public accounts, but we do not anticipate any significant changes to the consolidated statements as presented.
FY 2017 Overview
Fiscal Year (FY) 2017 once again required William & Mary to absorb a reduction in state support, an effort that continues into FY18. Despite state actions, the university’s strong economic health continues to reflect W&M’s ability to recruit students and our ability to raise revenue through tuition and fees, grants and contracts and philanthropy. It also reflects our willingness to reallocate funds to support the university’s highest priorities.
William & Mary continues to recruit, admit and retain top-caliber students even as we compete against the most selective public and private institutions in the country. Freshman applications to the university continue to be strong, with 14,921 students seeking admission for the 2017-18 academic year. With an incoming class size of 1,534 students, W&M has almost 9.7 applicants for every student enrolled. Given our robust applicant pool, the credentials of admitted students remain strong, reflecting William & Mary’s highly selective nature. These statistics, coupled with the university’s academic reputation, suggest a strong continuing student demand for the future.
Similarly, William & Mary’s Virginia Institute of Marine Science (VIMS) continues to see significant success in its academic, research and advisory programs, particularly in high-profile areas such as coastal flooding, sea-level rise and water quality.
As noted previously, university programs are supported from a variety of sources, including state funds, tuition and fees, auxiliary enterprise revenues (auxiliary enterprise activities being those programs that receive no state support such as residence life, food service, athletics, etc.), federal grants and contracts and private funds. This diversity of funding is critical to William & Mary’s overall financial health.
The Commonwealth of Virginia provides partial operating support for the university’s academic programs as well as need-based aid for Virginia undergraduates. State support for operations is a function of general economic conditions and the priority assigned to higher education by the governor and General Assembly as they consider competing demands for commonwealth resources.
For FY17, state funding initially reflected increased support from the commonwealth. However, after ending FY16 with a revenue shortfall, the governor announced budget reductions for all public colleges and universities, as well as most state agencies. At that time, the state eliminated support for FY17 faculty and staff salary increases and imposed one-time reductions for W&M in FY17 and FY18, along with a permanent $2.2 million reduction in FY18. Despite those reductions, growth from other revenue sources in FY17 remained strong, allowing the university to largely mitigate the impact of the state reductions, including the loss of state support for salary increases.
Over the last year, the university maintained the William & Mary Promise, an innovative operating model that enhances the quality of a W&M education while improving predictability and affordability for in-state undergraduate students. Key pieces of the model include improved predictability through a guaranteed four-year tuition for in-state undergraduate students, financial aid for qualifying low- and middle-income Virginia families, more enrollment slots for Virginia students and additional resources to recruit and retain the superb faculty crucial to continued academic excellence, among other efforts.
Internally, FY17 budgets were developed within the context of the university’s strategic planning process and the Six-Year Plan, as approved by the Board of Visitors. To the extent resources were available, expenditures in support of the university’s academic program reflected the priorities outlined in these plans. Incremental funds generated through the Promise in combination with private and reallocated funds allowed the university to:
- Maintain all elements of the Promise.
- Enhance the quality of academic programs, including the competitiveness of faculty salaries.
- Allocate funds to support new facilities.
- Address our strategic plan, Six-Year Plan and commonwealth priorities, including expanded aid for middle-income Virginia families.
- Balance revenue need with student affordability.
- Continue to enhance efforts to raise private funds and seek other revenue sources.
Beyond allocations for faculty and staff salaries, increased fringe benefit costs, the cost of new facilities, and academic and business improvements, FY17 allocations also supported several initiatives identified by the campus community as essential. These include:
- Recognizing the ongoing work of the Task Force on Race and Race Relations, the administration recommended an immediate allocation of $600,000 to support initiatives in this area, including $500,000 to recruit faculty whose experiences and backgrounds will increase student engagement and advance diversity and inclusiveness. The administration recommended, and the Board of Visitors approved, additional base funding for this initiative in FY18. These funds are managed through the provost’s office.
- Through a combination of funds, including private funds and debt, the FY17 budget expands support for various club and extracurricular activities. This investment includes additional staffing, a pool of funds to assist students with need in covering the cost of participation in extracurricular activities, and field improvements to improve scheduling and allow a more efficient use of space regardless of weather conditions.
- Funds to recognize the impact of undergraduate enrollment increases across the disciplines, including the Raymond A. Mason School of Business.
In support of these investments, William & Mary continued to identify opportunities for academic and business innovation, allowing the university to reallocate resources to higher priority activities.
In addition to operating dollars, investments in our facilities and infrastructure remain strong. FY17 saw significant improvements to our academic facilities with the completion of the third phase of the Integrated Science Center and the renovation of Tyler Hall. With support from the commonwealth, we are actively planning a series of construction and renovation projects that will provide state-of-the-art educational and performance facilities for our music, theater and dance programs — creating a new Arts Quarter for the campus — and ultimately construction of a fourth phase of the Integrated Science Center. This facility will house kinesiology, mathematics and computer science as well as provide space for the new engineering and design initiative.
Thanks to philanthropy secured in FY17, over the coming year we plan to break ground on the expansion and renovation of the Alumni House, which will increase in size by approximately 35,000 square feet, and will be one of the largest gathering spaces on campus. We will also begin construction on the new Shenkman Jewish Center and continue planning for The Martha Wren Briggs Center for the Visual Arts.
On the auxiliary side, construction of the McLeod Tyler Wellness Center is underway as is the renovation of Landrum Hall. Fall 2017 saw the opening of Richmond Hall (formerly the Days Inn on Richmond Road) as an additional residence hall. Purchased and renovated by the William & Mary Real Estate Foundation, these additional beds allowed the university to take Landrum Hall offline for a full academic year, allowing for a complete renovation. At VIMS, projects are currently underway to construct a new research vessel as well as research and support facilities at both the York River and Eastern Shore campuses. This investment will significantly enhance VIMS’ research and administrative capacities.
How is W&M's operating revenue spent?
Operating expenses, shown below, are divided among the following categories:
Instruction: Instructional faculty, departmental operating costs
Research & Public Service: Targeted, state supported research, community service activities
Academic Support: Library materials, access and services, information technology, academic administration
Student Services: Registrar, admissions, financial aid administration, career services, student organizations, etc.
Institutional Support: Executive management, fiscal services, human resources, police, purchasing, fund raising, etc.
Operation & Maintenance: Buildings/grounds maintenance and repair, plant personnel, utilities
Student Aid: Grants awarded to students to offset their cost of attendance
Auxiliary Enterprises: Dormitories, food services, parking and transportation, recreation centers, student health services
Our future outlook is likely to reflect the positive results and direction of FY17 as well as some of the challenges. Competition for admission to William & Mary will remain intense, allowing the university to meet its enrollment targets while admitting the highest quality students.
State support will remain unsteady as higher education competes for limited state funds in an uncertain economic environment. Virginia’s economy, and its tax revenue, remain dependent to a large extent on federal government and military spending. So long as Washington, D.C., remains unsettled, consistent and stable funding from the commonwealth will be challenged. Over the long term, a more diverse Virginia economy will bear fruit, but the exact pathway and timing are unclear. As a result, we will continue to exercise caution in making commitments that assume state support.
Tuition and fee revenue will continue to increase but at a decreasing rate as tuition increases associated with the William & Mary Promise level off. These revenues, when combined with increased philanthropy and reallocated funds, will allow the university to move forward strategically.
William & Mary continued its trek across the nation, celebrating its For the Bold campaign in a number of regions with alumni, parents and friends. Ongoing investment in University Advancement is producing a great return on value as the campaign is allowing W&M to reach historic levels in fundraising – which is vital as philanthropy continues to exceed state funding as part of our total operating budget. Funding generated through annual giving, including giving to the Fund for William & Mary, and endowment growth will provide long-term support for students, faculty and programs and will ensure the margin of excellence that distinguishes William & Mary.
Finally, strategic investment in academic and auxiliary facilities provide the physical foundation for academic success and student growth. Development of the Arts Quarter, including a renovated Phi Beta Kappa Hall, a new music building and The Martha Wren Briggs Center for the Visual Arts, which will be home to an expanded Muscarelle Museum of Art, will address an area long neglected.