Corvey Outlines State of Finances at UNH

By Lori Wright, Media Relations

Many things keep Candace Corvey, vice president for finance and administration, up at night, among them the rising cost of energy, the level of funding UNH receives from the state, rising medical benefits costs, the need regularly to increase tuition at rates above inflation, and increases in the investment in financial aid that the university must make to ensure that all qualified applicants can afford to attend.

However, there is much to be optimistic about, including the university’s stellar efforts in attracting federal research money, its past success and aspirations for private fundraising, and a major initiative to reduce the university’s reliance on expensive energy sources.

Corvey recently provided an overview of the university’s financial health, explaining how the university generates revenue and what areas are her greatest concerns for the future. For fiscal year 2005, the university’s revenue was $404 million. Of that 27.7 percent, or $112 million, was from tuition and fees, minus financial aid.

“Our main lifeblood is net tuition, which is tuition minus the financial aid we need to spend in order to make the institution economically accessible to students and their families. We are constantly worrying about our price point with respect to tuition. We have relatively high tuition rates compared to other public institutions and that is directly related to the fact that we have relatively low state support,” Corvey said. “We are constantly worrying about how much higher we can push tuition rates, even when we offer considerable amount of financial aid, before we shoot ourselves in the foot.”

For the 2005-2006 academic year, tuition for in-state students increased 6.9 percent, or $500, to $7,710. Out-of-state tuition is $19,430. With fees, room and board, the cost of attending UNH for in-state students this year is $16,810; for out-of-state students, it is $28,530.

Auxiliaries and other sources accounted for 26.3 percent, or $106 million of the university's $404 million in revenue. This revenue comes primarily from room, board, and mandatory fees paid by students for services that support student life on campus.

State funding was 14.9 percent, or $60 million, of the university’s total revenue in 2005. It was the first time the university’s state appropriation slipped below 15 percent of total revenue – the lowest in the nation for state support per capita. The state would need to increase its support for the university by 43 percent just to reach Vermont’s state funding support level. Vermont ranks 49th of 50.

“This trend is a troubling one. When I first came to UNH in 1996, the state appropriation was 20 percent of the revenue. This has been a continuing downward trend,” Corvey said.

On a positive note, 26.7 percent, or $108 million, was from sponsored research and federal aid. “That portion of our revenue has been growing quite significantly. This year we passed the $100 million mark, and that was a real milestone,” she said.

Finally, UNH’s gift and endowment income was 4.4 percent of revenue, or $18 million. Endowment income has been hard hit in recent years because of stock market performance but things are improving.

On the expense side of the equation, the university still is struggling with increasing costs of fringe benefits, which accounted for 16 percent, or $63.6 million, of FY 05 expenses. Over the past five years the cost of benefits has risen 9.4 percent a year on average in spite of aggressive efforts to contain cost. “The rising cost of health care is a national trend that affects all institutions and continues to be an enormous concern to UNH,” Corvey said.

Three years ago, USNH instituted several cost-saving measures, including increasing the percentage cost employees pay for medical benefits, increasing co-payments, taking advantage of competitive bidding with health insurance providers, and increasing the rate that university departments must pay for employee benefits.

“All of the cost mitigation efforts have made an enormous difference and enabled us to keep the average annual growth of fringe benefit costs below10 percent over the last five years, and even still, it is one of our largest headaches. It remains in a category of unsolved problems,” Corvey said.

Fringe benefits with wages and salaries (48 percent, or $193 million of FY 05 expenses) account for 64 percent of UNH’s expenses. “It’s a pretty common cost structure for universities to spend roughly two-thirds of their resources on personnel, and you can see how important it is for us as an institution to wisely manage our compensation and benefits structures,” she said.

And although utilities account for only 2.6 percent, or $11 million, of total expenditures for FY 05, Corvey said the area is scaring her, given the skyrocketing cost of heating oil and natural gas. Even though UNH is working hard to be strategic about when to buy oil and lock in a price, the university is anticipating an overrun in utilities costs this year of $3 to $3.5 million. “The extra net tuition that we gained this year from our large freshman class comes at a fortuitous time,” she said.

Going forward, UNH has several long-range plans underway to help protect the university from these kinds of increased energy costs. The co-generation plant is expected to come online Jan. 1. Over a 20-year period, it is expected to save the university, on a present dollar basis, on the order of $40 million. “It will be a significant economic and environmental benefit because it is a very efficient way of generating electricity and gives us much more flexibility in terms of the types of fuel we can use,” Corvey said.

UNH also is exploring the possibility of fueling the co-generation plant with alternative fuels that are less apt to fluctuate with world markets.