PUTTING ON A POOR FACE
©1999 Edward G. Rozycki
Small, sectarian Newtown College enjoys an endowment seven times its yearly budget of eighteen million dollars,
Neighboring Federholz U. - of fame and repute - goes through $750 million yearly with a cushion of but $1.2 billion. Despite Newtown's better financial status, its faculty salaries are about 20% under those of Federholz. Newtown's alumni are shown financial statements depicting a slim margin of funds over current operating expenses. Its faculty, apprised of these same figures, refrain from asking for salary increases; indeed, they are grateful that cutbacks have been avoided
The fact is that Newtown takes in some $750 thousand yearly over its operating expenses but hides the surplus from faculty and alumni by transferring it to various funds and obscuring the transfers in their financial statements. Newtown is not unique in employing this manouver. Indeed, the more privately run the institution, the more likely income surpluses are squirreled away to promote those important virtues of faculty abstemiousness and alumni generosity,
The trick is simple. Most financial statements available to faculty and alumni list only current operating expenses, Down the list is usually an entry called "mandatory transfers". Other transfers - not mandatory - are listed close behind in the expectation they will be confused as mandatory also. They are not. They are arbitrary depletions introduced by the budget officers of the college to lower the surplus.
For example, income surpluses are used for plant maintenance rather than special funds reserved for that purpose. No reimbursements are made. Thus the professoriate is assured of its virtue, if not its reward. No doubt, those who enjoy the reward find virtue in that.