Alan Norton, St. Olaf treasurer, plans ahead for the next year taking into account several factors. While some expenses the College will incur in the next year are fairly predictable, such as salaries for faculty and staff, other expenses are less predictable.
Although the College can generally expect its level of spending to increase every year due to inflation, Nortons goal is to control spending. "Were trying to make changes to ensure that the college is financially healthy for years to come," Norton said.
These changes include some budgeting, addressing immediate problems while putting off less crucial projects, such as minor maintenance, for another year. "I would rather that we put our money somewhere else that has more need," Norton said.
The favorable financial situation the college finds itself in this year is the result of the increase in tuition, efforts to reduce costs, and other factors that benefitted the college.
"Everything that contributes to a positive outcome happened last year," Norton said.
The sale of the WCAL radio station, however, was not one of the factors that contributed to the operating budget of the college. That money, Norton explained, went to the St. Olaf endowment, where the revenue it creates from interest is used as part of the strategic plan of the college. As told to the St. Olaf community, the money went to endow certain music programs, such as the organ in Boe Chapel, among other campus projects.
The biggest variable for the colleges revenue is the enrollment. The larger than expected sophomore class generated a lot of revenue for the college, along with the high student retention rate.
The official cut-off date for enrollment is the 10th day of classes at which time Norton can then finalize the budget for the current fiscal year, to be presented to the Board of Regents during their October meeting. Norton will also start working on the 2007 fiscal year.
One challenge the Colleges administrators face for this coming year is the sudden increase in fuel prices due to Hurricane Katrina. While the College does some planning for this sort of rapid increase in prices, and can handle the increased prices in the short term because of financial hedges put in places to protect the College from sudden increases in operating costs.
Ultimately, the higher fuel prices will affect the college. "Hurricane Katrina concerns me not so much for this year, but two or three years out we will see higher prices than I ever planned for," Norton said.
Norton explained that the total operating budget for St. Olaf is $90 million and that the cost of fuel generally is only $1.2 million. Before Hurricane Katrina, there was an expected five or six percent increase in fuel prices expected. Now, Norton said some experts are predicting as much as a 70 percent increase in the cost of fuel. However, Norton points out that even if the cost of fuel doubles, it still remains a small portion of the overall cost of running St. Olaf.
Nortons goal for the Colleges finances remains the same: "I am trying to have the College in a position that we dont have to do anything that year to keep us in the black." This includes continuing to budget and keep spending under control, although the College will increase spending if it achieves strategic objectives. Norton states that there is positive momentum from the 2005 fiscal year.