Lincoln University's increased operating expenses have resulted in an overall loss of $3.2 million in fiscal year 2020, an increase of $0.6 million compared to the overall loss in 2019.
The Lincoln University Board of Curators approved the university's audited financial report for fiscal year 2020 and discussed its financial status during a meeting Thursday.
The audit, from 2019 through June 30, 2020, shows LU's $57.4 million in operating expenses were offset by $14 million in operating revenues.
That is a total operating loss of $43.4 million, most of which was offset by non-operating revenues of $40.2 million.
The largest component of non-operating revenues was state appropriations, followed by federal grants and contracts, according to the report. Although these revenues support operating expenses, the Governmental Accounting Standards Board mandates these revenues be recorded as non-operating revenues.
Of the $40.2 million in non-operating revenues and expenses, $18.6 million was from state appropriations and $18.3 million was from federal grants and contracts.
The amount of non-operating revenue from state appropriations decreased by $1.3 million from fiscal year 2019.
Despite increased operating and net non-operating revenues, revenues were not sufficient to cover the increased operating expenses, resulting in an overall loss of $3.2 million in fiscal year 2020, an increase of $0.6 million compared to the overall loss of $2.6 million in fiscal year 2019.
Operating expenses increased at a greater rate (11 percent) compared to revenues at (10 percent). Operating expenses were impacted by an increase in pension expenses compared to 2019.
Lincoln's operating expenses for 2020 included $21.8 million for compensation, $12.6 million for benefits and $10.1 for contractual services.
The university's operating revenues in the 2020 fiscal year included $5.4 million in tuition and fees. Tuition and fees revenue from the 2019 fiscal year was $5.8 million.
Net auxiliary expenses for the 2020 fiscal year were $5 million, a decrease of $1.6 million from the previous year.
In fiscal year 2020, operating revenues increased from fiscal year 2019. Tuition and fees decreased by $0.4 million and auxiliary enterprises decreased by $1.6 million from fiscal year 2019 due to "a combination of decreased enrollment and the COVID-19 pandemic."
Auxiliary enterprises decreased as a direct result of COVID-19, according to the report. Residential students received a refund for a portion of their room and board fees as a result of an early move-out in spring 2020.
A large portion of these revenues were recouped by federal CARES Act funding and recorded in non-operating revenue.
In fiscal year 2020, other operating revenues increased by $3.0 million, "primarily due to the inflow of insurance proceeds from the tornado damage that occurred in spring of 2019 of $2.93 million," according to the report.
Enrollment for the fall 2020 semester was down about 17 percent, which is about 8 percent less than the board expected. Enrollment for the spring semester is at about the same range. The board expected it to be 25 percent down, and it's about 17 percent down.
There will be a drop in revenue because the board budgeted for 627 students for the spring semester, but there are only 538. Because of the reduction in residence hall occupants, there may be a need by the end of the fiscal year to transfer revenue from the general fund to the auxiliary fund, according to the board.
To retain some savings for the spring semester, the university consolidated residence halls.
While the general fund results are close to budget, auxiliary fund revenue is short of what was predicted. The university will provide an update in April on what it looks like and how much may need to be transferred, according to the board. Expenses such as salaries and wages will be lower than expected, so that will offset some of the revenue shortage.