Financial Overview: 1997-98 Fiscal Year

The 1997-98 Fiscal Year was one of growth in a tremendously challenging environment. Despite the difficult task of managing a national liberal arts college in today's competitive academic market, Millsaps is financially s•rong because of the gifts it has received over the years and wise stewardship by the Board of Trustees, administration, faculty, and staff. This is most evidenced by the fact that our net assets, after depreciation, have risen to $117 million as of June 30, 1998, an increase of $15 million from the prior year.

This improvement was driven primarily by increases in the market value of the College's investments which rose $13.5 million. Most of the investments, $90.1 million, represents the College's permanent endowment. Our endowment funds earned an 18.6% total return for the fiscal year, slightly above the median 18.2% for all higher educational institutions. This increase helped us to maintain and enhance our academic programs as all of the income from the endowment is used to support annual college operations. The balance of our investments represents temporarily invested funds committed to the recently launched Campus Life Complex and operating cash.

The second reason for our asset increase can be attributed to gifts to the New Century of Light Campaign with contributions receivable increasing by $1.6 million. The $80 million New Century of Light Campaign has continued to progress towards its goal and stood at $70 million on June 30, 1998 (the current total is $74 million). Payment on multi-year pledges and gifts that have come in since the announcement of the $17.3 million Campus Life Complex have made it possible for us to move forward immediately with this ambitious project. Scheduled for completion in early 2000, this project will be a transforming event in the life of our College and will create student-centered facilities to complement our student-centered teaching focus.

With regard to the annual operating budget, like most colleges, we are very dependent on enrollment to fund our operations, with 70% of our revenue coming from tuition, room, board, and fees. Still, it should be recognized that students who receive no scholarship or need-based grant aid from Millsaps in fact do receive a "hidden scholarship" that makes up the 30% difference between the cost of operating the College and our income from students. Further, most of our students receive additional scholarships from Millsaps based on merit or financial need.

This "hidden scholarship" is supported by current Annual Fund gifts and the income from previous gifts that comprise the College's endowment. This donorrelated support allows us to widen the margin of excellence of a Millsaps education and raises our position in national college rankings. We are proud to be in the top half of the 159 national liberal arts colleges as ranked by U.S. News • Would Xeport, but we want to keep moving towards the top quartile.

In terms of expenditures, we use just under half of our budget for salaries and benefits to our outstanding faculty and staff, one-third on student financial aid, and slightly more than a quarter for all other college expenses such as academic and administrative support, maintenance, and utilities. We value the individuals that make Millsaps the special place that it is. The 43% of the operating budget that is used for salaries and benefits is an investment in people, and we candidly wish we could do more for our faculty and staff. If you ask students what makes Millsaps unique, they will tell you that it is the people here who have changed their lives.

Almost one-third of our budget goes toward financial aid to provide opportunities for deserving students from a wide range of backgrounds, family incomes, and talents. Many families now view a college education as a type of commodity and shop for the best value - the best education at the lowest price to them. Millsaps has consistently performed well against our national liberal arts competitors on this measure. Last fall, U.S. News b World Report ranked Millsaps as the Gth best value among national liberal arts colleges, a significant leap from 27th only a year prior. Despite the consistent accolades in providing a superior education at an affordable cost, we accomplished this with a financial aid budget that is less than the average of colleges of our type and caliber. We are hopeful that continued and increased support from our alumni and friends will allow us to provide even greater support to our deseruing students.

While we have been successful in our actions to date, we must remain vigilant in our efforts to attract and retain the best students and still provide them with an exceptional academic value. With continued gifts from the Annual Fund, corporations, foundations, and other individuals, we can assure that the best qualified students will be able to receive a superior liberal arts education.

We are ever mindful and most thankful for the loyal support of alumni, parents, and friends of the College. We have accomplished much, but we have much left to do as we strive to enrich the Millsaps experience for generations of students yet to come. We hope you will join us as we extend our success into the next century and beyond.

Sincerely,

George M. Harmon,
President

John D. Pilgrim,
Vice President for Business Affairs