The Financial Picture

The Treasurer Reports Operations in the Black for 1949-50, Predicts a Tougher Time Ahead

IN PRESENTING to the Board of Trustees his first annual financial report since taking over the duties of Treasurer of the College, John F. Meck '33 had good news which may not be repeated for some years to come. For the fiscal year 1949-1950, at any rate, the favorable report was that Dartmouth College had been able to operate in the black, without drawing on any reserves or capital funds.

The credit balance for the year was small, amounting to $2,317, but with deficit financing now a fairly prevalent experience among the independent colleges, Dartmouth's 1949-50 results were viewed as highly satisfactory. A major factor in this showing was the superlative result of the 1950 Alumni Fund, which raised a grand total of $414,916 and provided a net of $378,009 toward the operating expenses of the College. Without the Fund, Dartmouth would have wound up the year with a deficit of over $375,000 instead of an unrestricted credit balance of slightly more than $2,000.

Mr. Meek predicted to the Trustees, at their fall meeting October 20-21, that his report to them one year hence would contain less satisfactory news. "This favorable result," he said, "unfortunately will not be repeated in 1950-51 because it is already probable that a combination of reduced income and increased expense, reflecting in part the infernational situation, will result in the College operating at a deficit."

ANNUAL COSTS REACH NEW HIGH

The annual operating costs of the College continued to climb, reaching for 1949-50 the record total of 13,515,022, or an increase of $169,843 over the preceding year. The most substantial increase occurred in scholarship aid which, at $234,054, was up $66,628 or about 40% over 1948-49. Re- flected in this rise was the sharp decline in the number of veterans attending college under the G.I. Bill. An increase of $43,575 in general expense was brought about by the transfer to this classification of certain Dartmouth Outing Club activities previously included under instructional expense, by Dartmouth Development Council costs, and by the DCAC deficit of the past year. Plant operation and maintenance rose a little over $15,000 and Health Service costs were up by approximately $6,000.

A decrease of $91,677 in instructional costs was made possible by the previously mentioned transfer of D.O.C. activities and by the absence from Hanover on leave of more faculty members than in a normal year. Administrative expenses were also reduced by slightly more than $7,500.

On the income side, an increase of $205, 402 in student fees over the year before re- suited almost entirely from the $75 "added fee toward the cost of education" which took effect in September 1949. Even with this increase, the student fee total of $1,900,292 provided only 54% of the total cost of Dartmouth's educational program. Net income from investments amounted to $910,967 and was about $15,000 greater than for the preceding year. This represented 25.9% of Dartmouth's operating income for the year. The Alumni Fund net of $378,009 provided 10.74% of the year's income, while other gifts and receipts from trusts in the hands of others accounted for $157,577 or. 448% °£ total income.

The comparative income and expense figures for 1949-50 and the year previous are presented in the accompanying boxed tabulation. It should be explained that these figures from the Treasurer's Report are intended primarily to show the operations of Dartmouth College as a teaching institution. They do not include income or expenditures of the College as a landlord or supplier of meals or services except as the net results of such operations enter into the figures. This applies to the Dartmouth Dining Association, the Hanover Inn, the Dartmouth Outing Club, the Council on Student Organizations, the Hanover Country Club and, for the first time, the Dartmouth College Athletic Council. In the case of the DCAC, the Trustees agreed to underwrite its 1949-50 program on the basis of advance approval of its budget.

TOTAL ASSETS EXCEED $36,000,000

Total assets of Dartmouth College on June 30, 1950, amounted to $36,337,557, an increase of $1,016,106 or almost 3% over the total of June 30, 1949. On the balance sheet, investment assets were listed at $27,062,575, plant assets at $8,251,105, and current assets, largely in cash, at $1,023,876. Included in the investment figure are dormitories and certain service properties constructed with endowment funds. If these were added to the plant figure, that account would stand at $11,232,406.

The grand total of Dartmouth's endowment funds and unrestricted funds currently functioning as endowment was $27,201,682 on June 30. The net increase of slightly more than $ 1,000,000 during the year resulted primarily from gifts and bequests 'and from the net realized gain on investments amounting to $300,281. The largest single gift received during the year was the $55,934 added by the Class of 1925 to its Class Memorial Fund.

HOPKINS FUND INCREASES

The Hopkins War Memorial Program Fund, carried for the present as a separately invested fund, was increased during the year by $97,084, which brought the grand total to $1,715,934. The fund was established to provide for the addition to the Wilder Physics Building, the construe- tion of the Hopkins Center, and the Ernest Martin Hopkins Scholarships for the sons of Dartmouth men who gave their lives in World War II. The recent gift of $250,000 from John D. Rockefeller Jr. has now wholly endowed the Hopkins Scholarships independently of the Hopkins War Memorial Program Fund. Construction of a new laboratory wing on the Physics Building was begun July 1, 1950, at an estimated cost of $260,000, exclusive of furniture and equipment.

Dartmouth's invested assets, with a total book value of 127,062,575, are distributed 43.67% in bonds, 34.42% in common stocks, 8.53% in dormitories, 5% in other Hanover real estate, 4.14% in preferred and guaranteed stock, 1.5% in real estate mortgages, 1.35% in the Tuck School dormitories and refectory, 1.33% in real estate outside of Hanover, and .06% in miscellaneous.

RETURN ON INVESTMENTS WAS 4.4%

The average net return for the year on all investments was 4-4% as compared with 4.25% for the preceding year. On security investments alone the average return was 4.77% as compared with 4.66% for 1948-49.

Among the various investments, common stocks, as would be expected had the highest net rate of return with 7.03%. Following were preferred and guaranteed stocks, 5.43%; real estate mortgages, 4.82%; dormitories, 3.99%; bonds, 2.83%; real estate outside of Hanover, 1.62%; Tuck School dormitories, 1.08%; other Hanover real estate, 0.84%; and miscellenaeous, 0.03%.

In view of the proportion of the College's funds invested in common stocks and the extent to which dividends might fluctuate from year to year, the Trustees in 1937*38 created the Income Stabilization Reserve, to which a portion of dividends received in more favorable years could be trans- ferred for use in years when dividend income fell off. During 1948-49 the sum of $80,000 was transferred to this reserve and during 1949-50 an additional $100,000 was thus earmarked, bringing the total of this reserve fund to $500,000. "With increased corporate income taxes already enacted," Mr. Meek reported, "and excess profits taxes a possibility in the near future, the existence of this Reserve gives some assurance of stability to the College's investment income."

MARKET VALUE OF SECURITIES UP

After making allowance for the Income Stabilization Reserve, the average return for the year was 3.93% as compared with 3-94% for the year before. All these average rates of return are based on book values, which represent cost at the time of purchase or market value at the time these securities were purchased or received by gift or bequest. At the end of the fiscal year 1949-50, the market value of Dartmouth's security holdings was 108.9% of book value, as compared with 100.6% for the preceding year. For common stocks the figure was 119.6%, for bonds 101.6%, and for preferred and guaranteed stocks 100.8%. This excess of market value over book value totaled $1,986,864.

In the distribution of Dartmouth's security holdings, public utilities lead with 25.7%, followed by governments 22.8%, industrials 22%, railroads 14.7%, mining and oil 8.6%, and financial 6.2%. Because of gifts and bequests received in invested form, and continued in that form because of donors' restrictions, the list of securities does not accurately represent the College's "investment policy."

TRIBUTE TO ALUMNI FUND

The results of the 1950 Alumni Fund were described by Mr. Meek as "a magnificent showing." Thanks to its unrestricted net of $378,009, "the Alumni Fund enabled the College to end another year with its financial strength unimpaired," he said. "This is of particular significance at this time because of the grave difficulties facing the College in 1950-51 as a consequence of the international situation. I wish to express to the many contributors to the Alumni Fund and to the Class Agents and others who worked on the Fund the deep appreciation of the College for their loyal and generous support."

Printed copies of the 1949-50 financial report, containing detailed schedules of assets and of income and expense for the year, may be obtained by writing to the Office of the Treasurer, Parkhurst Hall, Hanover, N. H.

TREASURER JOHN F. MECK '33 (right) shown in his Parkhurst Hall office with Donald L Barr 'lB (center), Assistant Treasurer, who specializes in investments, and Leonard E. Morrissey, Assistant to the Treasurer.

BURSARY BOSSES: Max A. Norton 'l9 (left), who is Bursar and Assistant Treasurer of the College, delves into some brand-new Social Security Act problems with Leßoy G. Porter 'l5, Assistant Bursar.

COMPTROLLER: Robert D. Funkhouser '27 (right), formerly Assistant Bursar and now head of the new Comptroller's Office, shown with Mason I. Ingram '29, who has been named Assistant Comptroller.