October 23, 2013
SOUTH HAVEN, MI – Rehmann Robson Certified Public Accountants gave Lake Michigan College the highest possible rating of a clean, unqualified audit opinion during the October LMC Board of Trustees.
According to LMC President Dr. Robert Harrison, the audit shows that the College is being fiscally responsible and is operating within its means. The rating agency of Standard & Poor’s recently recognized the College’s strong financial management strategy with a AA+ rating, making LMC their highest ranked community college in the state of Michigan.
“These financial statements demonstrate that solid budget management is a priority for the College,” stated LMC Board of Trustees Chair Dr. David Maysick. “The financial landscape remains a challenging one, but the College’s management team ensures that we continue to move forward with delivering high-quality programs and services while maintaining the financial health of the institution.”
According to the audited financial statements, all of the College’s key financial indicators are within an acceptable range, including days cash on hand and debt service coverage ratio.
Operating and other revenues for the 2012-2013 fiscal year totaled $43.3 million. The College’s operating revenues are comprised primarily of tuition and fee revenue (54 percent), grant funding (35 percent), and auxiliary activities (11 percent), while non-operating revenues come from property taxes (49 percent), federal Pell Grants (26 percent) and state appropriations (17 percent). Both property taxes and Pell Grants declined during the past year.
Operating expenses of $40 million decreased $4.4 million (9.9 percent) from the previous year primarily as a result of wage and benefit savings from reductions in force efforts made at the end of prior year. Wages and benefits are the largest component of operating expenses at 62 percent of the total.
The net operating result of the College and the Lake Michigan College Foundation, which are combined in the financial statements, is a $3 million surplus in 2012-2013. Included in that surplus is more than $1.3 million of investment income as a result of solid performance by the Foundation’s investment holdings, as well as a near record-breaking year in non-credit tuition and fees from short-term training and related offerings at the College’s Workforce Training and Development Center.
Additional state appropriations intended to help fund rising retirement costs of $200,000 and gifts and contributions of $342,000 are also included. Rounding out the factors in the College’s solid financial results for 2012-2013 is the continued focus on and commitment to cost containment and efficiency strategies.
“The surplus is being set aside to meet future needs of the College and remain financially flexible,” stated LMC President Dr. Robert Harrison stated. “It will allow us to focus on our many student success initiatives as well as maintain aging facilities and weather unexpected economic downturns.”