By Sarah Carillo
Assistant News Editor
Questions have risen over how well Pepperdine is handling the stagnant economy following the release of Pepperdine’s 990 tax forms, which disclose the financial state of the University.
Despite a poor economy, Pepperdine has fared reasonably well in the past year, according to the University’s annual report.
“Fiscal year 2002 proved to be both challenging and rewarding for Pepperdine University,” the report stated. “Despite the impact of the unfavorable and volatile markets on the University’s investment portfolio during 2002, the total assets of the University continued to increase and finished 2002 at $974 million.”
While total assets increased in 2002, Pepperdine’s 990 tax forms show that net assets and revenue actually decreased.
“Revenues per Pepperdine University’s form 990 decreased as a result of a reduction in realized gains on sales of securities and other assets,” Paul Lasiter, associate vice president for Finance and University controller, wrote in an e-mail interview. “Excluding gains and losses from sales and securities and other assets, Pepperdine University’s revenues increased from $219,396,000 in (fiscal year) 2001 to $245,225,000 in (fiscal year) 2002. The net assets of Pepperdine University decreased primarily as a result of unrealized investment losses.”
The University’s annual report explained the investment losses as the result of “the recent turmoil in the capital markets,” and said while the school’s investments did have a 4 percent loss for the year, Pepperdine is fairing better than schools such as Stanford, which experienced a 24 percent investment loss.
Despite some investment losses, the annual report said operations at Pepperdine are still running smoothly.
“University operations remained strong with net tuition and fee revenues increasing 6 percent to $124 million for fiscal (year) 2002,” the report stated. “This compares to 3 percent increases in each of the prior two fiscal years.”
As tuition revenue is on the rise, the annual report also stated a 7 percent increase in expenses.
“The University remains committed to providing the best possible academic experience for all its students,” the report stated. “As such, operating expenditures for instruction, research, academic support and student services amounted to $116 million, or a 7 percent increase from last year’s levels. Total operating expenses for the University increased to $192 million and included one-time costs designed to restructure and improve support functions and operating cash flow.”
Some figures in the 990 forms, such as administrators’ salaries, are slightly ambiguous as to all that they represent. For example, some administrators receive a ministerial housing allowance. On the 990 forms, this amount is included in the gross earnings of the administrator and so what may seem to be an unusually high salary may be the result of a ministerial housing allowance.
Also, the athletics department is not represented on the forms because no one from the department met the 990 criteria as one of the “five highest paid employees other than officers, directors and trustees.” The Controllers Office does have the salaries of the athletic department, including basketball coach Paul Westphal, but is not required to release them.
Chancellor Charles B. Runnels and President Andrew K. Benton are paid Pepperdine’s highest and second highest salaries.
September 25, 2003