Audit: NMC posts $4.5M net loss in fiscal year 2010

The Northern Marianas College posted a net operating loss of $5.544 million in fiscal year 2010, based on the latest audit report released by the institution covering last fiscal year.

The report indicates that the college had $10.481 million in operating revenue last fiscal year but incurred total operating expenses worth $15.025 million. This means that NMC did not generate enough revenue from operations to cover all its expenses.

NMC, as a quasi-governmental agency, provides low cost access to higher education for the community and receives subsidies from the CNMI government to fully fund its operation.

NMC also recorded an operating loss of $4.522 million in fiscal year 2009, with just $9.515 million in revenue and $14.038 million in operating expenses.

Both fiscal years’ operating losses are a significant increase compared to fiscal year 2008’s loss of $3.774 million.

According to the audit conducted by Deloitte & Touche LLC, the college will continue to reflect operating losses until such time that operating revenues are increased substantially and the college no longer has to rely on CNMI appropriations.

According to the audit report, student tuition and fees decreased by $243,354 between fiscal years 2009 and 2010 due to the declining trend in student enrollment since fiscal year 2004. One of the main factors cited in the enrollment decline is the slumping CNMI economy, as people attaining college age are either relocating or joining the workforce or military.

It was reported that a significant portion of college tuition and fees are funded by Pell grants, which increased by $1.1 million last fiscal year due to the state fiscal stabilization fund and other ARRA grants.

NMC relies on tuition and fee revenues for its operation.

Meantime, allocations from the CNMI government for fiscal year 2010 remained consistent with the level of funding received in fiscal year 2009 as a percentage of revenues available for appropriations.

“The CNMI’s support of the college has remained consistent in spite of the economic hard times, which the college is appreciative of. This has enabled the college to maintain its current staffing levels as CNMI appropriations primarily funds salaries and benefits,” the audit states.

The budget cut implemented by the CNMI government across the board last fiscal year was hard on the college. The report said this is a reflection of the difficult economic conditions in the CNMI. NMC, however, was “fortunate as there were no additional reductions in CNMI support last fiscal year, which helped in maintaining its current staffing levels.”

To cope with the drastic reduction in funding from this historically stable revenue source, NMC quickly adjusted its expense levels and reorganized itself to operate within the reduced resource levels. The report states that NMC’s cash position remained strong in fiscal year 2010.

Meantime, the college’s net assets increased from $14.8 million in fiscal year 2009 to $16.1 million in 2010.