Ava Rowland, reporter
MOUNT BERRY, Ga. – Despite the pandemic and numerous shutdowns, Berry College’s financial health is thriving according to Vice President of Finance, Brian Erb.
Berry College has operated on a balanced budget for the past 15 years, which means its expenses are equal to expected revenue. The college operates on two different types of accounts: an endowment started by Martha Berry, and the expected revenue stream from students. Brad Reeder, the assistant Vice President of Finance at Berry, said the college approaches the budget from three sources of funding.
“Berry is a different business model than schools our size,” Reeder said. “Operations supported by endowment gifts and donations make up 40% of operations, student charges make up 50% of the budget.”
According to Reeder, the other 10% of the budget is revenue generated by lumber sales and land leasing.
Since most of the budget comes from students, the college must work hard to estimate how many students will be enrolled every semester based on historical charts and environmental factors.
Erb said that students are the biggest source of revenue for the college, the total amount for tuition and housing contributes greatly to Berry’s budget. Berry College operates on the money they make from their students; depending on admissions, the college could either have surplus or need to make some cutbacks.
Alongside the operational budget, Berry College operates on an endowment that is used for investment ventures and scholarships. The endowment fund began with Martha Berry as she opened Berry.
Donors give monetary gifts directly to the endowment that stay in that account permanently. Berry uses that gift to invest in diverse projects to try and get the most return from that money. The return generated from the investment is what Berry can use in the operational budget.
“The better the endowment does, the more money goes to the college,” Erb said.
According to Erb, if the investment does well, so does the endowment; however, if the investment doesn’t meet expectations, not all hope is lost for Berry since it was an investment of the endowment and not the daily budget. So, for investments like the Fairfield Inn and the Spires, they don’t necessarily affect the daily budget, but instead impact the endowment.
However, there is one difference between the Fairfield and the Spires: Berry College owns the Fairfield Inn, so much of the money made by the hotel goes directly back to Berry.
Reeder said since the Fairfield Inn is directly owned by Berry, it is very impactful on the financial health of the college compared to the Spires.
The Spires, owned by Lavender Mountain Senior Living, receives most of the revenue instead of Berry. The housing program, however, leases land from Berry and must pay for the land it uses, which goes directly to the operational budget.
The Spires is doing very well for a startup according to Lemarr Gass, the director of accounting for The Spires.
“We have a lot of different covenants we have to meet with our bond holders. We’ve met all of them up to this point.” Gass said.
Eventually The Spires will begin paying back their loan, but that will begin once they are not considered a startup company. Accountants from both Berry and The Spires have predicted that The Spires will be able to start paying back their loan by 2025.