Office of the President

President's Report 2020

Financial Report

The Perfect Storm

The ongoing political unrest in the country, particularly in the last three years, has led to serious economic and monetary issues with no signs of imminent recovery. Despite the red flags raised years ago by the international community and its urgent call for serious reforms, political feuds continued to escalate with obvious signs of a diminishing interest in Lebanon, even from traditional supporters. Unemployment, especially among the youth, and poverty rates reached unprecedented levels with no serious attempts by the government(s) to remedy the situation. The result of this unwarranted negligence led to the unprecedented uprisings the country is currently facing.

Add to that the banking and liquidity crisis that has overtaxed an economic sector already close to extinction. Access to funding and hard currencies has almost extinguished. Projects have been put on hold, and signs of global bankruptcies or business cessations, along with large-scale dismissals of employees and labor, are beginning to show.

The university, like other higher education institutions, has been severely impacted by the depression. Drastic measures were considered to partially rebalance the financial position of the university in order to maintain a minimum level of self-sustainability. These measures consist of applying a revised rate of exchange to tuition coupled with a massive adjustment to financial aid making sure a significant category of students, especially the needy ones, is not impacted. A cost containment program has been diligently devised and applied while ensuring quality is not, in any way, impacted.

Moreover, as part of its commitment to its community, the university introduced a second-to-none relief package to its staff and faculty. The importance of this package is translated by the inclusion of scarce hard currency within the compensation, fully funded by the endowment.

The university is heavily dependent on tuition as a main source of revenue. In view of the fact that the fair market value of this main source is considerably less of its nominal value, whereas the reverse is true for our spending, a serious mismatch arises. This compels the university to seek new sources of hard currency mostly through venturing out outside Lebanon in fundraising initiatives and enterprise ventures in keeping with Pillar III of SPIII.

As an integral part of a complex national fabric, the university stood firmly by its mission to educate and serve, undertaking to help the students get an education irrespective of their financial means. This commitment was favorably perceived and welcomed by a community in desperate need of support.

LAU’s operating budget for AY2019-2020 was around $203.0 million, 2.4 percent over the previous year. This growth represents a landmark given the restrictive economic conditions prevailing in Lebanon.

LAU’s commitment to excellence and, with it, its students and community, stands unrivaled. More than half the university’s student population benefits from financial aid. In addition, the university has made a substantial investment in academics manifested by an increase in the number of full-time faculty and physicians.

Revenue Budget for 2019-2020 US Dollars
Tuition

156,401,06077%

Development Goals

29,731,88415%

Other Revenue

9,279,5805%

Endowment Income

7,600,0004%

Total

203,012,524

The Overall Picture

The university’s operational efficiency and effectiveness continued to contribute favorably to its financial stability. Total assets increased by $7.5 million scoring a 0.66 percent growth. Net assets grew by approximately $34.9 million, or 3.39 percent, increasing its position to $1.06 billion on August 31, 2020.

Pressure on enrollment is increasing considering the economic conditions and competition. Nonetheless, LAU is managing to keep enrollment at healthy levels. This is costing the university more investment in aid given the prevailing circumstances. However, remarkable efforts are being exerted by all constituents to help sustain a healthy operation.

Investment in subsidiaries was $146.5 million, up by $25.9 million when compared to last year. The fair market value of the property and assets of the hospital in Beirut returned a positive excess over the amounts already invested by the university. This confirms that our investment is not impaired.

LAU’s investments, mainly made up of endowments, continued an upward trend and closed at $566.5 million as of August 31, 2020. Looking forward, some risks will be rewarded, and well-structured portfolios can achieve realistic investment goals. LAU’s Investment Committee, Investment Office and consultants continue to focus on winning strategies while monitoring the Endowment Portfolio, assessing market conditions, and building a strategic asset allocation mix and robust manager-selection processes.

Undergraduate financial aid reached unprecedented heights during fiscal year 2020. More than half the undergraduate students benefit from financial aid. This number is expected to reach significantly higher levels during the next academic year in line with the new strategy adopted by the university and the fast-changing economic conditions.

Total expenses, excluding financial aid, increased by around 1.4 percent when compared to prior fiscal year in line with the university’s cost cutting plan. In addition to the above, operating expenses displayed continuing efficiency and effectiveness in the allocation of resources sparing more funds to financial aid.

Expense Budget for 2019-2020 US Dollars
Teaching Compensation

59,898,78329.50%

Non-Teaching Compensation

40,310,17419.86%

Financial Aid 

39,465,97519.44%

Contracted Services

16,164,7697.96%

Depreciation

15,895,2117.83%

Contingency & Transfers

8,500,0004.19%

Utilities

4,437,0002.19%

Other Projects Budget

4,399,8982.17%

Supplies

3,666,9951.81%

Travel & Conferences

3,071,8501.51%

Books & Electronic Resources

2,914,6251.44%

Communication

1,312,6760.65%

SP III

970,0000.48%

Other Expenses

929,9080.46%

Entertainment & Public Relations

626,5500.31%

Transportation

448,1100.22%