4/23/2020 En Route to Financial Health? Three Business Drivers to Consider During COVID-19 To Receive CPE Credit › Individuals • Participate in entire webinar • Answer polls when they are provided › Groups • Group leader is the person who registered & logged on to the webinar • Answer polls when they are provided • Complete group attendance form • Group leader sign bottom of form • Submit group attendance form to training@bkd.com within 24 hours of webinar › If all eligibility requirements are met, each participant will be emailed their CPE certificate within 15 business days of webinar 1
4/23/2020 Today’s Presenters Jonathan Swanson, CAIA Institutional Consultant, Graystone Consulting Nicholas J. Wallace, CPA, CGMA Director, BKD CPAs & Advisors “You Cannot Fix What You Will Not Face” – James Baldwin 2
4/23/2020 “I Cannot Change the Direction of the Wind, but I Can Adjust My Sails to Reach My Destination” – Jimmy Dean Regional Public Universities › “A sustainable business model is one in which colleges streamline their academic offerings based on mission (What are we good at?), market (What do students want and need?), and margin (How can we generate net revenue for reinvestment?)” › An analysis by the education consulting firm rpk GROUP consistently shows that two-thirds of an institution’s undergraduates major in no more than 12 programs Source: Rick Staisloff, Chronicle of Higher Education, March 31, 2020 3
4/23/2020 Purpose for Purpose for Going to College Going to College 70.0% Prepare for a specific job or career 69.0% For Faith-Based Schools, Which Is Rated Highest? 56.0% Increase financial opportunities 55.0% Stay competitive in today's job Prepare for a specific job or career 51.0% 48.0% market Increase financial opportunities Strengthen critical thinking and 36.0% 36.0% writing skills Stay competitive in today's job market 31.0% Strengthen critical thinking and writing Growth in leadership skills 30.0% skills 26.0% Discover who you are 27.0% Growth in leadership skills 23.0% Learn about academic interest 25.0% Discover who you are Learn how to make a difference in 22.0% Learn about academic interest 22.0% the world Learn how to make a difference in the 14.0% Develop moral character 14.0% world 7.0% Encourage spiritual growth Develop moral character 7.0% Encourage spiritual growth 0.0% 20.0% 40.0% 60.0% 80.0% Self-Identified Christians All U.S. Adults What Programs Are Growing? As summarized from data on the National Center for Education Statistics website Source: As summarized from data at the National Center for Education Statistics website 8 4
4/23/2020 Have You Stress Tested Your Institution Lately? What is your next step to preventing an unpleasant set of conditions? • Major program cuts & layoffs • Major reductions of services for students • Closure of portions of the operation How long will your reserves last? Massachusetts Requirement for All Colleges Law Passed in 1. Notification of the State Board regarding the existence of the risk of November imminent closure 2019 2. Annual assessment of the risk of imminent closure based on an annual State of Massachusetts Act to financial screening Support Improved Financial Stability in Higher Education 3. Fines, suspended funds & degree (H4099) granting authority 4. Required training for campus governing board members 5
4/23/2020 So Where Is Your Institution? MODIFIED SCALE FOR CHARTING CFI PERFORMANCE Critically Barely Surviving Thriving Unhealthy Surviving ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐ 4 ‐ 3 ‐ 2 ‐ 1 0 1 2 3 4 5 6 7 8 9 10 Source: Current State of Financial Health for Private Masters and BACC Institutions, Attain Oct. 2018 P. 4 The Teaching Institution Economic Model › Three distinct centers of operational activity that generate economic return • Academic core • Auxiliaries (food service, housing, bookstores & coffee shops, parking, health systems, real estate development, sports) • Philanthropy & capital (giving, investment return, financing) 6
4/23/2020 Revenue Cost & Margin Analysis Private School #1 – Small School Enrollment 2,502 (’17) Endowment $13,129,960 Grad School: Yes Academic Programs Auxiliary Enterprises Capital Management & Philanthropy Instruction Auxiliary Enterprises Capital Management & Philanthropy Sales & Services $ 6,293,136 Investment Income $ 1,180,482 Tuition & Fees $ 41,655,470 Less Institutional Aid $ (15,495,387) -37% Private Gifts – Nonoperational Private Gifts – Operational $ 2,833,180 Endowment Gifts Government Appropriations Interest Rate Gain on SWAP Change in Value – Split Interest Gifts Instruction $ (18,449,103) -44% Auxiliary Service Expense $ (6,993,619) -111% Interest on Operating Funds Other Income $ 622,619 Margin $ 7,710,980 19% $ (700,483) $ 4,636,281 Margin Funding Academic Support $ (2,633,608) Interest Cost Allocated Student Services $ (9,809,024) Fundraising Expense $ (94,201) Institutional Support $ (5,529,902) Loan Cancellation Allocated Net Margin $ (10,261,554) -25% $ (700,483) -11% $ 4,542,080 Net Loss – $6,419,957 Revenue Cost & Margin Analysis Private School #2 – Larger School Enrollment 5,204 (’18) Endowment $432,000,000, Grad School: Yes Academic Programs Auxiliary Enterprises Capital Management & Philanthropy Instruction Auxiliary Enterprises Capital Management and Philanthropy Sales and Services $ 20,829,788 Tuition and Fees $ 138,416,775 Investment Income $ 20,728,073 Less Institutional Aid $ (63,334,552) Private Gifts ‐ Operational $ 7,374,855 Government Grants $ 5,294,081 Private Gifts ‐ Non ‐ Operational $ 42,010,456 $ 80,376,304 Change in Value Split Interests $ 1,991,138 Other Income $ 6,505,989 Fundraising Expense $ (4,182,072) Auxiliary Service Expense $ (21,279,025) Instruction Delivery Cost $ (46,484,926) Endowment & Plant contributions $ 8,195,347 Margin $ 33,891,378 42% Margin Funding: Academic Support $ (12,950,532) Student Services $ (29,831,393) Institutional Support $ (25,760,969) Net Gain (Loss) $ (449,237) ‐ 2% Public Service, Research and Media $ (2,949,489) Net Margin $ (37,601,005) ‐ 47% Change in Net Assets $44,573,544 Net Return $ 82,623,786 7
4/23/2020 Revenue Cost & Margin Analysis Public School #1 (Large Public) Enrollment (’18) 44,474 Endowment $3.3B Grad School: Yes Auxiliary Enterprises Capital Management & Philanthropy Academic Programs Auxiliary Enterprises Capital Management and Philanthropy Instruction Sales and Services $ 377,393,000 Tuition and Fees $ 1,037,216,000 Investment Income $ 125,711,000 Less Institutional Aid $ (145,279,000) Private Gifts ‐ Operational $ 91,659,000 Private Gifts ‐ Non ‐ Operational Government & Other Grants and Contracts $ 405,179,000 Change in Value Split Interests $ 1,297,116,000 Other Income $ 88,027,000 Fundraising& Interest Expense $ (29,687,000) Auxiliary Service Expense $ (231,617,000) Endowment & Plant contributions $ 96,515,000 Instruction Delivery Cost $ (1,351,618,000) Margin $ (54,502,000) ‐ 4% State Appropriations $ 398,143,000 Margin Funding: Academic Support $ (213,981,000) Student Services $ (47,874,000) Institutional Support $ (279,731,000) Net Gain (Loss) $ 145,776,000 39% Public Service, Research and Media $ (146,278,000) Net Income $173,778,000 Net Return $ 372,225,000 Net Margin $ (344,223,000) ‐ 27% (13% of Net tuition & grants) Revenue Cost & Margin Analysis Public School #2 Small Public Enrollment 9,454 (’18) Endowment $51,849,060 Grad School: Yes Capital Management & Philanthropy Academic Programs Auxiliary Enterprises Instruction Auxiliary Enterprises Capital Management and Philanthropy Sales and Services $ 44,233,077 Tuition and Fees $ 111,630,154 Investment Income $ 3,191,632 Less Institutional Aid $ (42,834,365) Private Gifts ‐ Operational $ 1,369,510 Government & Other Grants and Contracts $ 28,794,657 Private Gifts ‐ Non ‐ Operational $ 403,899 $ 97,590,446 Change in Value Split Interests Insurance recovery $ 4,040,459 Auxiliary Service Expense $ (27,014,680) Fundraising& Interest Expense $ (1,829,489) Instruction Delivery Cost $ (107,416,840) Endowment & Plant contributions $ 8,553 State capital Contribution $ 4,378,656 Margin $ (9,826,394) ‐ 10% State Appropriations $ 45,344,100 Margin Funding: Academic Support $ (9,953,325) Student Services $ (16,563,970) Net Gain (Loss) $ 17,218,397 39% Institutional Support $ (19,094,877) Net Income $12,116,772 Public Service, Research and Media $ (6,570,379) Net Margin $ (16,664,845) ‐ 17% (12% of Net Tuition & Grants) Net Return $ 11,563,220 8
Recommend
More recommend
