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FY 2013
…It was a very good year…BUT!
UNAUDITED
STATEMENT OF ACTIVITIES
Year Ended June 30, 2013
Account
Description
Operating Activities
Revenue
Tuition
College of Arts & Sciences
School of Nursing and Health Professions
School of Education
School of Professional Studies
Continuing Education
Total Tuition
Financial Aid
Net Tuition
Fees
Gifts & Private Grants
Government Grants/Contracts
Auxiliary Enterprises
Trinity Center
Other
Student Rooms
Operating Interest Income
Other Revenues
Total Operating Revenue
6/30/13
FY 13
Budget
6/30/12
FY12
Budget
19,440,475.00 20,025,650.00 18,796,920.00 18,663,108.00
3,944,950.00 3,994,360.00 3,106,804.00 2,801,600.00
4,521,063.00 4,575,428.00 5,781,501.00 3,675,245.00
9,018,932.00 9,458,105.00 9,632,394.00 7,902,106.00
1,250,470.00 1,251,915.00
1,500,000.00
38,175,890.00 39,305,458.00 37,317,619.00 34,542,059.00
8,470,576.00
8,953,880.00
8,099,215.00
7,910,739.00
29,705,314.00 30,351,578.00 29,218,404.00 26,631,320.00
557,935.00
886,512.00
199,256.00
552,750.00
800,000.00
156,138.00
459,601.00
906,480.00
265,802.00
424,938.00
900,000.00
334,113.00
546,098.00
570,750.00
556,630.00
610,000.00
1,769,273.00 2,005,494.00 1,924,138.00 1,928,400.00
1,105,316.00 1,227,620.00 1,217,128.00 1,246,033.00
607,748.00
225,000.00
384,355.00
225,000.00
290,815.00
245,000.00
346,589.00
222,000.00
35,668,267.00 36,134,330.00 35,279,127.00 32,521,804.00
UNAUDITED
STATEMENT OF ACTIVITIES
Year Ended June 30, 2013
Expenses
Instructional Expenses
Academic Support
Student Services
9,123,101.00
3,408,307.00
3,482,088.00
9,835,729.00
4,030,289.00
3,938,967.00
8,301,122.00
2,848,979.00
3,405,716.00
8,596,563.00
3,121,493.00
3,703,687.00
Facility Services
Institutional Support
Public Service
3,759,487.00
7,508,760.00
32,867.00
4,445,277.00
9,457,558.00
39,183.00
3,717,389.00
7,114,491.00
169,560.00
4,294,698.00
8,532,985.00
209,367.00
723,283.00
753,374.00
779,095.00
559,199.00
768,763.00
1,031,302.00
954,491.00
943,107.00
Interest Expense
Auxiliary
Trinity Center
Other
Total Operating Expenses
912,392.00 1,030,699.00
979,452.00
936,307.00
29,719,048.00 34,562,378.00 28,270,295.00 30,897,406.00
Net assets released from restriction
(1,172,629.00)
Net Operating Expenses
28,546,419.00 34,140,567.00 27,396,325.00 30,681,817.00
Net Operating Revenue
7,121,848.00
(421,811.00)
1,993,763.00
(873,970.00)
7,882,802.00
(215,589.00)
1,839,987.00
UNAUDITED
STATEMENT OF ACTIVITIES
Year Ended June 30, 2013
Non-Operating
Other Gains & Losses
510,957.00
0.00
(608,021.00)
0.00
Internally Designated Gifts for Acad. Center
268,577.00
0.00
467,903.00
0.00
(506,682.00)
0.00
86,943.00
0.00
0.00
0.00
0.00
0.00
(51,432.00)
(53,350.00)
(50,858.00)
(50,858.00)
Non-operating investment return
Internally Designated Gifts
Accretion Expense
Depreciation Expense
Net Income
(1,017,313.00) (1,080,000.00) (1,040,211.00) (1,000,000.00)
6,325,955.00
860,413.00
6,738,558.00
789,129.00
MOODY’S NOT-FOR-PROFIT PRIVATE
COLLEGES AND UNIVERSITIES
OUTLOOK
Three major trends across the spectrum in
current financial environment:
1.
Muted Net Tuition Revenue Growth
2.
Flat to Declining Enrollment Growth
3.
Difficulty controlling expenses for
multiple years
Moody’s Suggested Actions to Counter
Current Environment



Ensure Operating Margins
Maintain elevated levels of liquidity
Reduce debt structure risk and limit use of debt
WHAT DOES THIS ALL MEAN?

The Good News





Financial Ratios are moving in line with the benchmarks.
Cost containment and improved accounts receivable balances led to
improvement in the Operating Performance Ratios.
Debt Ratios continue to be in line with benchmarks.
Trinity exceeded the Debt Covenant Ratios.
Managerial Financial Imperatives


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Continued growth in enrollment
Continued vigilance over costs
Continued emphasis on cash and liquidity availability
Continued emphasis on receivables management
Continued need to improve endowment
Continued focus on strong balance sheet
•
•
•
Cushion Ratio measures the ability to make debt payments with available cash and investments.
Cushion Ratio should be > 1.
Bond Covenants require 4.0.
•
•
•
Actual Debt Service Coverage Ratio measures the actual coverage of debt payments by annual operations.
Actual Debt Service Coverage should be > 1.0
Bond Covenants call for 1:1 minimum
•
•
Annual Operating Margin measures the extent to which current-year internally generated resources have
contributed to the overall financing of the institution’s operations.
The Annual Operating Margin should be positive and have an improving trend.
•
•
Debt Service to Operations indicates how much of an institution’s operating expenses are used for making debt
service payments.
This ratio should be low.
•
•
Direct Debt to Total Capitalization measures the portion of the balance sheet covered by debt.
This ratio should be lower than the median established.
•
•
Viability Ratio measures the availability of expendable net assets to cover debt should the institution need to settle
its obligations as of the balance sheet date.
A ratio of 1.0 or > indicates that an institution has enough expendable net assets to cover its debt obligations.
•
•
Return on Net Assets measures the change in net assets that occurred as a result of the operations of the
institution.
The Return on Net Assets should be positive and have an improving trend.
 Measures the number of days an institution is able to cover its cash operating expenses from Annual Liquidity
 Annual liquidity times 365 divided by total expenses less depreciation less additional, unusually large non-cash
expenses
 Measures an institution’s ability to repay its demand debt from its Annual Liquidity
 Annual Liquidity divided by demand debt
 Estimates institutional deferred maintenance as well as the operating efficiency of the existing plant facilities
 Accumulated Depreciation divided by Depreciation Expense
Measures the annual investment in capital facilities compared to annual depreciation expense
Purchases of property, plant and equipment (from statement of cash flows) divided by depreciation expense
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TRINITY ACADEMIC CENTER
Financing Plan
for the
New Academic Center
September 2013
Topics for Discussion
Q&A



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Q. How much do we need?
A. Project modeling and debt capacity analysis
results
Q. Where are we going to get it?
A. Sources of funding for the project
How much do we need?


Current estimate is a maximum $40M project cost
for a 75-80K square foot building.
This estimate includes ALL costs – hard and soft
costs; furniture, fixtures, equipment (FF&E); a
contingency fund and capitalized interest.
Where are we going to get it?
Total Cost = $40M
$10M
Funds accumulated from excess cash
for the last 4 fiscal years
Cap. Campaign $15M
Qualified pledges in hand of $15M
as of Sept. 15, 2013
Trinity Cash
External Funds $15M
New debt to be secured via RFP
process
Can Trinity assume $15M more debt?


We engaged Public Financial Management (PFM) to
serve as our Financial Advisor for the project.
Step 1 involved the assessment of Trinity debt
capacity. A 5-year pro-forma analysis indicated
that Trinity could borrow $15M in debt in addition
to current bond debt of $15.7M.
Would the $15M come from the public markets or a
direct purchase bond with a lending institution?
Based on the following factors, we decided to issue an RFP for a
tax-exempt direct purchase bond financing rather than public
market bond debt on Trinity’s credit rating:
 Costs to secure funds are lower for direct purchase
 No public market “red tape” and disclosure to deal with
 No need for or cost of a public rating from a ratings agency
 Direct purchase market is very competitive in DC resulting in
favorable rates and terms
 Provides more flexibility in managing debt and interest rate
protection
Which lending institutions are in the
market for this kind of transaction?
The strategy is to “cast a wide net” and there are
currently 17 banks on the list to receive the RFP.
(A list of the banks was sent to you along with the
RFP.)
The RFP Goals
The goals of the RFP are to:
 Select a financing partner
 Secure the most cost-effective funds with the least
onerous “T’s and C’s”.
 Provide flexibility and options for Trinity.
RFP – Issues to Consider
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Current outstanding Series 2001 Bonds - $15.7M
Existing Letter of Credit (issued by Wells Fargo)
enhancing the series 2001 Bonds with maturity date
of April 2014.
Existing interest rate swap on the variable rate
Series 2001 Bonds is currently out of the money,
estimated mark-to-market of $1.4M
RFP – What are we asking for?
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Bank non-qualified tax-exempt direct purchase a
bond of up to $31.7M to finance in part the
construction of the new Academic Center and the
possible refinancing of the Series 2001 Bonds on a
non-taxable basis
Taxable proposals for construction to permanent
financing of the Center both facilities with terms of up
to 15 years
Variable rate and fixed rate proposals for the
$31.7M
A substitute Letter of Credit for the existing Series
2001 Bond
Swap(s) solution
Financing Plan Timetable
Key Dates:
Sept. 27 Board Approval of RFP
Oct. 7
RFP distributed
Oct. 28
Proposals due; Select Bank
Nov. 4
Negotiate Term Sheet
Submit DC Application
Nov. 8
Board approval of financing
Nov.-Feb. Term sheet, bond documents review
Mar. 10
Deal Close
We are seeking Board approval to
proceed with the issuance of the RFP



Discussion on the recommendation to issue the RFP
as presented to and approved by the Finance
Committee.
Motion: “The Board of Trustees approves issuance
of the RFP to secure external funding for the new
Academic Center.”
Vote on the Motion