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Transcript
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 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 21 TRINITY ACADEMIC CENTER Financing Plan for the New Academic Center September 2013 Topics for Discussion Q&A 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 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? 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