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Credit Presentation to Moody’s Investors Service May 17, 2012 PowerPoint PPT Presentation


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Credit Presentation to Moody’s Investors Service May 17, 2012. Participants. Augustana College Steven C. Bahls , President David A. English, Chief Financial Officer, Vice President of Finance and Administration

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Credit presentation to moody s investors service may 17 2012

Credit Presentation to

Moody’s Investors Service

May 17, 2012


Participants

Participants

  • Augustana College

    • Steven C. Bahls, President

    • David A. English, Chief Financial Officer, Vice President of Finance and Administration

    • W. Kent Barnds, Vice President of Enrollment, Communication and Planning

    • Dr. Pareena Lawrence, Dean of the College

    • Lynn E. Jackson, Vice President of Advancement

    • Darlene J. Link, Controller

    • Sheri L. Curran, General Counsel

    • Kim Brunner, Chairman of the Board of Trustees

  • Robert W. Baird & Co.

    • Thomas J. Gavin, Managing Director

    • Stephan C. Roberts, Director

    • Amy Young, First Vice President


Table of contents

Table of Contents

Section 1:Introductory Remarks

  • Section 2:Governance and Management

    Section 3:Academic Programs

    Section 4:Student Demographics and Enrollment

  • Section 5:Advancement and Fundraising

    Section 6:Finance

    Section 7:Debt Structure

    Section 8:Conclusion


Section 1 introductory remarks

Section 1: Introductory Remarks


Introductory remarks

Introductory Remarks

  • Positive financial results for FY 2011 since Moody’s review in May of 2011

  • Net Unrestricted Revenue up by 14.1% in 2011 despite fewer students than 2010

  • Private Gifts up over 100% in 2011

  • FY 2011 Operating Expenses remained flat compared to FY 2010

  • Projected operating surplus of $1 million in FY 2012

  • Net Unrestricted Assets up 38.5% in FY 2011

  • Implemented strict budget discipline

  • Continued emphasis on academic excellence with further development of liberal arts in practice


Section 2 governance and management

Section 2: Governance and Management


Governance and management

Governance and Management

  • Self-aware and focused on assessment

  • Bold, steady and forward-thinking senior leadership and Board of Trustees

  • Recent history of planning success and achievement

  • Fiscal stability

  • Mission-centered and market-smart


Leadership and board of trustees

Leadership and Board of Trustees

  • Thought-leadership in shared governance

  • Stable and strong senior leadership

  • National service and leadership

  • Benchmarking against similar colleges

  • Community involvement

  • Financial commitment of Board

  • High-level of board oversight and participation

  • National and diverse Board


Planning success and achievement

Planning Success and Achievement

  • The College implemented two ambitious plans in less than 10 years

  • Authentically Augustana (2005-2011)

    • Enrollment increase (2,200 to 2,500)

    • $152 million campaign

    • Grew and strengthened the faculty profile

    • New programs (Capstone, General Education, New Majors and Minors)

  • Affirm, Assure, Assess (2011-2014)

    • Outcomes, Accountability, Continual Improvement & Transparency

    • Risk Management

    • Strengthening finances, community, results and physical plant


Fiscally stable

Fiscally Stable

  • Operating surpluses of $1 million annually

  • Increases in student revenues

  • Asset growth

  • Budgeting for depreciation (approximately $5 million annually)

  • Demonstrated ability to adjust quickly to market conditions

  • Exceptional fundraising success

  • Operating budget discipline and expense-side discipline


Mission centered and market smart

Mission-Centered and Market-Smart

  • “Five Buckets” response to recession and demographic shifts

  • Center for Student Life

  • Strong reputation and national thought-leadership

  • Genuine distinctiveness in the marketplace

    • Augie Choice

    • Good value liberal arts college (4 year graduation guarantee)

    • Location in the Quad Cities

    • Academic All-American (ranked #6 in the nation)


Section 3 academic programs

Section 3: Academic Programs


Academic programs

Academic Programs

  • The college offers a total of 71 programs or majors with 192 full-time faculty members (157 are in tenured or tenure track positions)

  • There are 79 part-time and adjunct faculty members

  • Student to faculty ratio is at 11.5:1 and 69.2% of classes have 20 or fewer students

  • 95% of all full-time faculty have a PhD or a terminal degree in their field


Academic programs cont

Academic Programs (cont.)

  • In the past 3-4 years the College has added 8 new academic programs in:

    • International Business

    • Multimedia Journalism and Mass Communication

    • Graphic Design

    • Creative Writing

    • Pre-Engineering/Physics

    • Neuroscience

    • Japanese

    • Pre Seminary

  • All academic programs are working towards increasing student participation in deeply engaging and experiential learning based educational opportunities. Student participation rates in select programs include:

    • 24% undergraduate research activities

    • 53% Study Abroad

    • 52% Internships

    • 86% Community Volunteerism

    • 99% Senior Inquiry


Academic outcomes

Academic Outcomes

  • Augustana ranks as the top school among our peers when measuring Academic Challenge as measured by National Survey of Student Engagement

  • 2010-11 data on graduates indicates that within 9 months of graduation:

    • 36% went to graduate school

    • 49% were fully employed

    • 12% were employed part-time

    • 3% were seeking employment


Preparing for the future

Preparing for the Future

  • Focus on strengthening the following academic initiatives:

    • Advising and mentoring of students across the College

    • College wide Student Learning Outcomes mapped to the curriculum

    • Departmental Student Learning Outcomes mapped to the curriculum

    • Ongoing Departmental Review linked to a staffing plan

    • Strategic Plan for the Community Engagement Center to better integrate it with our academic programs


Section 4 student demographics and enrollment

Section 4: Student Demographics and Enrollment


Student enrollment overview

Student Enrollment Overview

  • 250% increase in first-year student multicultural enrollment (2001-2011)

  • 78% increase in applicant pool (2001-2011)

  • 46% increase in first-year student out-of-state enrollment (2001-2011)

  • 13% increase in overall enrollment (2001-2011)

  • Improving selectivity

  • Stable academic profile and strong retention

  • Opening new markets

  • Steady growth in revenue in challenging economy


Enrollment trends

Enrollment Trends

  • Enrollment has increased by 13.4% the last ten years (nearly 300 more students)

Total Enrollment

Last Ten Years


Enrollment trends and demand

Enrollment Trends and Demand

Enrollment Trends & Demand

New Full Time Students (Fall)

67%

70%

70%

67%

70%

70%

67%

65%

66%

26%

25%

25%

23%

23%

20%

21%

20%

17%


Selectivity and matriculation

Selectivity and Matriculation

Primary Selectivity and Matriculation

New Full Time Students (Fall)

67%

70%

70%

67%

70%

70%

67%

65%

66%

26%

25%

25%

23%

23%

20%

21%

20%

17%


Stabilizing profile during growth

Stabilizing Profile During Growth

  • The average ACT score for first-year students the last ten years was 25.5

Quality Profile of Entering First-Year Students

ACT Mean


Strong and stable first to second year retention

Strong and Stable First to Second Year Retention

1st Year to 2nd Year Retention Rate

Ten Year History


Improving out of state recruitment

Improving Out-of-State Recruitment

Total Numbers Out-of-State Students

In First-Year Cohort (Includes International Students)

% of Out-of-StateStudents

In First-Year Cohort (Includes International Students)


Successfully adapting to demographic changes

Successfully Adapting to Demographic Changes

Underrepresented Students

In First-Year Cohort

(Does not Include International Students)

Underrepresented Students

In First-Year Cohort

(Does not Include International Students)


New recruitment initiatives

New Recruitment Initiatives

  • Regional Office of Admission (Naperville)

  • Expanded International Recruitment Efforts

  • Faculty participation in recruitment

  • Augustana College Summer Academy

  • New recruitment materials and market research

  • Expanded travel in CA, TX and American Southwest

  • Expanded outreach to community-based organizations (new position)

  • Improving advising

  • New retention efforts


Class of 2016 preliminary results

Class of 2016 Preliminary Results

  • 2nd largest applicant pool in history (4,200)

  • 3rd most selective year in history (68%)

  • 650 enrollment (building toward budget goal of 675)

  • Multicultural recruitment success

    • 20% multicultural (highest % of a class)

    • 2nd largest number of multicultural students

  • Highest net revenue per student in history (approximately $24,911)

  • Increase of approximately $700 in revenue per student


Regional competition national clearinghouse cross admits for fall 2008 2009 2010 2011

Regional Competition (National Clearinghouse cross-admits for fall 2008, 2009, 2010, 2011)

Source: College Board Fall 2011 Cost of Attendance


Comprehensive fees

Comprehensive Fees

First-Year Comprehensive Fees

Ten Year History


Stable revenue while diversifying and growing

Stable revenue while diversifying and growing

Net Tuition and Net Comprehensive Fee per First-Year Student

Ten Year History


Financial aid

Financial Aid

  • 98% of the student body receives some form of financial assistance

  • Ten year average unfunded discount is 33%

Total and Unfunded Discount Rate

Ten Year History


Section 5 advancement and fundraising

Section 5: Advancement and Fundraising


Comprehensive campaign authentically augustana a call to action

Comprehensive Campaign (Authentically Augustana: A Call To Action)

  • The College completed a 6 ½ year comprehensive campaign in December 2011 exceeding its $100 million goal by $52 million

  • Raised $152 million - $97 million in outright cash donations

    • Outright to deferred - 64% to 36%

  • Funds were designated for endowment and several capital projects

  • Capital projects include Carlsson-Evald Hall, Old Main, Center for Student Life, Swanson Commons, Parkander Residence Center and football stadium

  • Augustana’s cost to raise a dollar $0.087; cost nationally $0.20


Campaign giving

Campaign Giving


Unrestricted giving

Unrestricted Giving

Unrestricted Giving

Includes: Pledge Payments, Gifts, Actualized Gifts and Matching Gifts


Annual gift income

Annual Gift Income

  • Five year average of $11.7 million generated each year through annual giving

  • Alumni participation rate for gifts to all funds was 32% for FY 2011

Total Gift Income

Last Ten Fiscal Years


Summary of private gifts and grants

Summary of Private Gifts and Grants

Summary of Private Gifts and Grants by Recipient Fund

For Fiscal Year End


Ten year trend of alumni donors

Ten Year Trend of Alumni Donors

  • An annual average of 5,741 alumni donors the last ten fiscal years

Number of Alumni Donors

10-Year History


Section 6 finance

Section 6: Finance


Historical operating performance unrestricted fund only

Historical Operating Performance (Unrestricted Fund Only)

  • Operational Highlights:

  • Net tuition increased 0.21% despite fewer students in 2010-2011

  • Unrestricted Revenues increased 19.7% in 2011

  • Private Gifts and Grants up 100% in 2011

  • Operating Expenses remained flat to 2010


Fy 2012 budget and fy 2013 forecast

FY 2012 Budget and FY 2013 Forecast

  • The College projects a surplus of $1 million for FY 2012

  • The College budgeted for net revenue of $1 million in FY 2013, after fully funding depreciation

  • Since FY 2011, the College has fully budgeted for depreciation to address its plant

  • Expense Controls

    • Additional hiring reviews

    • Changed Investment advisor

    • Switched to self-insurance for health insurance

    • FY 2013 reduced $700,000 from FY 2012 forecast expenses

  • Enrollment:

    • Fall 2011-12: 2,501

    • Fall 2012-13 projected: 2,525


Endowment value and allocation

Endowment Value and Allocation

Endowment Value

In Millions

Endowment Allocation by Class

As of April 2012

Return in FY 2010 11.7%

FY 2011 22.6%

FY 2012 (through 3/31/12)-0.2%


Section 7 debt structure

Section 7: Debt Structure


Outstanding debt

Outstanding Debt

  • The College has no interest rate swaps

  • The Series 2003B and Series 2005 are supported by LOCs from Harris which are set to expire on October 21, 2012

    • The College is in the process of renegotiating the LOCs with Harris at 30 bps lower than current pricing with a three year term

  • The variable rate exposure is manageable given the College’s strong liquidity and internal practices (budgeting, liquidity and covenants)

    • It is the College’s intent to buy down variable rate debt over time to lower exposure


Plan of finance overview

Plan of Finance Overview

  • Series 2012 will be a combination of refunding and new money bonds

    • All bonds will be issued as fixed rate

    • Changes the College’s variable rate exposure from 38% to 34%

  • Refunding Bonds

    • Refunds $30,570,000 of Series 2003A maturing October 1, 2012 through 2032 on the October 1, 2012 call date

    • Refunding generates approximately $3.46 million in gross debt service savings and $2.38 million in present value savings (7.78% of refunded par)

    • No change in structure – refunding is solved uniform to current Series 2003A debt service

  • New Money Bonds

    • $7 million of bond proceeds will be used to partially fund the construction of the Center for Student Life

    • Structured to wrap around existing debt service to generate overall level debt service

    • 20 Year amortization with a final maturity of October 1, 2032

    • Debt service reserve fund will be funded with bond proceeds


Center for student life project

Center for Student Life Project

  • 35,000 square foot addition to the Thomas Tredway Library and renovation of the 39,000 square foot library

  • Combines dining services, student activities and the library into one facility to provide an enhanced learning environment for students

    • Contemporary dining with multiple dining stations seating up to 700 people

    • Additional features include private and group study rooms, adaptable multi-purpose rooms, digital game room, expansive outdoor patio, spaces for Reading/Writing Center and expansion of Brew

  • The renovation and combination of spaces addresses the changing academic and social needs of students and will provide an advantage in recruiting.

  • Total cost estimated at $20 million

    • $13 million funded with gifts and internally generated funds

    • $7 million funded via Series 2012 bond proceeds

  • Construction is expected to be completed by August 2013


Estimated sources and uses of funds

Estimated Sources and Uses of Funds


Preliminary structuring numbers

Preliminary Structuring Numbers


Summary of bond covenants and security for bondholders

Summary of Bond Covenants and Security for Bondholders

  • Bonds will be issued under a new Trust Indenture

  • Revenue pledge on parity with all outstanding bondholders

  • Negative pledge on property financed or originally financed with the 2003A Bonds being refunded

  • Debt Service Reserve Fund equal to the lesser of i) maximum annual debt service, (ii) 10% of proceeds, or iii) 125% of average annual debt service

  • Bond Covenants:


Covenant calculations

Covenant Calculations


Covenant calculations cont

Covenant Calculations (cont.)


Section 8 conclusion

Section 8: Conclusion


Conclusions wrap up

Conclusions / Wrap-up

  • Outstanding Board of Trustees

  • Strong and stable administrative leadership

  • Fiscally strong business practices and planning

  • Talented faculty, committed to College

  • Exceptional fundraising success

  • Nimble organization, emphasizing best practices and adroit responsiveness

  • Effective strategic planning and goal achievement 

  • Strong student demand and responsiveness to changing marketplace 

  • Emphasis on results and outcomes 

  • Significant positive changes warrant an upgrade


Key dates

Key Dates


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