Messiah College FY13 Financial Plan

1. Messiah College FY13 Financial Plan FY13 Parameters January 4, 2012

2. FY13 Budget Forum • Budget Methodology • Revenue Sources • Expense Drivers • Financial Planning • Q & A

3. Budget Methodology • Budget now focuses on cash flows and controllable expenditures. • Operating budget no longer includes depreciation, a non-cash expenditure. • Budget includes capital spending and total debt service. • Total debt service includes principal and interest. • Depreciation funding targeted at 70%.

4. Revenue Sources UG Net Tuition & Fees (NTR) (>1/2 of Total Revenue) • Undergraduate Enrollment • Tuition and Fee Increases • Financial Aid (Discount Rate) • Auxiliary(Room, Board, Campus Store) • Graduate Programs • Endowment • Other (Conferences, Camps etc.) • Gifts (=1/4 of Total Revenue)

8. Pricing Strategy • Middle of the pack relative to Peer Group • Price sensitivity - what will the market bear? • Sufficient increase to meet revenue needs • 3.9% increase to comprehensive fee proposed (slightly higher than last year)

10. HEPI – Higher Education Price Index CPI – Consumer Price Index

11. MessiahNat’l Average* Difference 2011-12 $36,776 $38,589 ($1,813) *Source: The College Board. For private nonprofit four-year private colleges/universities.

12. * Excludes Graduate Programs

14. Graduate ProgramsProjected Operating Results (in 000s) Includes projections for the following programs: Art Education Conducting Counseling Education Higher Education Youth & Young Adult Ministries

15. Other Revenue • Auxiliary Revenue (Dining, Housing, Campus Store) fee and revenue increases average 4.0% ($713,000) • Endowment, and federal and state aid appropriations increased modestly ($225,000) • Modest projected increases in other revenue sources (gifts, summer conferences, etc: $175,000)

16. Revenue Summary (in 000s) * Includes graduate programs.

17. Key Expense Drivers • Salary & Wages • Benefits • Inflation (CPI and HEPI)

18. Projected Wage & Benefit Increases • Percentages above exclude impact of Graduate Programs.

19. Projected Wage & Benefit Increases • 3.0% increase to faculty base • Health Insurance increase forecasted at 12% • FY13 Total Salaries, Wages & Benefits: $52.0 million • 58.0% of total expenses

20. FY13 Expense Distribution

21. Expense Summary (in 000s)

22. Balanced Budget (in 000s)

23. FY13 Budget Summary (in 000s)

24. Financial Planning ReservesCoverage Return on Net Assets “A Balanced Budget” • NTR • Giving • Efficiencies • Entrepreneurial Assets to Debt KPMG,NACUBO “Ratio Analysis in Higher Education”

25. Financial Planning • Long-term planning – multi-year perspective. • Link to strategic planning. • More effective predictive modeling. • Match funding to strategic initiatives.

26. Key Takeaways – FY13 Budget • Undergraduate FFTE 725, 105 transfers. • First year discount rate 46%. • Comprehensive fee increase 3.91%. • Salary, wage and benefits increase 4.75%. • Depreciation funding reduced to 70%.

27. Questions & Answers

28. Projected Wage & Benefit Increases • Percentages above exclude impact of Graduate School

34. Sensitivity Parameters

35. Competitor Institutions Calvin College Cedarville University Eastern Mennonite University Eastern University Elizabethtown College Geneva College Gordon College Grove City College Houghton College Lebanon Valley College Liberty University Roberts Wesleyan College Susquehanna University Wheaton College York College

36. Glossary of Terms Higher Education Price Index (HEPI) – Measures increases in cost of goods and services purchased by institutions of higher education. Compensation is a major factor. Gross Tuition – Price charged to a student for attendance. Net Tuition – Price to be paid by the student/family after aid. Cost – Resources expended by the institution to provide the full educational experience to each student. Net Tuition Revenue – Tuition and fees less financial aid.

37. CPI-W versus Wage & Salary Increases