Shakeup in Enrollment Management??

[vu72]

This is concerning... We're building to suit 6000 students when we're struggling to exceed\stay above 4000 and just lost one of our greatest grad school draws. I hope it works out but it seems like our best and only way to achieve this goal would be for Valpo to go on some major tournament runs (sweet 16 or better).

I guess I'm wondering what would indicate we are building for 6000?  The new buildings, since the 6000 goal was expressed, include a new science building (desperately needed) a new dorm (probably not needed for capacity reasons but needed for modern reasons). The sorority complex, which has nothing to do with expected growth and??  I guess I don't see the "building" part of it.  Part of the reason for expanded growth was to better utilize existing spaces.  Places like the Union and Library were not expressly built with the expectation of significant growth.  The law school loss really doesn't effect the rest of the campus.  Those students live off campus.

[FieldGoodie05]

I think most folks on the board believe that a basketball success makes a big impact.   But thanks to ML2 we discovered how leveraged the university is in terms of loans to build its buildings.  You can only borrow money for so long against a "future income stream." 

We are "house poor" in the way that a young couple making a combined $150,000 buys a $500,000 house on the belief that they will earn more and more in the next decade and squeeze out a house payment. We did the same thing betting on tuition payment from 6,000 students.

Then they take a pay cut for unforeseen reasons and can't restore that income for the next five years.  They eat baked beans and tuna, and can't buy furniture or landscaping.  ....Or they just keep spending on landscape anyway.

I also believe in the logic you have presented.  Good example btw.

[crusadermoe]

The published masterplan says that the buildings "are needed to support the 6,000 students goal."  That document has been posted on this board a few times.  Perhaps not "expressly built for growth", the library and union are far larger than was needed for a 4,000-4,500 student target. Our appetite for "space" just outgrow our income. "We came to a fork in the road and we took it." (Yogi Berra)

VU72 (in prior post): 
I guess I'm wondering what would indicate we are building for 6000?  The new buildings, since the 6000 goal was expressed, include a new science building (desperately needed) a new dorm (probably not needed for capacity reasons but needed for modern reasons). The sorority complex, which has nothing to do with expected growth and??  I guess I don't see the "building" part of it.  Part of the reason for expanded growth was to better utilize existing spaces.  Places like the Union and Library were not expressly built with the expectation of significant growth.  The law school loss really doesn't effect the rest of the campus.  Those students live off campus

[crusader05]

There are definitely parts of the master plan that are contingent on growth in numbers, such as at least one new dorm and potentially my guess is funding for upgrading some academic buildings. But there was also stuff that was considered high priority to stay competitive to even maintain numbers. Specifically things like the new Science building and Beacon/Sorority Housing (you cannot renovate the current dorms in the future if they are always filled). The Endowment is also a part of the Strategic plan to help decrease yearly costs to aide in bond payments and other small costs or unforeseen financial issues, as well as the continued increase in programs offered like 2 new engineering programs in 2 years and the beginning stages of bringing an Occupational Therapy program to campus.


My guess is that is there are probably some projects that will not see fruition until graduate numbers rebound(such as improvements to the business school) but there will still be certain areas of donor focus and building, like prioritizing ARC upgrades over the new rec facility.

[bbtds]

The published masterplan says that the buildings "are needed to support the 6,000 students goal."  That document has been posted on this board a few times.  Perhaps not "expressly built for growth", the library and union are far larger than was needed for a 4,000-4,500 student target. Our appetite for "space" just outgrow our income. "We came to a fork in the road and we took it." (Yogi Berra)

"The Valparaiso University administration is not as smart as the average bear. Even I don't steal more food from pic-a-nic baskets than I can eat, right BooBoo?" (Yogi Bear)



     

[FieldGoodie05]

The published masterplan says that the buildings "are needed to support the 6,000 students goal."  That document has been posted on this board a few times.  Perhaps not "expressly built for growth", the library and union are far larger than was needed for a 4,000-4,500 student target. Our appetite for "space" just outgrow our income. "We came to a fork in the road and we took it." (Yogi Berra)

"The Valparaiso University administration is not as smart as the average bear. Even I don't steal more food from pic-a-nic baskets than I can eat, right BooBoo?" (Yogi Bear)

Was the new Student Union mostly financed by debt?  I must admit to ignorance on that subject, thought I saw a wall of donors for the Union and unsure as to what % of the overall cost came from debt and what % came from donations?


     

[crusader05]

The Union was donor based.

As far as debt based that would be the two residence halls (although the sorority complex and even Beacon I believe pay their way) and the two latest Academic buildings although I believe there was still some donor participation in that.

The reality is that our buildings were way behind the times and we had already outgrown the campus space with past enrollment so something needed to be done and Valpo just does not have the large donor base needed to do the updates and renovations we need to do. Thankfully the bonds were taken out during the time of record low interest rates. We either were going to need to build with bonds or fall further and further behind.

[vu84v2]

The question that really needs to be asked is, what is the level of enrollment needed in the next 10 years (or more) to service the debt and the operating costs on the new buildings? I don't know the answer and no one else here seems to know that answer. If they built new buildings with the idea of needing to support 6000 (i.e. plan capacity for the future), but they only require an enrollment of 3000 in the business model - then it looks like a good move. If they built with an assumption in their business model that they will have 5000+ students, that is a huge problem. My guess is that they have been fairly cautious and that they are OK, but other schools have taken out huge debt that they cannot service - so I hope, in relationship to Valpo, that I am right.

[crusadermoe]

The biggest problem is their unfunded grants to students (aka the "discount" rate).  Even if you bring in an extra 500 students, you only generate cash from them at a "sale" price.  But obviously 500 additional per class would add much more cash to operations than adding zero students or decreasing your class sizes.

Endowment is of course the long-term answer, but that is a very slow build if you only spend out 4-5% on the student grants.  What is the 3-10 year answer to the bond-holders?

[crusader05]

I can't attest to the truth of it but I've heard that are equity in land is quite large so I wonder if that offsets any immediate concerns about bond payments.

Everything I've heard about financial concerns for the university center around the law school and making sure that enrollment numbers and retention numbers continue to improve. Those are usually talked about though in relation to yearly budgets vs endowment or long-term financial concerns. I remember hearing that our long-term investment structure is solid, it is just getting through the immediate financial tightness of closing down the law school and adjusting to changing demographics and increased competition.

[vu72]

I can't attest to the truth of it but I've heard that are equity in land is quite large so I wonder if that offsets any immediate concerns about bond payments.

Everything I've heard about financial concerns for the university center around the law school and making sure that enrollment numbers and retention numbers continue to improve. Those are usually talked about though in relation to yearly budgets vs endowment or long-term financial concerns. I remember hearing that our long-term investment structure is solid, it is just getting through the immediate financial tightness of closing down the law school and adjusting to changing demographics and increased competition.

When you think about it, it has to be substantial.  350 acres?  Think of all of old campus plus all of Mound Street plus almost all of Linwood plus all of new campus?  That is a lot of dirt.

[crusader05]

That doesn't even count the Eastgate fields and the land of that old grocery store. Plus I believe they have been picking up land off of Laporte

[valpo64]

Wasn't the property where the new Phi Psi House will be located acquired in a trade for their Mound Street property?

[vu72]

So here is some info from the attached 990 from year end 2014.  This is after building Beacon Hall.  Here are some highlights:

Total Assets          $567,503,000
Total Liabilities        145,429,000
Net Worth              422,064,000

Total Revenue         182,986,000   (includes Gov't Grants of $5.3 mil, Gifts of $24.3 mil and Tuition/housing/misc of $160.2 mil)
Total Expenses        191,893,000  (includes the scholarships of $63.5 mil)
Net Loss                    8,907,000  (of this amount 6,834,000 was from cost of goods sold--no cash)

Scholarships provided to 3,444 students:  $63,523,780

Total Tax Exempt Bonds Outstanding:  96,935,000  (of which 37,600,000 is attributed to Beacon Hall)

The highest paid University employee was a guy named Bryce Drew who earned $423,201.  For those of you who think President Heckler isn't backing the athletic programs, that is roughly $10,000 more than he earned.

Interestingly enough, the law faculty is very expensive.  Four law faculty members listed earned a combined $1,035,085.

That's all folks!  Happy digging!

http://990.erieri.com/EINS/350868125/350868125_2014_0cbfca22.PDF

[crusader05]

Yes, I believe the way it works for Phi Psi and eventually Sig Ep is that there is a land swap where the university will take over the old Phi Psi building and cleared the land to provide for the new house. I believe there was also some sort of understanding that as part of building the House they would include some sort of green/all campus space that students can utilize on the land as well. I believe they have also made that request of Sig Ep but am unsure of Sigma Chi. I think that is because the university would take on the costs of tearing down the old buildings and, in the case of the phi psi and eventually sigma chi land, they removed the buildings that were currently there.

Word on the street is also that Theta Chi might be returning but they will have to tear down and rebuild as the old house is pretty much uninhabitable.

[crusadermoe]

I'm not a CPA.  I don't play one on TV or even stay at a Holiday Inn Express the night before a financial meeting. 

The $8.9 million net loss shown in the financial statements from VU72 is notable.  VU72 says over $6 million of that $8.9M net loss is "cost of goods sold," )(not cash.)   

Maybe that is better than a "cash" loss.  But I have a sincere question. Can someone explain how a "cost of goods sold" shows as an expense that is not offset by the cash obtained from the sale?     

[vu72]

I'm not a CPA.  I don't play one on TV or even stay at a Holiday Inn Express the night before a financial meeting. 

The $8.9 million net loss shown in the financial statements from VU72 is notable.  VU72 says over $6 million of that $8.9M net loss is "cost of goods sold," )(not cash.)   

Maybe that is better than a "cash" loss.  But I have a sincere question. Can someone explain how a "cost of goods sold" shows as an expense that is not offset by the cash obtained from the sale?     

Good question.  When I said "Not cash" , I should have said, "not cash this year"  At some previous point the funds were spent.  They related to "inventory", whatever that means. The sale produced over $8,000,000 in proceeds which is included in the total revenue.  Think of it as if you bought a stock several years ago and then sold it this year.  The proceeds will effect your cash flow this year and the cost basis (cost of goods sold) impacted you cash flow at a different time. 

My attempt was to show the operating results on a cash basis when the actual financials were done on an accrual basis, which shows a loss of $9,000,000.

[valporun]

I wasn't a business major, so all of that talk was like a plane flying over my head...all nice and loud, but I just didn't understand.

[crusader05]

http://nwindianabusiness.com/community/business-news-bits/valparaiso-university-will-offer-online-post-professional-occupational-therapy-doctoral-degree-beginning-in-summer-2019/

Looks like the University will be offering a new doctoral degree online. I've been hearing about this and the hope is to eventually fully grow it out to a complete OT degree but this is a good way to be in service of the community without demanding too much more work. I hope we see a few more of these programs popping up.

Also, the Sigma Chi fraternity is in the midst of their fundraising push for their house. Looks like they need to raise 1 million to be able to finance the rest. I hope they get it as Phi Psi will be building soon and it would be nice to have two new houses popping up on campus again.

[crusadermoe]

I could see Sigma Chi doing well raising funds.  Impressive group.   

Let's hope the enrollment big picture improves and many other opportunities should be open to Valpo.

[vu72]

Did I mention that my granddaughter was just accepted to Valpo and, offered a Presidential Scholarship!  Other than bragging, I found it interesting that her acceptance letter was signed by a guy named Ray Brown, as Vice President of Enrollment Management.  I presume he is replacing Joseph.  I don't recall any announcement about Mr. Brown.    Anybody know him?  Given our enrollment challenges you have to expect this was a VERY important hire.

I did find his bio on the Office of the President website.  Sounds like a very experienced and successful enrollment officer:

Ray Brown, M.A., joined Valparaiso University as interim vice president for enrollment management on Aug. 6, 2018. As the chief enrollment officer, Vice President Brown leads the development and oversees the execution of the University's comprehensive enrollment management plan, under the leadership of Senior Vice President Susan Scroggins, CPA, '04 MBA, and the executive management team.

Vice President Brown has extensive experience in higher education, most recently serving for 16 years as the dean of admission at Texas Christian University (TCU) in Fort Worth, Texas, where he led the team that yielded 1,900 first-year students and 400 transfer students. Under Vice President Brown's tenure at TCU, the university increased selectivity and increased applications significantly. At the end of Vice President Brown's tenure he became the first non-faculty member to become designated emeritus.

Previously, Vice President Brown served as the dean of undergraduate admissions at Marquette University in Milwaukee, and as the associate dean of students and director of admission and financial aid at the University of Chicago Booth School of Business, among other universities.

Education
A.M. — University of Michigan
B.A. — Concordia University

[crusader05]

I don't know much more than what you posted other than a few other things. I believe he specializes in boosting enrollment and selectivity at smaller schools so seems a good fit for valpo. I have heard he's hand-signing all acceptance letters and has even hand delivered some to local students so he definitely seems invested.

[vu72]

I don't know much more than what you posted other than a few other things. I believe he specializes in boosting enrollment and selectivity at smaller schools so seems a good fit for valpo. I have heard he's hand-signing all acceptance letters and has even hand delivered some to local students so he definitely seems invested.

[/b]

That was the case with my granddaughter and he added a personal handwritten note concerning the legacy.  Nice touch.

[crusader05]

This article was recently posted and talked a bi about the struggle for small liberal arts colleges

https://www.insidehighered.com/news/2019/01/24/green-mountain-latest-small-college-close#.XEuCLT0lgRc.twitter

it's also important to realize that many of these colleges have enrollment goals that are only slightly larger than the number of transfers Valpo sees enter on an academic year to give an idea about what people mean when they talk about "small" liberal arts colleges.

Valpo is in budget constraints for sure but the reality is that we are large enough, and soon to be well-endowed enough, to not have to deal with the consequences that happen to these smaller schools when you miss enrollment targets by even a small amount.

A report recently indicated that approximately 60% of universities have not hit their enrollment targets in the last year or two which indicates that we are a time of constriction for higher ed and immediate financial decisions must focus on running a tight ship and focusing on retention and what your enrollment needs to look like. 

I also wanted to respond to the concern about the bonds. I cannot speak to all but I know that when looking at the cost of building Beacon and the sorority complex that the income brought in from filling those beds is designed to pay for the cost.

[crusadermoe]

That's encouraging to know that income from Beacon etc. should offset payments.  And yes VU does have a lot of assets. Yes, the environment is highly competitive. I've offered numerous comments about the potentially strong need to know yourself thoroughly and to know how you are distinguished from the hundreds of others. 

But yes, the industry is a tough one.  Let's hope that Mr. Ray Brown and his executive peers bring some insights and execution to the battle against the forces you outlined.  You seem to have the answers to our tough questions, so thank you, Crusader05!