Valpo Strategic Plan

[crusadermoe]

That's the document that upholds the highly unique target concepts of "Learn, Lead, Serve and Thrive."  I bet if you google "strategic plan" and any two of those words you would pull up 200+ college plans.  Yawn. 

The associate degree piece really sounds off key and implies to me an "Ivy Tech" vibe. I am not a snob and in fact I am a fan of community colleges, thinking they should be nearly free.  But in a strategic plan it is hard to harmonize that item with a residential product costing $40,000+ in private tuition.

[valpo95]

Agreed that it makes little sense not to feature what seems like a successful campaign. The University could use more good news IMO. It got me thinking why they might not want to do it - here is what I came up with.

1) The $302M is nice, yet most of it is pledged, not spendable cash. Perhaps the campaign wasn't as successful as we were led to believe, or some of the gifts have melted away?
2) The University has had a number of cuts to faculty and staff, so celebrating the success when there are cuts and layoffs is bad form.
3) Similarly, some individuals may expect a raise or market adjustment on the assumption that there is a lot of money raised.
4) There is a plan to tap the donors to either accelerate their gifts or start a new campaign, so celebrating a big win would make it harder to show the need.
5) There is a plan to increase tuition, fees or expenses on students.
6) More significant cuts, consolidations or extreme financial distress is imminent, perhaps due to timing of debt payments?
7) The decision-makers are worn down, incompetent,  or there are not enough staff to take on this announcement. Or, they do not realize constituents need good news.

Other suggestions?

To my mind, none of these are especially good reasons not to celebrate a success. I get that one might want to wait some time after a series of celebratory announcements before announcing program cuts or tuition increases, yet that is a timing issue. At this point, it seems like an unforced error.

[vu72]

That's the document that upholds the highly unique target concepts of "Learn, Lead, Serve and Thrive."  I bet if you google "strategic plan" and any two of those words you would pull up 200+ college plans.  Yawn. 

The associate degree piece really sounds off key and implies to me an "Ivy Tech" vibe. I am not a snob and in fact I am a fan of community colleges, thinking they should be nearly free.  But in a strategic plan it is hard to harmonize that item with a residential product costing $40,000+ in private tuition.

Disagree on the Associates degree notion.  I think it is a way to "open the door" to this fancy, near ivy University to those who  lives close by and may, hopefully stay to complete their Bachelors. Not sloby, but no doubt many in the greater Valpo area may have the impression that Valpo is an 'exclusive" venue.  Getting ones foot in the door may be enticing to some.

[vu72]

That's the document that upholds the highly unique target concepts of "Learn, Lead, Serve and Thrive."  I bet if you google "strategic plan" and any two of those words you would pull up 200+ college plans.  Yawn. 

The associate degree piece really sounds off key and implies to me an "Ivy Tech" vibe. I am not a snob and in fact I am a fan of community colleges, thinking they should be nearly free.  But in a strategic plan it is hard to harmonize that item with a residential product costing $40,000+ in private tuition.

Disagree on the Associates degree notion.  I think it is a way to "open the door" to this fancy, "near Ivy" University to those who  lives close by and may, hopefully stay to complete their Bachelors. Not sloby, but no doubt many in the greater Valpo area may have the impression that Valpo is an 'exclusive" venue.  Getting ones foot in the door may be enticing to some.  It is also the stated opbective of President Padilla and others to reach out and better involve the local community to all things Valpo U.

[vu84v2]

That's the document that upholds the highly unique target concepts of "Learn, Lead, Serve and Thrive."  I bet if you google "strategic plan" and any two of those words you would pull up 200+ college plans.  Yawn. 

The associate degree piece really sounds off key and implies to me an "Ivy Tech" vibe. I am not a snob and in fact I am a fan of community colleges, thinking they should be nearly free.  But in a strategic plan it is hard to harmonize that item with a residential product costing $40,000+ in private tuition.

Disagree on the Associates degree notion.  I think it is a way to "open the door" to this fancy, near ivy University to those who  lives close by and may, hopefully stay to complete their Bachelors. Not sloby, but no doubt many in the greater Valpo area may have the impression that Valpo is an 'exclusive" venue.  Getting ones foot in the door may be enticing to some.

I do see the societal value of Associate degrees and related types of two year/shorter programs. The problem that you will not be able to get past, however, is that you cannot have some students sitting in a class in which their list price was one amount and another group of students in the same class whose list price was a small fraction of that amount. You can't price the Associates degree program much higher than the market rate and get students to enroll and you don't have enough critical mass to have separate classes for Associate program and traditional programs. I have seen efforts to do similar things at other universities and they fail miserably - unless the programs are entirely separate.

Good list on the possible reasons for not doing an announcement...but they make little sense to me as well, since the parties who might think they deserve something because of the campaign's success already know the results.

[David81]

Agreed that it makes little sense not to feature what seems like a successful campaign. The University could use more good news IMO. It got me thinking why they might not want to do it - here is what I came up with.

1) The $302M is nice, yet most of it is pledged, not spendable cash. Perhaps the campaign wasn't as successful as we were led to believe, or some of the gifts have melted away?
2) The University has had a number of cuts to faculty and staff, so celebrating the success when there are cuts and layoffs is bad form.
3) Similarly, some individuals may expect a raise or market adjustment on the assumption that there is a lot of money raised.
4) There is a plan to tap the donors to either accelerate their gifts or start a new campaign, so celebrating a big win would make it harder to show the need.
5) There is a plan to increase tuition, fees or expenses on students.
6) More significant cuts, consolidations or extreme financial distress is imminent, perhaps due to timing of debt payments?
7) The decision-makers are worn down, incompetent,  or there are not enough staff to take on this announcement. Or, they do not realize constituents need good news.

Other suggestions?

To my mind, none of these are especially good reasons not to celebrate a success. I get that one might want to wait some time after a series of celebratory announcements before announcing program cuts or tuition increases, yet that is a timing issue. At this point, it seems like an unforced error.

A $302m campaign, sandwiched in-between a deep recession and a global pandemic -- is very good news for a school like VU. However, it's not an earth-shattering amount compared to schools that have been at this game for much longer. I think this very successful effort plays better internally (i.e., alums, students, employees) than externally. So....personally, I'd opt to send a news release announcing the results, but I wouldn't expect it to cause much of a stir.

As for how secure is the $302m amount, there's always going to be some melt. It's higher ed fundraising 101 that (1) a lot of gifts are pledges and bequests, not hard cash; and (2) some won't come to fruition or will deliver less than the original amount promised. For example, if someone pledges $100k as a bequest but they burn through most of their retirement funds before they pass, then it ain't gonna happen. No school announces the latter; it's just the normal way of things.

It's pretty clear that another fundraising campaign is coming. Donors already tapped out by the just-completed one may not be able to give significantly again. (I mean, how many reliable bequests can one person make?) But I'd be shocked if a new fundraising campaign was launched without a good number of lead gifts already committed, which is typical practice. And if, say, new athletic facilities were part of the mix, then it's quite likely that a major naming gift would be part of the initial announcement. VU is now good enough at doing this that they're not going to launch a new campaign without having a reasonable chance of success.

[David81]

Also, I saw a few references suggesting that VU should tap more deeply into its endowment to buttress up some programs.

One challenge in doing so is that the ~250m endowment includes gifts that are already committed to specific purposes. Only unrestricted endowment funds can be accessed for elective purposes.

The bigger challenge is that wise use of endowment money is usually predicated on an assumption that drawing endowment money will not exceed interest income and, in fact, will be less than that, in order to allow the principal to grow. Many institutions use a 4 percent figure as a presumptive starting point. So...VU's 4 percent endowment yield would be around $10m, and some of that money is already spoken for due to specified-purpose gifts.

Drawing deeper from the principal is not unheard of, and many schools -- including mine, with an endowment in the neighborhood of VU's -- did so during the heart of the pandemic slowdown. Problem is, then you're reducing the amount of principal that will keep producing interest income.

In other words, drawing too heavily on the endowment is like drawing too heavily/too early on one's 401k or similar retirement fund. Short-term benefit, hopefully, but at a potential longer-term cost.

I do not blame current or recent Administrations for VU having to play catch-up ball in this realm. Going back to the last century, VU was slow to get into the fundraising game. But Presidents Schnabel, Harre, and Heckler all deserve credit for bringing VU into the modern age of gifts and development.

[David81]

valpo22, thank you for your thoughtful comments in response to mine.

Fundraising to build an endowment is a critical function for any university that hopes to be around for many more years, especially a school like VU, which has to do some catching up in this regard. Even at schools that are making painful cuts, this activity must continue to be a priority. At times that means broadcasting successes, such as major gifts. In fact, many big donors expect to get some mention in university in-house publications, at the very least. And touting fundraising success is seen as building a culture of giving among alums and other major university stakeholders.

This doesn't negate your concerns and compassion for faculty and staff who have lost their jobs or been nudged toward early retirement, or for students who are experiencing program reductions or closings while dealing with big tuition bills. And there's no doubt, say, that a student experiencing a program closure might wince even more upon reading of a big contribution to an Annual Fund or capital campaign.

I believe that continued program eliminations eventually lead to a diminished institution, to the point where a certain curricular richness is no longer there, and the school becomes a less interesting place. I've been saddened to learn of some of these closures at Valpo. I've seen similar decisions made at my university (a medium-sized regional private university in Boston), and they've come at a cost to morale as well. Unfortunately, contraction is a common theme of the day in all but the richest universities. Even some of the tonier schools are making cuts and downsizing faculty & staff. Of course, there are areas of growth and expansion, too, but that's of little comfort to those affected by program closures.

So...it's a really challenging time in higher ed. Ongoing financial challenges, the pandemic, and changing demographics are all playing a role. It is fair to say that we've seen many casualties of these developments, going back to the financial meltdown of 2008 that had ripple effects for years, and now punctuated hard by the pandemic.

[vu72]

Fundraising to build an endowment is a critical function for any university that hopes to be around for many more years, especially a school like VU, which has to do some catching up in this regard.

No doubt Valpo needs to keep going regarding endowment growth, but with the conclusion of the current effort, I suspect Valpo is at the higher end of endowments for similar institutions. As examples, at the end of 2020, Valpo's endowment stood at $254 million, that compares to Butler at $217 million, Drake at $220 million, Belmont at $292 million and Bradley at $302 million.

[David81]

Fundraising to build an endowment is a critical function for any university that hopes to be around for many more years, especially a school like VU, which has to do some catching up in this regard.

No doubt Valpo needs to keep going regarding endowment growth, but with the conclusion of the current effort, I suspect Valpo is at the higher end of endowments for similar institutions. As examples, at the end of 2020, Valpo's endowment stood at $254 million, that compares to Butler at $217 million, Drake at $220 million, Belmont at $292 million and Bradley at $302 million.

vu72, I'm going to sound like the male version of Cassandra here. You're absolutely right, VU's endowment is comparable to that of a number of recognized peer institutions, such as the ones you aptly listed. From a keeping-up-with-the-Joneses perspective, Valpo is holding its own, and then some.

But here's where I'm coming from: The endowments of these well-respected, regional, mid-sized private universities aren't enough to provide the needed income to ease the burden of using annual revenue to meet budgets and to offer a reassuring safety cushion. 

Here's my comparison: Some of us are of a certain age where we're paying closer attention to average retirement account balances (401k, 403b, etc.) and comparing our account balances to those averages. Let's say our VU classmate Joe is 60, and he reads a study reporting that the median (half below, half above) household retirement savings for 60-year-old breadwinners in the U.S. is around $135,000. Well, it turns out that Joe's retirement account sits at $200,000.

Hooray, right!!!??? Joe's retirement account balance is some 40 percent higher than the U.S. median!!! He's already way above the median! It's Miller Time!

But hold on a minute. If Joe were to quit the workforce today and started applying the presumptive 4 percent draw to his retirement account, he'd have about $8,000 annually to pay his share of the bills. Uh oh....... 😳

Back to endowments: My point is that comparing VU's endowment to that of peer schools provides a similar false sense of security in an era of contraction, higher costs, and diminishing college-age student pools. Like Joe thinking he's doing a smash-up job on his retirement account, it's easy to compare VU's endowment with comparable schools (e.g., Evansville at ~$93m) and say we're in strong shape.

Perhaps more indicative of overall university financial health is the Forbes magazine survey and rankings of the strongest and weakest colleges (financially speaking). VU doesn't look quite as good under those measures, earning a financial grade of C-, nor do many peer institutions. Here's the link:
https://www.forbes.com/sites/emmawhitford/2022/06/09/the-strongest-and-weakest-colleges-in-america---behind-forbes-2022-financial-grades/?sh=1100bd9affad

Now, I should qualify my invocation of Cassandra and clarify that I don't think the sky is falling. And BTW, I readily admit that I am tossing these stones from my own glass house. My own university is similarly situated financially. It's why we, too, are engaging in significant belt-tightening, even as we expand other areas of the curriculum and (oy...) hire more and more administrators.

That said, these $200m-$300m endowments don't go nearly as far as first meets the eye.

Those of us who toil in the less-Ivied vineyards of academe (gratefully so, in my case, as I feel very fortunate to be a full-time professor) tend to be associated with institutions whose futures are not guaranteed. Schools that build up their endowments will be among the survivors of any fallout to come.

SORRY FOR GOING ON AND ON, BUT HOPEFULLY NOT ALL OF THE ABOVE IS HOPELESS YAMMERING! 🤓

[vu72]

I hear ya David81!  That is precisely why President Heckler and the Board undertook Forever Valpo.  The numbers I posted were from the end of 2020 so I'm guessing, that, if of the $302 million posted, we actually took in 25% (probably too high), we would now be closer to Bradley's 302 million number. Still, dangerously low.
Agreed that the process needs to keep moving forward.

[crusadermoe]

Unfortunately, the 401k analogy is a very good one in terms of the peer endowment competition.

Yes, those median retirement numbers I read for the 50s age group are scary. The AVERAGES of 401k balances in your 50s are always higher because a well-planned and/or fortunate group has built up $1M+. 

Even a $1M nest egg spins off 4 percent. If you want an even more "Cassandra" reminder, realize that the 401k still has to be pay income taxes so income from $1M 401k is probably a net of $30,000 per year rather than the full $40,000 from 4%  Of course we know taxes will go down over the next several years as we borrow our way into oblivion.

Folks in our 50s might as well plan on working until age 70 and that is ok by me. But I would prefer in the meanwhile that we not use my S.S. taxes to pay a lot of very healthy current 66-68 year-olds to play golf all day and not work. The full retirement age should have been raised to age 70 yesterday, except for certain job classifications for physical work.  By 2040 forget about SS income for the rest of us who follow the baby boomer SS drain.

[vu72]

Unfortunately, the 401k analogy is a very good one in terms of the peer endowment competition.

Yes, those median retirement numbers I read for the 50s age group are scary. The AVERAGES of 401k balances in your 50s are always higher because a well-planned and/or fortunate group has built up $1M+. 

Even a $1M nest egg spins off 4 percent. If you want an even more "Cassandra" reminder, realize that the 401k still has to be pay income taxes so income from $1M 401k is probably a net of $30,000 per year rather than the full $40,000 from 4%  Of course we know taxes will go down over the next several years as we borrow our way into oblivion.

Folks in our 50s might as well plan on working until age 70 and that is ok by me. But I would prefer in the meanwhile that we not use my S.S. taxes to pay a lot of very healthy current 66-68 year-olds to play golf all day and not work. The full retirement age should have been raised to age 70 yesterday, except for certain job classifications for physical work.  By 2040 forget about SS income for the rest of us who follow the baby boomer SS drain.

A couple of things.  I'm a CFP and am asked about this stuff all the time.  The 4% number may be OK but the remainder will continue to grow. Most of us use a 6% number for ongoing growth.  So if you are planning to leave the $1 million to your kids you may be onto something.  If you plan on spending it for your spouse and your retirement, the planning should include one or the other living to 100.  In that case, depending on when you start, the drawdown could be much more than the 30-40,000 number.  If you have $1 million saved, most likely you've had a pretty solid income level.  If that is the case, even if your spouse didn't have a career, the social security benefit would be something north of $2500 a month with the spouse getting a minimum for 50% so there is another 3700 or so per month even if there isn't a pension involved.  Up to 15% of social security isn't subject to taxes.

And I fully agree on the 70 full retirement age.

[crusadermoe]

Very good points.

I will benefit from the spousal Society Security benefit. But I think it is grossly unfair for stay at home and part-time mom or dad to draw 50% of a higher-earner husband or wife's benefit rate.  Married couples should get a combination of the two individuals' separate earnings rates. 

Oh well.  Ain't no way you boomers are voting in that full age of 70+ or giving up the spouse money at this point. I am a very conservative guy in most issues. But I truly think that social security should be banded with a higher minimum benefit and a lowered maximum benefit.  Anyway back to VU issues.   

[vu72]

Anyways, I am kind of disturbed to learn about the details of social security and I think this could very easily turn into some kind of inter-generational theft. The elderly already benefitted from a huge half century of post-WWII economic boom and overall upwards trend of stock market this last century in the US, and they don't really need the money.

No doubt, it is a complicated situation.  having said that, let's examine a few facts:  The average income for Americans is $63,214.  The tax rate paid on this amount--for social security--is 12.4%, 1/2 by the employer and 1/2 by the employee.  This tax is paid on incomes up to 147,000 currently.  So if we take this average income, the taxes paid into the system amount to %7839 annually.  Assuming 46 years of work (67 (full retirement age -21 starting age)--averaging $63,214 of income, the total tax contributed would be $360,573.

Now, let's look at the average social security benefit in 2022. That amount is $1542 per month.  Assuming again that this person has a non-working spouse (very rare these days) that woul d add 771 to the household benefit, bringing the total to $2313 monthly.

next, let's take a look at current life expectancy--which is 77 years of age.  If both spouses die at 77 their combined benefit taken out of the system amount to $2313 X12 X 10= $277,560 on contributions of $360,573.

Sure, there are gobs of flaws in my simple example and the higher your income the less likely it is that you'll breakeven.  I personally know two couples who both passed away before reaching 70!  And to further complicate matters (remember my opening comment: "No doubt, it's a complicated situation") up to 85% of Social Security benefits are subject to income tax!

Many advisors suggest waiting to age 70 to take social security as you benefit grows at 8% per year if you wait.  However, that makes your break even at age 81. given all the benefits you pass by during your waiting period.  What if you die at 79?  No necessarily a good option--but it might be.

good luck my young fellow Valpo grad, life--and taxes--are going to get MORE complicated, not less!

[usc4valpo]

I think Valpo starting another fundraiser can be perceived as quite desperate and more so quite tacky as they were able to exceed their $250M goal.

Two big problems
1. our economy is on the downswing, inflation is high, growth has slowed - yes, we are in a recession - and getting pledges from beloved alums may not be as easy the second time around. You can take so much milk from the dairy farm.
2. the $300M in pledges are pledges and not guaranteed cash to depend on. Since the fundraiser, some may not be able to commit to their pledge because of more difficult times.

Also, there is nothing wrong with retiring before 70 it it is feasible, and for most the social security check is critical to accomplish that. Changing the rules is a delicate thing.

[vu84v2]

vu72: Your calculations considered average income, but median income is more appropriate for this type of analysis since average income is skewed positive because of very high earners and (as you point out) there is a maximum annual SS contribution. The 2022 estimated median is $44,225, which reduces the estimated annual contributions to social security quite a bit.

To usc4valpo's point, I think there is another option (that Valpo may well be considering or even executing). When universities consider new campaigns, most have a quiet period in which they privately work with major/high potential donors. The result (usually a number of years later) is that a new campaign is "announced", but that is has been going on quietly for several years. Thus, a university will announce a $250M campaign and have half of the money pledged already.

To another point, donors to Valpo are very committed and thus the university should have high confidence of receiving most of the committed donations. Of course, there will be some cases where pledges are not made or someone designated X% of their estate - but the estate has declined due to market conditions. My guess is that Valparaiso includes an estimate of this in their long-term financial projections.

[vu72]

When universities consider new campaigns, most have a quiet period in which they privately work with major/high potential donors.

I believe that when Forever Valpo was announced, contributions were at the 135 million level.

[vu72]

vu72: Your calculations considered average income, but median income is more appropriate for this type of analysis since average income is skewed positive because of very high earners and (as you point out) there is a maximum annual SS contribution. The 2022 estimated median is $44,225, which reduces the estimated annual contributions to social security quite a bit.

Perhaps.  I used average income because the Social Security benefit quoted was the "average".  If we used the median then true, the contributions would be less, but so would the benefit.

[usc4valpo]

How long do you think Padilla will be around? Is this stepping stone for him to do bigger leadership jobs?
I am still blown away by the ineptness of 16 priorities, where this dilution will prohibit from tangible, meaningful results.

[David81]

How long do you think Padilla will be around? Is this stepping stone for him to do bigger leadership jobs?
I am still blown away by the ineptness of 16 priorities, where this dilution will prohibit from tangible, meaningful results.

My sense of these things is...if it's a good fit, 6 to 10+ years are a possibility. Even if he believes he has another university presidency in him, it would be great to land the next job via a solid record of success at Valpo. And if he likes it here and proves successful, he may stay a while. For the right person, VU can be a career destination school.

If it's a bad fit, it's not unusual to see a new university president leave within 3 years. It can be a reflection on that individual, on the school, or both. Cut your losses both ways.

[crusadermoe]

Valpo has rock bottom so he can claim a valiant effort to improve it fiscally.  It will take more cuts.

Do a number of factors e is a very good candidate for public universities in growth states and even a flagship one.  I think the over and under on his duration is 4 more years. I think he will be strong enough to force a downsize at Valpo if necessary from a cold eye that he seems ready to bring.

[vu72]

Valpo has rock bottom so he can claim a valiant effort to improve it fiscally.  It will take more cuts.

Do a number of factors e is a very good candidate for public universities in growth states and even a flagship one.  I think the over and under on his duration is 4 more years. I think he will be strong enough to force a downsize at Valpo if necessary from a cold eye that he seems ready to bring.

What are you thinking?  How much smaller do you think Valpo needs to be??

[VU2022]

While I don't think valpo needs to be smaller, what areas are being offered at valpo needs to change. While valpo is considered a liberal arts school, this honestly does not reflect what students are actually studying. Most VU students are in STEM fields, or in the college of business. I see that the buyouts and layoffs of humanities faculty have been much bemoaned on this thread, but at the end of the day it doesn't make business sense to employ faculty for such a small number of students in things like Japanese studies and hurts the greater VU community as the money could go to more populated majors and disciplines. I think that the cuts to various humanities disciplines did not go far enough (that said, I graduated with a stem degree so I am, of course, biased), and I think that crusadermoe is saying that Padilla might still take action to reduce these less popular disciplines and further shore up the budget.

[usc4valpo]

Invest on your strengths, not on programs just to have then exist. STEM and business and strength at Valpo, continue invest in it and keep it that way.