UNCW Financial Update
Presentation to the Board of Trustees
Business Affairs Committee
February 13, 2014
Page 2
UNCW Financial & Budget Update
• FY 2013 Audited Financial Statements
• Moody’s Credit Review
• Budget Update: FY14 and FY15
Page 3
FY 2013 AUDITED STATEMENTS
Page 4
FY 2013 Financial Highlights
• State Auditor issued unqualified opinion
• No material deficiencies in internal controls ‐ on‐going
effective internal control environment
• Continued growth in net position
Page 5
2013 Change in Net Position
in (000's)
Operating Income (Loss)
Operating Revenues
Operating Expense
Total Operating Income (Loss)
Nonoperating Revenues (Expenses)
Income (Loss) before other revenues,
expenses, gains and losses
Other revenues, expenses, gains and losses
Change in Net Position
Net Position July 1
Change in Net Position (above)
Net Position June 30
Change in Net Position (%)
*Restated.
FY 2011
FY 2012*
FY 2013
$140,028
254,608
(114,580)
$145,653
252,024
(106,371)
$154,112
267,650
(113,538)
122,572
110,638
121,862
7,993
4,267
8,324
11,952
19,945
24,445
28,712
19,207
27,531
351,039
19,945
370,984
370,984
28,712
399,696
399,696
27,531
427,227
5.68%
7.74%
6.89%
Page 6
Net Position Increased $27.5 MM
2013 Net Position $427,227
($ Thousands)
Restricted Nonexpendable
$65,774 (15%)
Unrestricted
$70,910 (17%)
Invested in Capital Assets
$272,634 (64%)
Restricted Expendable
$17,908 (4%)
Page 7
Unrestricted Net Position
Increased $10.9 MM
Unrestricted Net Position
Unrestricted Trust
Overhead
Housing
Union
Food Service
Rec Ctr/Intramurals
ITSD Communications
Ed & Tech Fees
Other
Total
FY12*
FY13
22,459,071
3,016,650
9,902,431
10,679,402
3,947,561
3,661,119
1,628,791
‐
4,668,956
59,963,981
24,364,679
2,639,248
9,710,320
15,066,414
3,717,953
3,283,614
1,794,360
1,602,820
8,730,915
70,910,321
Prior to FY13 Ed & Tech Fees were considered General Funds.
* Restated
Page 8
Diverse Revenue Sources
2013 Revenue by Source $306,676
($ Thousands)
Sales & Services, Net
$44,189 (14%)
Capital/Noncapital Grants
$41,780 (14%)
State Appropriations & State Aid
$96,879 (32%)
Investment Income
$8,561 (3%)
Other
$20,540 (7%)
Noncapital Gifts, Net
$2,973 (1%)
Non‐Federal Grants & Contracts
$2,007 (1%)
Other Revenues
$6,999 (2%)
Federal Grants & Contracts
$8,496 (3%)
Additions to Endowments
$1,750 (<0%)
Student Tuition & Fees, Net
$93,042 (30%)
Page 9
Expenses by Nature
2013 Expense by Nature $279,145
($ Thousands)
Supplies and Materials
$21,261 (8%)
Services
$50,058 (18%)
Scholarships and Fellowships
$17,661 (6%)
Salaries and Benefits
$156,786 (56%)
Utilities
$7,298 (3%)
Depreciation
$14,586 (5%)
Interest
$10,761 (4%)
* Fall 2012 undergrad headcount growth
Other
$734 (<0%)
Page 10
MOODY’S CREDIT REVIEW
Page 11
Moody’s Higher Education Outlook
• 2014 12‐18 month outlook: Negative
• No public universities upgraded in 2013
• Key Drivers
–
–
–
–
Weak revenue growth and building expense pressure
Heightened competition, driven in part by changing business models
Flat to declining government funding
Political and regulatory pressure create uncertainty
• Counterpoints
– Proven adaptability to weak economic conditions
– High fundamental demand for high education
– Stronger earnings by educational attainment
Source: 2014 US Higher Ed, NFP, & K‐12 School Outlooks,
Moody’s Investors Service, December 4, 2013, p. 3.
Page 12
UNCW Debt Summary 2004-13
$300
$250
254.2
249.1
233.4
239.6
$200
$ Millions
197.8
$150
145.0
140.7
2007
2008
$100
96.6
$50
70.9
67.5
2004
2005
$0
2006
Year
2009
2010
2011
2012
2013
Page 13
Return on Net Position
10%
8%
6%
7.74%
4%
Higher is
Better
6.89%
5.68%
2%
3.10%
2.07%
0%
‐2%
‐4%
‐3.25%
‐6%
2008
2009
2010
2011
UNCW Results
2012
2013
2014 2012
2015
Moody’s
A1 Median
Page 14
UNCW Expendable Resources to Debt
0.75x
0.65x
0.70x
0.55x
0.45x
0.35x
0.44x
0.37x
0.25x
0.33x
0.27x
0.15x
2008
2009
2010
2011
UNCW Results
0.30x
2012
2013
Moody’s
2014 2012
2015
A1 Median
Higher is
Better
Page 15
UNCW Debt to Operating Revenue
1.00x
0.80x
0.89x
0.91x
0.93x
0.93x
0.84x
0.70x
0.60x
0.40x
2008
Lower is
Better
2009
2010
2011
UNCW Results
2012
2013
2014
Moody’s 2015
2012
A1 Median
Page 16
Moody’s Rating
• Revised outlook from stable to positive
• Affirmed underlying ratings
– General Revenue Bonds: A1
– UNC Pool Revenue Bonds (2010 C/D): A1
– Certificates of Participation (COPs): A2
Revenue Bonds
Moody's
Aaa
Aa1
Aa2
Aa3
A1
A2
A3
Baa1
Baa2
Baa3
Non Investment Grade
Certificates of Participation
Moody's
Aaa
Aa1
Aa2
Aa3
A1
A2
A3
Baa1
Baa2
Baa3
Non Investment Grade
Page 17
Moody’s UNCW Rating Rationale
Strengths
•
•
•
•
Enrollment growth and strong demand
Improved operating performance with healthy cash flow margin of 12.5% in FY13
45% increase in cash and investments
Membership in UNC system and history of state support
Challenges
•
•
•
Leveraged compared to peers with expendable financial resources of .39x
Slowed state revenue support
Significant future growth limited without further capital investment
Factors that could make the rating go Up/Down
•
•
Up: “Continued strong operating performance with at least flat state funding
leading to augmentation of financial resources as it relates to debt”
Down: Diminished state support for capital & operation; new debt in excess of
resources; decline in operating performance; and declines in enrollment/demand.
Page 18
Questions, Observations, Comments
Page 19
BUDGET UPDATE: FY14 AND FY15
Page 20
FY 2013-14 Projected Tuition Revenue
(Regular Term + Distance Education)
Dollars
Regular Term
Distance Education
FY 13‐14 Budget
FY 13‐14
Spring
Revenues
FY 13‐14
Projected Total
Tuition Revenue
Variance
Resident Students
$38,559,022
$21,156,407
$19,483,365
$40,639,772
$2,080,750
Non‐Resident Students
$28,064,490
$14,811,131
$13,337,075
$28,148,206
$83,716
Totals
$66,623,512
$35,967,538
$32,820,440
$68,787,978
$2,164,466
$2,922,638
$1,660,961
$1,196,990
$3,410,018
$487,380
$637,724
$486,655
$339,277
$1,003,236
$365,512
$3,560,362
$2,147,616
$1,536,267
$4,414,254
$852,891
$70,183,874
$38,115,154
$34,356,707
$73,202,232
$3,017,358
Resident Students
Non‐Resident Students
Totals
Grand Totals
FY 13‐14
Fall
Revenues
Page 21
FY 2013-14 Projected Tuition Revenue
(RN to BSN Program)
Dollars
RN to BSN AP
Headcount
SCHs
FY 13‐14 Budget
Fall
AP 1 + AP2
Actuals
Spring
AP3
Actuals
Summer
AP4 + AP5 + AP6
Projections
Resident Students
$415,237
$99,355
$93,235
Non‐Resident Students
$127,775
$3,276
$6,552
Totals
$543,012
$102,631
$99,787
Projections
Actuals
Variance
AP1
52
64
12
AP2
84
95
11
AP3
116
145
29
AP1
236
291
55
AP2
367
456
89
AP3
505
699
194
Variance
Thru
AP3
$27,117
• Original projections were 90% in‐state / 10% out‐state
• Overall headcount & SCHs are above projections through AP3
• Year‐end revenues projected to be right at budget due to lower out‐state students
Page 22
FY 2014-15 UNCW
Potential Legislative Reductions
•
SL 2013‐360 (FY 2013‐15 Biennial Budget)
•
Year 1 reductions (2013‐14):
•
•
•
•
Management Flexibility: $2,751,507
Total: $3,940,134
Year 2 additional reductions (2014‐15):
•
•
•
•
Strategic Directions: $1,118,627
Strategic Directions: $528,963
Management Flexibility: $326,363
Total: $855,326
FY 2014‐15 Supplemental Budget
•
•
OSBM memorandum dated December 12, 2013
2% reduction plan based on UNCW’s FY 14‐15 certified appropriation
•
•
$2,021,954 reduction
Campus will develop a $3.0 million reduction plan ($855,326 + $2,021,954)