FY 2013
…It was a very good year…BUT!

Account
Description
Operating Activities
Revenue
Tuition
College of Arts & Sciences
School of Nursing and Health Professions
School of Education
School of Professional Studies
Continuing Education
Total Tuition
UNAUDITED
STATEMENT OF ACTIVITIES
Year Ended June 30, 2013
6/30/13
FY 13
Budget 6/30/12
FY12
Budget
19,440,475.00 20,025,650.00 18,796,920.00 18,663,108.00
3,944,950.00
3,994,360.00
3,106,804.00
2,801,600.00
4,521,063.00
4,575,428.00
5,781,501.00
3,675,245.00
9,018,932.00
9,458,105.00
9,632,394.00
7,902,106.00
1,250,470.00
1,251,915.00
1,500,000.00
38,175,890.00 39,305,458.00 37,317,619.00 34,542,059.00
Financial Aid
Net Tuition
8,470,576.00
8,953,880.00
8,099,215.00
7,910,739.00
29,705,314.00 30,351,578.00 29,218,404.00 26,631,320.00
Fees
Gifts & Private Grants
Government Grants/Contracts
Auxiliary Enterprises
Trinity Center
Other
Student Rooms
Operating Interest Income
Other Revenues
Total Operating Revenue
557,935.00
886,512.00
199,256.00
552,750.00
800,000.00
156,138.00
459,601.00
906,480.00
265,802.00
424,938.00
900,000.00
334,113.00
546,098.00
570,750.00
556,630.00
610,000.00
1,769,273.00
2,005,494.00
1,924,138.00
1,928,400.00
1,105,316.00
1,227,620.00
1,217,128.00
1,246,033.00
607,748.00
225,000.00
384,355.00
225,000.00
290,815.00
245,000.00
346,589.00
222,000.00
35,668,267.00 36,134,330.00 35,279,127.00 32,521,804.00

Expenses
Instructional Expenses
Academic Support
Student Services
Facility Services
Institutional Support
Public Service
Interest Expense
Auxiliary
Trinity Center
Other
Total Operating Expenses
Net assets released from restriction
Net Operating Expenses
Net Operating Revenue
UNAUDITED
STATEMENT OF ACTIVITIES
Year Ended June 30, 2013
9,123,101.00
9,835,729.00
8,301,122.00
8,596,563.00
3,408,307.00
4,030,289.00
2,848,979.00
3,121,493.00
3,482,088.00
3,938,967.00
3,405,716.00
3,703,687.00
3,759,487.00
4,445,277.00
3,717,389.00
4,294,698.00
7,508,760.00
9,457,558.00
7,114,491.00
8,532,985.00
32,867.00
723,283.00
39,183.00
753,374.00
169,560.00
779,095.00
209,367.00
559,199.00
768,763.00
1,031,302.00
912,392.00
1,030,699.00
954,491.00
979,452.00
943,107.00
936,307.00
29,719,048.00 34,562,378.00 28,270,295.00 30,897,406.00
(1,172,629.00) (421,811.00) (873,970.00) (215,589.00)
28,546,419.00 34,140,567.00 27,396,325.00 30,681,817.00
7,121,848.00
1,993,763.00
7,882,802.00
1,839,987.00

UNAUDITED
STATEMENT OF ACTIVITIES
Year Ended June 30, 2013
Non-Operating
Other Gains & Losses
Internally Designated Gifts for Acad. Center
Non-operating investment return
Internally Designated Gifts
Accretion Expense
Depreciation Expense
510,957.00
268,577.00
(506,682.00)
0.00
(608,021.00)
0.00
467,903.00
0.00
86,943.00
0.00
0.00
0.00
0.00
(51,432.00)
0.00
(53,350.00)
0.00
(50,858.00)
0.00
(50,858.00)
(1,017,313.00) (1,080,000.00) (1,040,211.00) (1,000,000.00)
Net Income 6,325,955.00
860,413.00
6,738,558.00
789,129.00

Three major trends across the spectrum in current financial environment:
1.
2.
3.
Muted Net Tuition Revenue Growth
Flat to Declining Enrollment Growth
Difficulty controlling expenses for multiple years






The Good News




Financial Ratios are moving in line with the benchmarks.
Cost containment and improved accounts receivable balances led to improvement in the Operating Performance Ratios.
Debt Ratios continue to be in line with benchmarks.
Trinity exceeded the Debt Covenant Ratios.

Managerial Financial Imperatives






Continued growth in enrollment
Continued vigilance over costs
Continued emphasis on cash and liquidity availability
Continued emphasis on receivables management
Continued need to improve endowment
Continued focus on strong balance sheet

• Cushion Ratio measures the ability to make debt payments with available cash and investments.
•
Cushion Ratio should be > 1.
•
Bond Covenants require 4.0.

• Actual Debt Service Coverage Ratio measures the actual coverage of debt payments by annual operations.
•
Actual Debt Service Coverage should be > 1.0
• Bond Covenants call for 1:1 minimum

• Annual Operating Margin measures the extent to which current-year internally generated resources have contributed to the overall financing of the institution’s operations.
•
The Annual Operating Margin should be positive and have an improving trend.

• Debt Service to Operations indicates how much of an institution’s operating expenses are used for making debt service payments.
•
This ratio should be low.

• Direct Debt to Total Capitalization measures the portion of the balance sheet covered by debt.
• This ratio should be lower than the median established.

• Viability Ratio measures the availability of expendable net assets to cover debt should the institution need to settle its obligations as of the balance sheet date.
•
A ratio of 1.0 or > indicates that an institution has enough expendable net assets to cover its debt obligations.

•
Return on Net Assets measures the change in net assets that occurred as a result of the operations of the institution.
•
The Return on Net Assets should be positive and have an improving trend.

 Measures the number of days an institution is able to cover its cash operating expenses from Annual Liquidity

Annual liquidity times 365 divided by total expenses less depreciation less additional, unusually large non-cash expenses

 Measures an institution’s ability to repay its demand debt from its Annual Liquidity

Annual Liquidity divided by demand debt

 Estimates institutional deferred maintenance as well as the operating efficiency of the existing plant facilities

Accumulated Depreciation divided by Depreciation Expense

 Measures the annual investment in capital facilities compared to annual depreciation expense
 Purchases of property, plant and equipment (from statement of cash flows) divided by depreciation expense

Financing Plan for the
New Academic Center
September 2013
21


Q. How much do we need?

A. Project modeling and debt capacity analysis results

Q. Where are we going to get it?

A. Sources of funding for the project


Current estimate is a maximum $40M project cost for a 75-80K square foot building.

This estimate includes ALL costs – hard and soft costs; furniture, fixtures, equipment (FF&E); a contingency fund and capitalized interest.

Total Cost = $40M
Trinity Cash $10M
Cap. Campaign $15M
External Funds $15M
Funds accumulated from excess cash for the last 4 fiscal years
Qualified pledges in hand of $15M as of Sept. 15, 2013
New debt to be secured via RFP process


We engaged Public Financial Management (PFM) to serve as our Financial Advisor for the project.

Step 1 involved the assessment of Trinity debt capacity. A 5-year pro-forma analysis indicated that Trinity could borrow $15M in debt in addition to current bond debt of $15.7M.

Would the $15M come from the public markets or a direct purchase bond with a lending institution?
Based on the following factors, we decided to issue an RFP for a tax-exempt direct purchase bond financing rather than public market bond debt on Trinity’s credit rating:


Costs to secure funds are lower for direct purchase
No public market “red tape” and disclosure to deal with



No need for or cost of a public rating from a ratings agency
Direct purchase market is very competitive in DC resulting in favorable rates and terms
Provides more flexibility in managing debt and interest rate protection

The strategy is to “cast a wide net” and there are currently 17 banks on the list to receive the RFP.
(A list of the banks was sent to you along with the
RFP.)

The goals of the RFP are to:

Select a financing partner

Secure the most cost-effective funds with the least onerous “T’s and C’s”.

Provide flexibility and options for Trinity.


Current outstanding Series 2001 Bonds - $15.7M

Existing Letter of Credit (issued by Wells Fargo) enhancing the series 2001 Bonds with maturity date of April 2014.

Existing interest rate swap on the variable rate
Series 2001 Bonds is currently out of the money, estimated mark-to-market of $1.4M






Bank non-qualified tax-exempt direct purchase a bond of up to $31.7M to finance in part the construction of the new Academic Center and the possible refinancing of the Series 2001 Bonds on a non-taxable basis
Taxable proposals for construction to permanent financing of the Center both facilities with terms of up to 15 years
Variable rate and fixed rate proposals for the
$31.7M
A substitute Letter of Credit for the existing Series
2001 Bond
Swap(s) solution

Key Dates:
Sept. 27 Board Approval of RFP
Oct. 7 RFP distributed
Oct. 28 Proposals due; Select Bank
Nov. 4 Negotiate Term Sheet
Submit DC Application
Nov. 8 Board approval of financing
Nov.-Feb. Term sheet, bond documents review
Mar. 10 Deal Close


Discussion on the recommendation to issue the RFP as presented to and approved by the Finance
Committee.

Motion: “The Board of Trustees approves issuance of the RFP to secure external funding for the new
Academic Center.”

Vote on the Motion