Messiah College FY13 Financial Plan FY13 ParametersJanuary 4, 2012

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Text of Messiah College FY13 Financial Plan FY13 ParametersJanuary 4, 2012

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  • Messiah College FY13 Financial Plan FY13 ParametersJanuary 4, 2012
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  • FY13 Budget Forum Budget Methodology Revenue Sources Expense Drivers Financial Planning Q & A
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  • 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%.
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  • Revenue Sources Undergraduate Enrollment Tuition and Fee Increases Financial Aid (Discount Rate) Auxiliary (Room, Board, Campus Store) Graduate Programs Endowment Other (Conferences, Camps etc.) Gifts UG Net Tuition & Fees (NTR) (>1/2 of Total Revenue) (=1/4 of Total Revenue)
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  • 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)
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  • HEPI Higher Education Price Index CPI Consumer Price Index
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  • Messiah Natl Average*Difference 2011-12$36,776$38,589($1,813) *Source: The College Board. For private nonprofit four-year private colleges/universities. Tuition, Fee, Room & Board Increases FY11FY12FY13 Gross Tuition26,68027,53628,638 SGA Fee230 Room4,3204,4604,638 Board3,8403,9604,118 Student Services Fees570590 Comprehensive Fee35,64036,77638,214 FY11 % IncrFY12 % IncrFY13% Incr Gross Tuition3.01%3.21%4.00% SGA Fee0.00% Room3.60%3.24%4.00% Board3.50%3.13%4.00% Student Services Fees0.00%3.51%0.00% Comprehensive Fee3.07%3.19%3.91%
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  • * Excludes Graduate Programs
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  • Graduate Programs Projected Operating Results (in 000s) FY13FY14FY15 FFTE 211 244 270 Revenue$2,126$2,516$2,892 Compensation($1,569)($1,904)($2,054) Direct Operating Expenses($297)($300)($306) Gross Margin$260$312$531 Includes projections for the following programs: Art Education Conducting Counseling Education Higher Education Youth & Young Adult Ministries
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  • 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)
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  • Revenue Summary (in 000s) FY13 FY12 $ % Budget Change Net Tuition and Fees*$50,744$50,142$6021.2% Endowment Income 6,085 5,894 1913.2% Interest & Trust Income 555 617 (62)-10.0% Gov't Appropriations 741 727 142.0% Gifts 1,359 1,294 655.0% Other Revenue 4,448 4,338 1102.5% Auxiliary Enterprises 22,489 21,670 8193.8% Total Revenue$86,421$84,682$1,7392.1% * Includes graduate programs.
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  • Key Expense Drivers Salary & Wages Benefits Inflation (CPI and HEPI)
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  • Projected Wage & Benefit Increases FY13 Projected Compensation Increases: Faculty Salary Pool Increase4.00% Staff/Admin Salaries & Wages Pool Increase3.50% Benefits Increase7.76% Total Compensation Increase4.75% Percentages above exclude impact of Graduate Programs.
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  • 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
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  • FY13 Expense Distribution
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  • Expense Summary (in 000s) FY13 FY12 $ % Budget Change Salary and Benefits$50,396$47,979$2,4175.0% Services and Supplies 19,256 19,052 2041.1% Purchases 3,988 3,949 391.0% Utilities 4,112 4,027 852.1% Debt Service 4,649 4,544 1052.3% Capital 4,020 5,131 (1,111)-21.6% $86,421$84,682$1,7392.0%
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  • Balanced Budget (in 000s) FY13 FY12 $ % Budget Change Net Tuition and Fees*$50,744$50,142$6021.2% Endowment Income 6,085 5,894 1913.2% Interest & Trust Income 555 617 (62)-10.0% Gov't Appropriations 741 727 142.0% Gifts 1,359 1,294 655.0% Other Revenue 4,448 4,338 1102.5% Auxiliary Enterprises 22,489 21,670 8193.8% Total Revenue$86,421$84,682$1,7392.1% Salary and Benefits$50,396$47,979$2,4175.0% Services and Supplies 19,256 19,052 2041.1% Purchases 3,988 3,949 391.0% Utilities 4,112 4,027 852.1% Debt Service 4,649 4,544 1052.3% Capital 4,020 5,131 (1,111)-21.6% Total Expense$86,421$84,682$1,7392.0% Net Income00
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  • FY13 Budget Summary (in 000s) Sources of Funds: Tuition and Fee Increase $2,439 Decreased Capital Spending 1,111 Auxiliary Enterprises 820 Endowment & Other Revenue 317 $4,687 Uses of Funds: Increased Financial Aid (1,837) Salary & Wage Increases (1,454) Benefits Increase (963) Services & Supplies Increase (204) Utilities, Debt Service & Purchases (229) $(4,687) Total Net $0
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  • Financial Planning Reserves Coverage Return on Net Assets A Balanced Budget Assets to Debt 1.NTR 2.Giving 3.Efficiencies 4.Entrepreneurial KPMG,NACUBO Ratio Analysis in Higher Education
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  • Financial Planning Long-term planning multi-year perspective. Link to strategic planning. More effective predictive modeling. Match funding to strategic initiatives.
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  • 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%.
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  • Questions & Answers
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  • Projected Wage & Benefit Increases FY12FY13 Proposed Compensation Increases: Faculty Salary Increase3.20%4.00% Staff/Admin Salaries & Wages Increase2.50%3.50% Benefits Increase5.76%7.76% Total Compensation Increase3.53%4.75% Percentages above exclude impact of Graduate School
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  • FTE StudentsTuitionNTRDisc Rate 725.0$25,000$9,787,50046% 711.8$25,000$9,787,50045% 699.1$25,000$9,787,50044% 686.8$25,000$9,787,50043% 675.0$25,000$9,787,50042%
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  • Sensitivity Parameters Approximate Sensitivity Parameters Estimated value of a 1% change FY12 data 1% tuition$610,000 (net of fin. aid) 1% FTFTFr fin aid$225,000 (i.e., 44% to 45%) 1% Enrollment$425,000 1% R&B$155,000 1% All Salaries$400,000 (w/benefits) 1% faculty$155,000 (w/benefits) 1% staff/admin$212,000 (w/benefits) 1% student$33,000 1% variable costs$113,000
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  • 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
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  • 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.
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  • CPI-W versus Wage & Salary Increases Prior Multi-Yr Wg & Sal Incr3-yr5-yr Faculty Base5.3%11.2% Fac avg w/step/promo/ret.**7.3%15.9% Assistant Professor10.2%20.7% Associate Prof (w/steps) ***9.3%19.1% Full Professor8.5%17.6% Prior 3 YRPrior 5 YR CPI-W 5.6%12.1% Est.