- change ups
Calvin lays out five-year financial plan
College will attack debt and sell some non-core properties.
Calvin College has a new five-year plan.
The strategic initiative detailing the college’s steps toward financial stability and higher accountability in all aspects was approved by the college’s board of trustees late last month.
The plan is known as “Calvin 2019: Strengthen, Support, Secure,” and it lays out the framework for strengthening the institution’s future by honing in on six areas over the next five years.
Calvin College President Michael K. Le Roy said the college has done strategic planning for a number of years, but the old plan “was ending this year, so we needed to chart a new course.”
“Planning is very, very wise in an environment of higher education,” said Le Roy. “In an atmosphere where so much is changing, dynamics are hard to predict.”
The new plan focuses on education, scholarships, community, diversity and inclusion, finances and external partnerships. Each theme was created with the intention to further the college’s mission while honoring its historic roots in Reformed Christianity. The plan will sharpen Calvin’s programs and operations to “provide a solid platform for the college to do more ambitious and creative work.”
According to Le Roy, the highest priorities are strengthening the educational framework and facing the college’s financial challenges. He said Calvin wants to be clear and succinct about what it promises so students have an understanding of what they will be gaining by attending the institution. In addition, the strategic plan will assess, measure and evaluate how well graduates have done in meeting the goals of professional competency and values of responsibility and caring.
Matt Kucinski, the college’s media relations manager, said that during the planning process a number of new programs were suggested and “merit further consideration and analysis.” Calvin already has incorporated a new graphic design major, which is cost-neutral, according to Kucinski.
“It will be important to maintain a rigorous process of review of any proposals to add new programs to include not just the merit of the idea, but also the impact on faculty, student enrollment, financial resources and existing programs,” he said.
Calvin’s second priority is establishing a “strong financial footing,” according to Le Roy. Upon arriving at the college in 2012, Le Roy commissioned an independent task force to take a hard look at the financial situation the institution would be facing in the coming years. Between 1997 and 2012, Calvin incurred a long-term debt of $115 million and a short-term debt of $7 million. Although the proportion of debt is not uncommon in academic institutions, the operating budget did not have a debt service payment built into the regimen. As of now, the debt service payment is 6.1 percent of the operating budget and anticipated to increase to 9.2 percent by 2017, with only 0.9 percent built into the existing budget.
The report indicated the financial predicament was a result of trying to use gifts and investment returns to avoid dipping into the operating budget for funds. Some of the factors that contributed to the debt were construction costs that exceeded funds raised by the college, and a negative return on real estate properties.
“There is a whole series of strategies and activities that we will undertake between now and 2017 to help establish that financial footing,” said Le Roy.
Since October 2012, the operating deficit has been reduced from $6.2 million to $4.5 million for the 2013-14 year, and the $7 million in short-term debt was paid in full as of Feb. 1, 2013. The strategic plan also plans to raise $25 million by 2017 to pre-pay principal on long-term debt, which is being accomplished through fundraising.
“The college has been overwhelmed by the positive response already from faithful donors committed to the mission of Calvin College,” said Kucinski.
Calvin also plans to sell non-core real estate assets in addition to fundraising. Kucinski said the college has defined core assets based on investment needed to keep property in good repair, adjacency to campus, current patterns of academic and co-curricular use, and annual net cash flow and depreciation.
“Based on these criteria, the college has listed the Weyhill building, the Glen Oaks East apartment complex and 1320 East Beltline,” said Kucinski. “The college has additional properties they’re considering.”
During the 2014-2015 fiscal year, the college plans on selling at least one of the non-core properties, retiring the stand-alone curriculum center, and combining campus events, advancement and conference services into one. According to Kucinski, the curriculum center collection will either be “integrated into the education department or library, or be discontinued if not necessary for accreditation or programmatic content.”
Le Roy said community involvement was instrumental in forming the five-year plan.
“In the end we have a plan that is owned by the community, which I believe is very important,” he said.