Post by Sly Fox on Oct 16, 2005 6:14:02 GMT -5
LU finances improving, records show
Ron Brown
rbrown@newsadvance.com
October 16, 2005
Liberty University has emerged from a decade of belt tightening in a relatively strong financial position.
In the past five years, several key indicators show the school becoming less dependent on contributions for its operations.
Those indicators, obtained from the school’s IRS 990 forms (which are required for non-profit organizations) and internal audits, also show student fees paying more of the school’s annual operational costs.
For instance, net student tuition accounted for $28 million in 2001 compared to $82.8 million in 2005, an increase of 195 percent. In that same period, net non-contributed revenue increased from $81.3 million to $122 million, an increase of 50 percent.
Over the past five years, the school’s inventory of property and equipment has almost doubled from an estimated $68.5 million to $132.9 million.
Annual fees for residential students, including tuition, jumped from $13,550 in 2001 to $18,550 in 2005.
LU had 5,026 residential students in 2001 compared to 8,394 this past school year.
Because of that growth, LU’s campus is in a perpetual state of construction.
Just last week, the school hired an engineer to design and obtain permits for five new dormitories, which will house about 420 students. Those new dorms will likely cost more than $5 million dollars.
That puts pressure on the school’s recruiters who must keep new students coming in order to pay the bills. The school’s budget is predicated on an incoming freshman class of at least 3,000 new students.
“My job is to keep the locomotive going down the track,” said the Rev. Jerry Falwell, the school’s chancellor and chief recruiter. “It’s the accountants’ job to keep it on the tracks.”
Jerry Falwell Jr., the school’s vice chancellor, said the shift away from a donation-enhanced budget has put the school’s operations on less volatile financial footing.
Simply put, while donations may come and go, student fees are, for the most part, dependable.
That is the concept LU had in mind when it moved to stabilize its financial picture in the 1990s.
Problems confronting the school had their origin two decades earlier during the heyday of the Rev. Falwell’s television ministry, the Old-Time Gospel Hour.
LU and OTGH shared the intoxicating effects of millions of dollars in donations to the television ministry.
LU was a university heavily subsidized by OTGH money and its students were receiving a heavily subsidized education. The university lacked a coherent long-range financial plan.
In the early 1980s, Falwell, who spearheaded The Moral Majority, was a national political figure, who could have the ear of President Ronald Reagan upon request.
As his profile grew, the donations to his ministry increased.
“We didn’t have to charge the students a fraction of what we’re charging them today,” Falwell said.
But along with low fees came a dependency on donated money.
“The Old Time Gospel Hour was the engine in the 1970s and most of the 1980s,” Falwell said.
Then the late 1980s televangelist scandals hit.
In 1988, television evangelist Jimmy Swaggart resigned his ministry after it was revealed he had consorted with a prostitute.
In 1989, another televangelist, Jim Bakker, was convicted of defrauding his contributors of millions of dollars after admitting having an illicit sexual affair with a church secretary.
At Bakker’s request, Falwell briefly took over leadership of Bakker’s ministries but quickly dissociated himself.
Falwell said last week that he doesn’t think OTGH contributions were hurt by his attempt to help Bakker.
“It was the scandal that hurt,” he said. “All ministries were hurt. There was a credibility crunch. It ruined forever the ability of the television ministry to sustain the university.”
Soon, OTGH’s contributions dipped from around $50 million per year to about $15 million. Liberty University was caught in the crossfire.
By 1992, the school’s debt stood at about $83 million. Paying on the debt was making the operation of the school virtually impossible.
“There was never enough money to meet obligations,” Falwell Jr. said. “We were having to borrow from one entity to pay another, even payroll. It was very stressful.”
In 1993, the school got some relief when two local businessmen, Jimmy Thomas and Dan Reber, purchased about $33 million of the school’s debt and forgave it.
The school limped along financially until 1997 when insurance mogul Art Williams paid off $20 million of the debt. Other donors enabled the school to pay off another $10 million.
With that relief, the school was able to pay on the remaining $20 million of debt and still maintain enough money for operations.
A management team was put in place to make sure that incoming revenue was sufficient to meet the school expenditures.
Part of the school’s plan was to ratchet down the amount of institutional scholarships while ratcheting up fees students pay.
Now, the school has about a $12 million annual surplus that it can put into the bank.
In the past four years, the school’s floor space has more than doubled, growing from 1.1 million square feet in 2002 to 2.3 million square feet in 2005.
In 2004, the school was given the 888,000 square foot Ericsson building by Hobby Lobby, an Oklahoma City crafts firm. That building now houses LU’s law school, seminary, indoor track and the LeHaye Student Center, which has five gym floors and an NCAA regulation swimming pool.
The school is building a new football operations center and an ice rink, which will house the school’s ice hockey team and will be open to the public at certain times.
Falwell has been assigned the task of putting together a $1 billion endowment to serve as a long-term financial underpinning for the school.
In the late 1990s, the school took a hit when school officials convinced Falwell Sr. to lessen his role as a recruiter in order to slow the school’s growth down. Those officials believed that slowing growth would make the school more manageable.
Enrollment started to decline.
Falwell said capping enrollment was not what he envisioned for the school.
“When you stop growing, you become stagnant,” he said. “My job is the keep the growth going. Momentum is something hard to get and hard to maintain.”
In 2001, Falwell began recruiting again and enrollment began to climb.
The school now has 17,949 students in its residential and distance learning programs.
Still, some problems remain.
The newly founded school of law is not yet at the break even point.
“Somewhere in the next five to seven years the law school will be self sufficient,” Falwell predicts.
Perhaps the biggest problem area is the school’s sports programs, which lost $7.4 million in 2004, a $1.5 million increase over its losses in 2001.
Falwell Sr. said even that can be fixed.
“A major university without men’s and women’s sports is not looked on as a true, full-blown university,” he said.
“There are only two sports you can upgrade that will put you in the black. That’s basketball and football.”
Falwell said the women’s basketball team did its job when it went to the NCAA tournament’s Sweet 16 last year.
“All coaches have incentive bonuses if they achieve certain goals,” Falwell Jr. said.
This year’s football team is 1-5 and is in last place in the Big South conference.
“I have pressure on me,” Falwell said. “Only football can make the big money. People don’t come to watch you play football or basketball. They come to watch you win. Until you win, they don’t come.”
At 72, Falwell’s sports goals are clear. He wants a competitive football team that will move into Division 1 in his lifetime. He wants the sports department to be more financially self-sufficient.
“The university won’t feel good until the financial losses in the sports programs are cut in half,” he said. “We’re going to solve it. We’re going to get there."
Ron Brown
rbrown@newsadvance.com
October 16, 2005
Liberty University has emerged from a decade of belt tightening in a relatively strong financial position.
In the past five years, several key indicators show the school becoming less dependent on contributions for its operations.
Those indicators, obtained from the school’s IRS 990 forms (which are required for non-profit organizations) and internal audits, also show student fees paying more of the school’s annual operational costs.
For instance, net student tuition accounted for $28 million in 2001 compared to $82.8 million in 2005, an increase of 195 percent. In that same period, net non-contributed revenue increased from $81.3 million to $122 million, an increase of 50 percent.
Over the past five years, the school’s inventory of property and equipment has almost doubled from an estimated $68.5 million to $132.9 million.
Annual fees for residential students, including tuition, jumped from $13,550 in 2001 to $18,550 in 2005.
LU had 5,026 residential students in 2001 compared to 8,394 this past school year.
Because of that growth, LU’s campus is in a perpetual state of construction.
Just last week, the school hired an engineer to design and obtain permits for five new dormitories, which will house about 420 students. Those new dorms will likely cost more than $5 million dollars.
That puts pressure on the school’s recruiters who must keep new students coming in order to pay the bills. The school’s budget is predicated on an incoming freshman class of at least 3,000 new students.
“My job is to keep the locomotive going down the track,” said the Rev. Jerry Falwell, the school’s chancellor and chief recruiter. “It’s the accountants’ job to keep it on the tracks.”
Jerry Falwell Jr., the school’s vice chancellor, said the shift away from a donation-enhanced budget has put the school’s operations on less volatile financial footing.
Simply put, while donations may come and go, student fees are, for the most part, dependable.
That is the concept LU had in mind when it moved to stabilize its financial picture in the 1990s.
Problems confronting the school had their origin two decades earlier during the heyday of the Rev. Falwell’s television ministry, the Old-Time Gospel Hour.
LU and OTGH shared the intoxicating effects of millions of dollars in donations to the television ministry.
LU was a university heavily subsidized by OTGH money and its students were receiving a heavily subsidized education. The university lacked a coherent long-range financial plan.
In the early 1980s, Falwell, who spearheaded The Moral Majority, was a national political figure, who could have the ear of President Ronald Reagan upon request.
As his profile grew, the donations to his ministry increased.
“We didn’t have to charge the students a fraction of what we’re charging them today,” Falwell said.
But along with low fees came a dependency on donated money.
“The Old Time Gospel Hour was the engine in the 1970s and most of the 1980s,” Falwell said.
Then the late 1980s televangelist scandals hit.
In 1988, television evangelist Jimmy Swaggart resigned his ministry after it was revealed he had consorted with a prostitute.
In 1989, another televangelist, Jim Bakker, was convicted of defrauding his contributors of millions of dollars after admitting having an illicit sexual affair with a church secretary.
At Bakker’s request, Falwell briefly took over leadership of Bakker’s ministries but quickly dissociated himself.
Falwell said last week that he doesn’t think OTGH contributions were hurt by his attempt to help Bakker.
“It was the scandal that hurt,” he said. “All ministries were hurt. There was a credibility crunch. It ruined forever the ability of the television ministry to sustain the university.”
Soon, OTGH’s contributions dipped from around $50 million per year to about $15 million. Liberty University was caught in the crossfire.
By 1992, the school’s debt stood at about $83 million. Paying on the debt was making the operation of the school virtually impossible.
“There was never enough money to meet obligations,” Falwell Jr. said. “We were having to borrow from one entity to pay another, even payroll. It was very stressful.”
In 1993, the school got some relief when two local businessmen, Jimmy Thomas and Dan Reber, purchased about $33 million of the school’s debt and forgave it.
The school limped along financially until 1997 when insurance mogul Art Williams paid off $20 million of the debt. Other donors enabled the school to pay off another $10 million.
With that relief, the school was able to pay on the remaining $20 million of debt and still maintain enough money for operations.
A management team was put in place to make sure that incoming revenue was sufficient to meet the school expenditures.
Part of the school’s plan was to ratchet down the amount of institutional scholarships while ratcheting up fees students pay.
Now, the school has about a $12 million annual surplus that it can put into the bank.
In the past four years, the school’s floor space has more than doubled, growing from 1.1 million square feet in 2002 to 2.3 million square feet in 2005.
In 2004, the school was given the 888,000 square foot Ericsson building by Hobby Lobby, an Oklahoma City crafts firm. That building now houses LU’s law school, seminary, indoor track and the LeHaye Student Center, which has five gym floors and an NCAA regulation swimming pool.
The school is building a new football operations center and an ice rink, which will house the school’s ice hockey team and will be open to the public at certain times.
Falwell has been assigned the task of putting together a $1 billion endowment to serve as a long-term financial underpinning for the school.
In the late 1990s, the school took a hit when school officials convinced Falwell Sr. to lessen his role as a recruiter in order to slow the school’s growth down. Those officials believed that slowing growth would make the school more manageable.
Enrollment started to decline.
Falwell said capping enrollment was not what he envisioned for the school.
“When you stop growing, you become stagnant,” he said. “My job is the keep the growth going. Momentum is something hard to get and hard to maintain.”
In 2001, Falwell began recruiting again and enrollment began to climb.
The school now has 17,949 students in its residential and distance learning programs.
Still, some problems remain.
The newly founded school of law is not yet at the break even point.
“Somewhere in the next five to seven years the law school will be self sufficient,” Falwell predicts.
Perhaps the biggest problem area is the school’s sports programs, which lost $7.4 million in 2004, a $1.5 million increase over its losses in 2001.
Falwell Sr. said even that can be fixed.
“A major university without men’s and women’s sports is not looked on as a true, full-blown university,” he said.
“There are only two sports you can upgrade that will put you in the black. That’s basketball and football.”
Falwell said the women’s basketball team did its job when it went to the NCAA tournament’s Sweet 16 last year.
“All coaches have incentive bonuses if they achieve certain goals,” Falwell Jr. said.
This year’s football team is 1-5 and is in last place in the Big South conference.
“I have pressure on me,” Falwell said. “Only football can make the big money. People don’t come to watch you play football or basketball. They come to watch you win. Until you win, they don’t come.”
At 72, Falwell’s sports goals are clear. He wants a competitive football team that will move into Division 1 in his lifetime. He wants the sports department to be more financially self-sufficient.
“The university won’t feel good until the financial losses in the sports programs are cut in half,” he said. “We’re going to solve it. We’re going to get there."
www.newsadvance.com/servlet/Satellite?pagename=LNA/MGArticle/LNA_BasicArticle&c=MGArticle&cid=1128767570972&path=
OK, guys. That doesn't sound like the vote of confidence we heard for Karcher just a week ago.
