Connected Campus

3.10.1 Financial Stability

 

The institution’s recent financial history demonstrates financial stability.

 

_X_  Compliance           ___  Partial Compliance          ___  Non-Compliance

 

Narrative

 

Mid-America Baptist Theological Seminary’s (MABTS) recent history demonstrates financial stability. Although the school is debt-free, it has experienced major changes in unrestricted revenues in several ways. Due to the downturn in the economy and donors giving fewer dollars, who have traditionally given over 2 million dollars annually, unrestricted donations have not met budget projections. Students are taking fewer classes and technology costs related to the implementation of the online program in fall 2015 have escalated expenditures. As a result, the trustees and executive administration of the school have formulated a long-term business plan [1] to increase tuition revenue at least ten percent annually and to use unrestricted invested monies (not endowed) temporarily, allowing time for the tuition and enrollment strategies to mature. Spending restraints and substantial unrestricted net assets have provided the stability needed to operate in the fluctuating economic climate. Additionally, the Academic Vice President (AVP) and the Academic Council are strategizing to increase enrollment streams by widening ministry scope in degree offerings (online, biblical counseling, worship) [2]. In 2014, the MABTS trustees voted to use 3 million dollars of the school’s invested funds to retire the long-term debt of the seminary’s student housing complex, thus creating a new revenue stream. Furthermore, the institution continues to receive permanently endowed monies for its named student scholarships. The institution has seen increases in temporary and unrestricted funds. The trustees and Vice President for Finance and Operations (VPFO) have the necessary qualifications and experience to manage and sustain the institution’s financial stability.

 

Financial Stability

 

Financial stability is evidenced at the institution by first understanding its revenue sources, trends, and tuition structure. A clear demonstration of financial stability is seen in the school’s financial base, asset base, and undesignated assets.

 

Revenue Sources. An analysis of MABTS’s revenue for FYE June 30, 2015 is reflected in figure 1 below. It indicates that the primary sources of revenues are unrestricted gifts, investment draws, and tuition and fees. The audit for the most recent fiscal year reveals that contributions and tuition account for 92% of all revenue [3]. Many of the contributors have a longstanding relationship with the school and have given consistently over the years. The Chief Development Officer (CDO) [4] of the seminary directs the office of Institutional Advancement and manages the relationships with each of the constituent donor groups. Unrestricted contributions are made up of gifts from alumni, individuals, churches, and organizations [5]. These constituent groups have remained resilient even through economic downturns. While the level of giving decreased, each constituent category demonstrated loyalty to the school as they continued to donate even in difficult times. Such loyalty is attributable to the relationships that have been nurtured and cultivated with alumni, individuals, churches, and organizations through the efforts of the President and the office of Institutional Advancement. In 2014-15, the actual average cost for a student to attend MABTS was $21,751 [3], but the average income from tuition and fees per student was $4,029. The 1.8 million dollars received in contributions helped to underwrite the costs of operation, thus allowing students to receive training at an affordable tuition rate.

 

Figure 1. Sources of Revenue, Fiscal Year 2014-15

 

Revenue Trends. The tuition revenue for FYE 06-30-2014 was $1,149,530, a slight decrease from the previous year primarily due to students taking fewer semester hours [6]. Over the past ten years, tuition revenues dropped to a low of $925,000 annually in 2011 [7] when a tuition strategy was put in place that began to increase rates on an annual basis. This strategy halted a five-year decline in tuition revenues and provided the seminary with the largest tuition revenues in its 40-year history. Another key source for funding operations comes from draws against unrestricted invested monies which the trustees and administration watch closely. This strategy was to lower the dependence on draws annually, from $1,626,728 in 2015 to $1,585,284 in 2016 [8]. MABTS took $2,450,000 in draws for the year 2008-09 and the amounts drawn each year, calculated in the budget proposal, have decreased every year since for a net decrease of 35% [8]. The growth of the invested monies has been similar to that of other institutions and the trustees have placed a Social Restriction Policy [9] upon the investment strategies for the seminary. This policy prevents institutional investors from buying certain stock that may be tracked to alcohol, gambling, and other social vices. Over the past five years, the returns have fluctuated from a high of 18.28% to a low of .07% [10]. The success of proposed academic programming and continued strength in fundraising is critical to the continued decrease in draws against unrestricted invested monies.

 

Regarding contributions, the trend over the most recent five-year period was a moderate decline in each of the four categories, as described in figure 2. The 2015 fiscal year reflected a slight increase in total giving primarily due to the performance of organizational giving. MABTS increased development efforts, as reported in Comprehensive Standard 3.2.12.

 

Figure 2. Unrestricted Giving Sources

 

Tuition Structure. As demonstrated in figure 3, the administration has increased tuition rates charged per hour over the last six years and has eliminated the Tuition Guarantee that allowed students to have a frozen hourly rate of tuition throughout their degree. By implementing these strategies, the institution has continued to achieve tuition revenues in excess of 1 million dollars in each of the fiscal years since implementation [7].

 

Financial Base. The recent Statements of Financial Position and Statements of Activities for FYE 2014 and 2015 [3] best illustrate the seminary’s sound financial base and demonstrate financial stability. As of 2006, the school’s total assets were 45 million dollars with only 2 million dollars in liabilities. Ten years later in 2015, total assets were 36.8 million dollars with only $434,000 in liabilities [11] and no long-term debt. Therefore, all unrestricted seminary revenues are available to fund the current operations of the institution and are not used to finance spending from prior years.

 

Asset Base. The total assets of MABTS as of 2015 are 36.7 million dollars, with Unrestricted Net Assets (UNA) of 32.7 million dollars and Unrestricted Net Assets Excluding Plant Debt (UNAEP) of 9.8 million dollars [7 and 11]. Of the total, a very healthy mix of over 33% is in cash, investments, and current receivables (to be collected in less than one year), and about 62% of the total is in capitalized assets [3]. The endowed assets of MABTS have grown $203,000, or 10% over the past five years from $2,005,950 to $2,209,347 [9]. The temporary restricted funds have grown $312,000, or 28% over the same period, from $1,115,064 in 2011 to $1,427,411 in 2015 [10].

 

Figure 3. Historical Tuition Rates

 

Undesignated Assets. According to the 2015 Audit [3], the school maintains 36.7 million dollars in unrestricted net assets. Of that total, $9.8 million is either: 1) unrestricted - general; or 2) is merely designated by the Board of Trustees. Therefore, 30% of MABTS’s unrestricted net assets have no restriction, which gives the institution great flexibility in navigating the addition of new programs as well as withstanding market and economic volatility.

 

Audited Financial Statements

 

MABTS has a sound financial base as evidenced by unqualified opinions on audited financial statements, which gives the school the ability to weather economic downturns even while experiencing less-than-projected enrollment [12]. The seminary paid off all debt in 2007 [7] and remains completely debt free with no plans for entering into debt for the foreseeable future. The liabilities to assets, or solvency ratio, divides the total liabilities of $434,828 by the total net assets of $36,351,754 [3], yielding a very low (.012:1) ratio which is extraordinary for any educational institution. The position of having no long-term debt has helped to establish a high level of solvency for the school.

 

The audited financial statements and related management letters for the fiscal years ended June 30, 2011 [13], 2012 [14], 2013 [15], 2014 [6], and 2015 [3] are included. MABTS is committed to handling its financial resources with the highest of integrity and have established the necessary internal controls to meet and/or exceed generally acceptable accounting procedures. The financial stability of an institution can be gauged in part by its ability to fund its mission year by year. Also important is its ability to endure seasons when revenues do not meet expectations or unforeseen expenses arise. MABTS’s financial history demonstrates that it has provided annual operating funds and has accumulated significant reserves that bolster the institution’s financial strength to provide a level of insulation from fiscal emergencies.

 

Leadership Qualifications and Experience

 

Each trustee at MABTS has the legal duty as a fiduciary to exercise direction and oversight of the seminary with absolute good faith, with undivided loyalty, and with a commitment to seek the best interests of the seminary [16]. Likewise, the VPFO has earned a Master of Business Administration and has 33 years of professional experience [17]. He directs the income and disbursement of seminary monies and provides budget supervision, budgetary analysis, and the maintenance of proper financial books and records [4].

 

Documentation

 

1. MABTS 2020 Business Plan

2. Academic Council Meeting Minutes

3. 2015 Audited Financial Statements 

4. 2014-15 Employee Handbook, p. 23-24

5. Five-Year Fundraising Data

6. 2014 Audited Financial Statements

7. Restatement of Net Assets Without Plant and Plant Debt

8. History of Draws Against Invested Monies

9. Investment Policy for MABTS

10. Fund Balance History – Unrestricted, Temporary and Restricted

11. Private Institutions Financial Worksheet

12. Enrollment History

13. 2011 Audited Financial Statements

14. 2012 Audited Financial Statements

15. 2013 Audited Financial Statements

16. 2014-15 MABTS Trustee Handbook, p. 3-9

17. VPFO Vitae

Sign Up


Sonis Web
New or prospective student?  Sign-up here for access to application information, grades, and account billing status.

 

Career Center

Alumni may register here to have their resume loaded into our career center.  Allow us to connect you with churches looking for qualified personnel.

 

Witness One:Seven Report
New Students may sign-up for access to the Witness One:Seven site here.

 

Login


Sonis Web
Students, Faculty, staff may access their SONIS web account here.  Please enter your SONIS ID and password/pin number for access.

 

Career Center
Sign-in here to access your resume and make changes.

 

Witness One:Seven Report
Students may update their Witness One:Seven information here.

 

Student Email
Sign-in here to access your student email account. Your Office 365 account name is [Student_ID]@mabts.edu (e.g. MA1234567@mabts.edu). Your password is your MABTS assigned PIN.

 

PhD Form
Click here to access the PhD form.