Cooper Union Financials: Overview

Cooper Union Financials: Overview

Robert Spencer, Huron Consulting, September 17, 2013. Presentation given to constituents during Fall 2013.

Outline

Outline

Key points (Robert Spencer, 2013)

Operating Revenues and Expenses

Operating Revenues and Expenses

1970-2012. Revenue and growth rates have diverged in an unsustainable manner since 1990. (Amounts shown here are fully funded per audited financial statements. Operating revenues include 5% spending policy).

Operating Deficits (1970-2012)

Operating Deficits (1970-2012)

Diverging operating expenses and revenues have led to persistent operating deficits. (Robert Spencer, 2013)

Operating Revenues (1970-2012)

Operating Revenues (1970-2012)

Operating revenue growth has been dependent upon income from the Chrysler Building and investment income per the payout policy. (Robert Spencer, 2013)

Operating Expenses

Operating Expenses

Operating expenses are largely comprised of salaries and benefits. Significant growth of interest expense occurred following the fiscal 2007 MetLife loan. (Robert Spencer, 2013)

Higher Education Inflation

Higher Education Inflation

Cash Basis vs Fully-funded Basis

Cash Basis vs Fully-funded Basis

(Robert Spencer, 2013)

Operating/Non-operating Activities

Operating/Non-operating Activities

1996-2012. Performance on endowment assets contribute to or offset operating deficits. However, operating deficits are the long term drivers. (Robert Spencer, 2013)

Total Net Assets (Equity)

Total Net Assets (Equity)

1996-2012. Persistent operating deficits in conjunction with investment returns and other non-operating activities contributed to the continual declines in total net assets. (Robert Spencer, 2013)

Total Net Assets (Equity)

Total Net Assets (Equity)

Including the Chrysler Building. Annual changes in net assets have led to significant declines in net assets - which led to declines in cash and investments. (Robert Spencer, 2013)

Annual Changes in Cash & Investments

Annual Changes in Cash & Investments

Excluding capital expenditures, MetLife loan and 51 Astor Place cash infusion. (Robert Spencer, 2013)

Cash and Investments

Cash and Investments

1996-2013 (excluding Chrysler Building). Declines in net assets have directly contributed to declines in cash and investments balances. Cooper Union must now allow cash and investments to reach the corpus level. (Robert Spencer, 2013)

What is a sustainable model?

What is a sustainable model?

Factors of a sustainable model. (Robert Spencer, 2013)

Revenues & Expenditures 2014-2035

Revenues & Expenditures 2014-2035

The base case of revenues and expenditures is the starting point for discussions of the new revenue model. (Robert Spencer, 2013)

Revenues & Expenses (Tuition Plan)

Revenues & Expenses (Tuition Plan)

2014-2035. The tuition plan allows for revenue growth in tandem with inflationary pressures on expenses. (Robert Spencer, 2013)

Forecasted Investment Pool

Forecasted Investment Pool

The tuition plan, as approved in April 2013, assumes $50 million of financing to avoid impacting the endowment corpus. (Robert Spencer, 2013)

Financial Overview Commentary

Financial Overview Commentary