Trinity Board of Trustees Board Retreat September 27

Trinity Board of Trustees Board Retreat, September 27, 2013 1

Board Retreat Agenda 9: 30 am 10: 00 am 11 am 12: 15 1: 30 Introductions and Agenda Overview Strategic Financial Presentation 1. Overall Trinity performance with dashboard data (Pat Mc. Guire) 2. Strategic Financial Ratios (Barbara Lettiere) Financing the Academic Center (Irene Hannan, Barbara Lettiere) Lunch: Academic Center Overview Design/Build Team from Clark/EYP will present the concept design Further discussion of the financing, the project and next steps ACTION ITEM: approve RFP to solicit bank loan proposals 2: 15 2: 30 Next steps including November meeting forecast Adjourn 2

September 27, 2013 STRATEGIC PLAN UPDATE AND KEY PERFORMANCE INDICATORS 3

Trinity Key Performance Indicators Fall 2013 Plan Fall 2013 Fall 2012 Fall 2011 Fall 2010 Fall 2009 Fall 2008 Fall 2007 Fall 2006 Enrollment 3000 2500 2664 2555 2311 2030 1736 1640 1605 Retention (S-F) 90% 79% 81% 82% 80% 78% Retention (F-F) 80% 72% 73% 72% 71% 70% IPEDS GRAD RATE (COHORT YR) 55% 32% (2006) 45% (2005) 35% (2004) 38%/41% (2003) 40% (2002) 36% (2001) SUCCESS RATE (COHORT YR) 70% 60% (2007) 57% (2006) New CAS 350 363 346 367 334 328 263 270 188 1100 1079 1038 1006 962 810 659 648 583 347 (cap) 302 250 305 315 277 235 249 190 % CAS Housed 50% (425) 28% 26% 30% 33% 34% 36% 38% 33% Faculty Salaries 95% of cohort avg 100% $68, 500 99% $66, 200 98% $64, 200 96% $63, 600 96% $61, 800 95% $60, 400 96% $58, 000 96% $56, 000 110 (60% courses taught by FT) 88 (67+21) 83 (63 + 20) 76 65 59 57 54 53 (40% courses taught) 230 213 192 164 136 133 122 642 637 597 532 501 463 427 45% 48% 50% 55% 205 200 183 182 178 171 16% 17% 14% 18% 25% CAS TOTAL Housing FT Instruction (Fac + Instrs) PT Faculty # Courses Taught % Courses Taught by FT 65% FT STAFF Staff Turnover FT Tuition Trinity Grant 15% 52% (2000) “Success Rate” is the measure of degree attainment or continuing enrollment for students in the baseline cohort who are still enrolled at Trinity or who have graduated from Trinity, or who are still enrolled or have graduated from another college. incr @ 3% $20, 970 $20, 550 $20, 150 $19, 750 $19, 360 $18, 800 $18, 250 No more than 40% $8, 388 $8, 220 est. $7, 575 $7, 269 $6, 886 $6, 294 $6, 249 $17, 700 4

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NUMBER OF STUDENTS 2664 2555 2506 2305 2034 1736 1645 1637 1659 1618 1605 1640 1327 6

NUMBER OF STUDENTS Actual 3553 Projected 3409 3486 3153 3005 2664 2555 2714 2859 2506 2305 2034 1645 1637 1659 1618 1605 1640 1736 1327 7

STRATEGIC ENROLLMENT PLANNING Headcount 2013 -2020 STRATEGIC ENROLLMENT MODEL SHOWING TOTAL FORECASTS BY ACADEMIC UNITS AND DEGREE LEVELS AS OF 8 3 2013 FISCAL 2013 Fall 12 Act CAS Sp 13 Act 1038 FISCAL 2014 Fall 2013 969 SP 14 1079 FISCAL 2015 Fall 2014 1019 SP 15 1158 FISCAL 2016 Fall 2015 1048 FISCAL 2017 SP 16 Fall 2016 1178 1048 FISCAL 2018 SP 17 Fall 2017 1183 1110 SP 18 1227 FISCAL 2019 Fall 2018 1150 FISCAL 2020 SP 19 Fall 2019 1250 1170 FY 2021 SP 20 Fall 2020 1267 1128 1220 SPS AA 82 77 83 82 100 97 98 95 100 90 102 86 95 75 86 79 90 SPS UG 518 479 470 445 427 410 407 405 414 450 530 515 585 638 SPS GR 249 222 202 241 255 280 301 287 310 306 330 353 330 335 355 95 82 78 77 98 100 110 106 105 108 110 109 110 125 135 SPS MBA NHP NRS 248 122 200 177 155 140 125 223 216 205 200 205 10 29 46 54 70 75 75 70 65 62 60 67 68 75 75 80 30 55 70 75 90 90 104 105 128 118 105 97 88 98 105 100 103 105 115 133 125 129 120 113 125 117 NHP RNMSN 401 2664 135 TOTALS 150 169 NHP OTM 192 434 213 NHP OTA EDU 30 364 2453 324 2506 344 2433 364 2714 395 2681 410 2859 2806 460 450 3005 2903 495 480 3153 525 3011 530 3409 3252 595 570 3486 3319 625 3553 8

September 27, 2013 STRATEGIC FINANCIAL RATIOS 9

10 FY 2013 …It was a very good year…BUT!

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MOODY’S NOT-FOR-PROFIT PRIVATE COLLEGES AND UNIVERSITIES OUTLOOK Three major trends across the spectrum in current financial environment: 1. Muted Net Tuition Revenue Growth 2. Flat to Declining Enrollment Growth 3. Difficulty controlling expenses for multiple years 16

Moody’s Suggested Actions to Counter Current Environment 17 Ensure Operating Margins Maintain elevated levels of liquidity Reduce debt structure risk and limit use of debt

WHAT DOES THIS ALL MEAN? 18 The Good News � � Financial Ratios are moving in line with the benchmarks. Cost containment and improved accounts receivable balances led to improvement in the Operating Performance Ratios. Debt Ratios continue to be in line with benchmarks. Trinity exceeded the Debt Covenant Ratios. Managerial Financial Imperatives � � � Continued growth in enrollment Continued vigilance over costs Continued emphasis on cash and liquidity availability Continued emphasis on receivables management Continued need to improve endowment Continued focus on strong balance sheet

• • • Cushion Ratio measures the ability to make debt payments with available cash and investments. Cushion Ratio should be > 1. Bond Covenants require 4. 0. 19

• • • Actual Debt Service Coverage Ratio measures the actual coverage of debt payments by annual operations. Actual Debt Service Coverage should be > 1. 0 Bond Covenants call for 1: 1 minimum 20

• • Annual Operating Margin measures the extent to which current-year internally generated resources have contributed to the overall financing of the institution’s operations. The Annual Operating Margin should be positive and have an improving trend. 21

• • Debt Service to Operations indicates how much of an institution’s operating expenses are used for making debt service payments. This ratio should be low. 22

• • Direct Debt to Total Capitalization measures the portion of the balance sheet covered by debt. This ratio should be lower than the median established. 23

• • Viability Ratio measures the availability of expendable net assets to cover debt should the institution need to settle its obligations as of the balance sheet date. A ratio of 1. 0 or > indicates that an institution has enough expendable net assets to cover its debt obligations. 24

• • Return on Net Assets measures the change in net assets that occurred as a result of the operations of the institution. The Return on Net Assets should be positive and have an improving trend. 25

§ Measures the number of days an institution is able to cover its cash operating expenses from Annual Liquidity § Annual liquidity times 365 divided by total expenses less depreciation less additional, unusually large non-cash 26 expenses

§ Measures an institution’s ability to repay its demand debt from its Annual Liquidity § Annual Liquidity divided by demand debt 27

§ Estimates institutional deferred maintenance as well as the operating efficiency of the existing plant facilities § Accumulated Depreciation divided by Depreciation Expense 28

§Measures the annual investment in capital facilities compared to annual depreciation expense §Purchases of property, plant and equipment (from statement of cash flows) divided by depreciation expense 29

30 TRINITY ACADEMIC CENTER Financing Plan for the New Academic Center September 2013

31 Topics for Discussion Q & A Q. How much do we need? A. Project modeling and debt capacity analysis results Q. Where are we going to get it? A. Sources of funding for the project

How much do we need? 32 Current estimate is a maximum $40 M project cost for a 75 -80 K square foot building. This estimate includes ALL costs – hard and soft costs; furniture, fixtures, equipment (FF&E); a contingency fund and capitalized interest.

Where are we going to get it? 33 Total Cost = $40 M Trinity Cash $10 M Funds accumulated from excess cash for the last 4 fiscal years Cap. Campaign $15 M Qualified pledges in hand of $15 M as of Sept. 15, 2013 External Funds $15 M New debt to be secured via RFP process

34 Can Trinity assume $15 M more debt? We engaged Public Financial Management (PFM) to serve as our Financial Advisor for the project. Step 1 involved the assessment of Trinity debt capacity. A 5 -year pro-forma analysis indicated that Trinity could borrow $15 M in debt in addition to current bond debt of $15. 7 M.

Would the $15 M come from the public markets or a direct purchase bond with a lending institution? 35 Based on the following factors, we decided to issue an RFP for a tax-exempt direct purchase bond financing rather than public market bond debt on Trinity’s credit rating: Costs to secure funds are lower for direct purchase No public market “red tape” and disclosure to deal with No need for or cost of a public rating from a ratings agency Direct purchase market is very competitive in DC resulting in favorable rates and terms Provides more flexibility in managing debt and interest rate protection

36 Which lending institutions are in the market for this kind of transaction? The strategy is to “cast a wide net” and there are currently 17 banks on the list to receive the RFP. (A list of the banks was sent to you along with the RFP. )

The RFP Goals 37 The goals of the RFP are to: Select a financing partner Secure the most cost-effective funds with the least onerous “T’s and C’s”. Provide flexibility and options for Trinity.

RFP – Issues to Consider 38 Current outstanding Series 2001 Bonds - $15. 7 M Existing Letter of Credit (issued by Wells Fargo) enhancing the series 2001 Bonds with maturity date of April 2014. Existing interest rate swap on the variable rate Series 2001 Bonds is currently out of the money, estimated mark-to-market of $1. 4 M

RFP – What are we asking for? 39 Bank non-qualified tax-exempt direct purchase a bond of up to $31. 7 M to finance in part the construction of the new Academic Center and the possible refinancing of the Series 2001 Bonds on a non-taxable basis Taxable proposals for construction to permanent financing of the Center both facilities with terms of up to 15 years Variable rate and fixed rate proposals for the $31. 7 M A substitute Letter of Credit for the existing Series 2001 Bond Swap(s) solution

Financing Plan Timetable 40 Key Dates: Sept. 27 Board Approval of RFP Oct. 7 RFP distributed Oct. 28 Proposals due; Select Bank Nov. 4 Negotiate Term Sheet Submit DC Application Nov. 8 Board approval of financing Nov. -Feb. Term sheet, bond documents review Mar. 10 Deal Close

41 We are seeking Board approval to proceed with the issuance of the RFP Discussion on the recommendation to issue the RFP as presented to and approved by the Finance Committee. Motion: “The Board of Trustees approves issuance of the RFP to secure external funding for the new Academic Center. ” Vote on the Motion

Capital Campaign and Building Program Update September 25, 2013 42

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Trinity Capital Campaign Schematic and Building Project Timetable SCHEMATIC DESIGN FINANCING APPROVAL Design/Buil d Team Selected: Clark Constructio n and EYP Architects 2013 BOARD APPROVAL TO MOVE TO GROUNDBREAKING Opening 2 yr construction window Target: May. June 2014 Target: Fall 2016 ZONING AUG SEP OCT NOV DEC 15 8 Groundbrea king 2014 20 JAN MAR MAY SEP OCT DEC 25 2015 JAN 30 MAR MAY SEP DEC 2016 JAN MAY SEP DEC 2017 CAPITAL CAMPAIGN Nucleus $18 M Major Gift = $5 -8 M Public $3 -5 M 46

Campaign Gift Table Schematic: $30 MILLION CAMPAIGN $10 m Nucleus phase $18 M total achieved 50 -100 donors Need 300 prospects 100 -500 donors $5 -8 million Goal Major Gift Phase November 2013 – July 2014 $3 -5 million goal Public Phase Need 1500 prospects August 2014 – December 2014 47

Campaign Planning Schematic: As of 9/25/2013 Target Prospect Pools, Proposal Sectors, Volunteer Leadership Sources (Min. Goal) Individual Sectors Corporate Sectors Project Proposal Sectors: Grants, Public & Private Trinity Alumnae ($5 M) D. C. Corporate ($250 K) Science ($2 M) Technology ($1 M) Federal Grant: NSF, EPA Federal Grant: NY DC CA FL Other: see lists Case: academic excellence and strong Trinity future Case: meeting workforce needs Case: women/minorities in math and science Case: innovation in pedagogy --- learning labs for creators Philanthropists ($2 M) National Corporate ($500 K) Healthcare ($2 M) Student Success ($500 K) (Names on list) Federal Grant: HHS, NIH Kimsey Foundation Johnson & Johnson Case Foundation Kaiser Permanente RWJ Foundation Keck Foundation Kaiser Foundation Case: serving the needs of the community/alignment with the interests of philanthropy Case: innovative strategies for educational success/excellent outcomes Case: meeting critical healthcare workforce needs Case: improving 48 neighborhoods/building selfsufficiency for DC residents through education

SECOND CENTURY CAMPAIGN Key Actions October – December 2013 • MAJOR GIFT PHASE ($5 -8 Million, Gifts from $100 K to $1 M) • • Staff Cultivation/Solicitation Assignments: DC, NY, FL, CA Pat: Top 50 List (Attached) Hugh: Next 50 List Kathleen: Next 50 List, Grants • CORPORATE/FOUNDATION PLAN ($2 Million) • Identify key targets for laboratories and equipment • Conduct preparatory calls and develop proposals • By December should have 10 active proposals in circulation • PREPARE PUBLIC PHASE ($3 -5 Million, Gifts from $10 K to $100 K) • • Identify prospects and prioritize Field events – “roadshows” in key markets: Boston, greater NYC, Philadelphia, Chicago Determine leadership signatories for solicitations Solicitation plan • LAUNCH PUBLIC COMMUNICATION PHASE (Now – End) • CAMPAIGN NEWSLETTER (every other month) • ANNUAL REPORT (next edition of the magazine about the building and campaign) • SOCIAL MEDIA 49

Agenda Forecast 2013 -2014 BOARD MEETINGS 50

Board Agenda Forecast: Key Topics 2013 -2014 TOPIC: November 8, 2013 February 7, 2014 May 2, 2014 Building Program Financial Plan Building Design Approval to proceed Bank Loan Groundbreaking Target Final Design Capital Campaign Plan for Major Gifts Update on Major Gifts Plan for Public Phase Finance FY 13 and FY 14 Performance Tuition for 2014 -2015 FY 2015 Budget Audit Receive Audit Report Review 990 Strategic Plan Overview Revisions to Strategic Plan Discuss Strategic Plan Updates Adopt Envision Trinity 2020 Academic Strategic Initiatives: Spring 14 launches Strategic Initiatives: Fall 14 launches Promotion & Tenure Cases Handbook Revisions Accreditation Update: Nursing, OT Middle States Timetable Update: CAEP (new Education accreditors) Update: Overall accreditation timetable Enrollment Fall Enrollment Report Trend Analysis Financial Aid and Retention Issues Forecast for FY 15 Enrollment and Review Strategic Enrollment Goals Enterprise Risk Management Review ERM Legal/Regulatory Overview Reauthorization Issues and Proposals Key issues in USDE plan for higher ed Legal Update 51

Envision Trinity 2020: Strategic Plan 2013 -2020 52

BY THE YEAR 2020 TRINITY WILL: INTRODUCTION Envision Trinity 2020 establishes the framework for institutional, operational and programmatic strategies to fulfill Trinity’s strategic goals. This plan emanates from Trinity’s mission and vision to sustain Trinity as a global model for the education of students, particularly women and men in urban centers, who seek to become leaders for change in their families, workplaces and communities. • • • This strategic plan continues the threads established in Trinity’s prior strategic plans from Toward Trinity 2000 (1992 -1999), Beyond Trinity 2000 (2000 -2006), and Achieving Trinity 2010 (2007 – 2013). Continuing the same format as the prior plans, Envision Trinity 2020 establishes new measurable goals and clear benchmarks for achievement of the goals. Each goal includes a statement of baseline measurements in the Year 2013 and establishes annual progress goals and ultimate strategic goal targets for 2020. • • Enroll 3500 students in all units and programs Meet or exceed financial benchmarks Offer fully enrolled programs in each academic unit that meet or exceed contemporary academic and professional standards for outcomes, delivered in all contemporary formats and meeting benchmarks for retention and completion Sustain a fully digital and virtual campus with pervasive portable technologies facilitating delivery of instruction and services across all units and departments, reaching students and graduates worldwide Employ a body of faculty and staff of the size and capacity necessary to deliver the quality and scope of programs and services Have an administrative structure, leadership and management capacity sufficient to ensure effective delivery of Trinity’s programs and services Create and manage a body of intellectual and informational resources adequate to support the academic enterprise and that also contribute significantly to the advancement of knowledge in the respective disciplines Be a national model for exceptional services to students and the larger community Meet or exceed external standards for quality and outcomes Operate in a new academic center, upgraded Main Hall and residential facilities, and have a plan in place for library redevelopment 53

STRATEGIC PLANNING DESIGN STRATEGIC ENROLLMENT GOAL (Goal 1) BASELINE 5 -YEAR FINANCIAL MODEL (Goal 2) Enrollment Drivers PROGRAMS (Goal 3) TECHNOLOGY (Goal 4) CAPITAL CAMPAIGN PLAN (Goal 2) Financial Drivers PEOPLE CAPACITY (Goals 5 -6) SERVICE REPUTATION INTELLECTUAL OUTPUT (Goals 7 -8 -9) FACILITIES (Goal 10) 54

STRATEGIC INNOVATION INITIATIVES SCHOOL OF NURSING AND HEALTH PROFESSIONS SCHOOL OF PROFESSIONAL STUDIES • • • Forensic Science Undergraduate Research and the Sciences Early Childhood Education Media Studies Criminal Justice Psychology Human Relations International Affairs and Government Business Administration • • Occupational Therapy including MOT RN-BSN expansion off-site and on-site MSN and Online Opportunities Other Allied Health Opportunities & partnerships • • • Early Childhood Education Clinical Mental Health Counseling School Leadership/Administrative Certificates Educational Policy Online Opportunities • Business Administration Programs with concentrations for UG: Accounting, Hospitality, Human Resources Early Childhood Education Intelligence Program Media Studies Pathways for Professional Student Success Online Opportunities 55 • • •

BOARD OF TRUSTEES Trinity Functional Organization Chart 2013 PRESIDENT PAT MCGUIRE ACADEMIC AFFAIRS STUDENT AFFAIRS ADMISSIONS ENROLLMENT SVCS INSTITUTIONAL ADVANCEMENT OPERATIONS FIINANCE LEGAL VP ADMIN VP STUDENT AFFAIRS VP ADMISSIONS VP ENROLLMENT VP ADVANCMNTVP DEVELPMNT CFO/VP FINANCE General Counsel MICHAEL MALEWICKI BARBARA LETTIERE Sarah Phelps ANN PAULEY HUGH DEMPSEY KAREN GERLACH KELLY GOSNELL CATHY GEIER TRINITY CENTER ENROLLMENT SVC ALUMNAE AFFRS Major Gifts DEAN OF Tamika Hilliard CAS ADMISSIONS BUSINESS OFFICE CHARLES BURT Margy Reagan Kathleen Zeifang STUDENT SERVICES DEAN CAS Estefani Rondon TRACY BERMAN FACULTY CAS MICHELE BOWIE CONFERENCES ANNUAL FUND FINANCIAL AID TECH SERVICES PUBLICATIONS CAMPUS MINISTRY SPS-EDU-NHP DEAN SPS Brittany Irvine MEGHAN HOWARD JASON PIER Alyson Stoffer ADMS Michael Burback Sr. Mary Ellen Dow FACULTY SPS TELAEKAH NICOLE ONLINE FOOD SVC BROOKS CAMPBELL REGISTRAR Gretchen Westgren DEAN NHP HEALTH SERVICES SUSIE POWERS COMMUNICATIONS TIMOTHY RUSSELL (Sodexho) FACULTY NHP MARY Stacey Santiago FACILITIES ROMANELLO TIM KNIGHT DEAN EDU ATHLETICS (Aramark) JANET STOCKS FACULTY EDU TRACY RENKEN HUMAN SECURITY RESOURCES RESIDENCE LIFE ADRIENNE MURRAY CAROLE KING CAT HOPKINS CONTINUING ED ERIN MCHENRY PROVOST/VPAA GINGER BROADDUS Trinity@THEARC Candice Washington Faculty Services Lawander Mc. Farland LIBRARY Jacob Berg ACADEMIC SERVICES KIMBERLY LABOONE 56

Trinity Quick Facts 2013 ENROLLMENT • 2, 503 students enrolled in degree programs in four academic units: – – • • • TUITION AND FINANCIAL AID CAS: College of Arts & Sciences (Trinity College) full-time undergraduate women SPS: School of Professional Studies, part-time working professionals, coed, all degrees NHP: School of Nursing and Health Professions, coed, all degrees EDU: School of Education, coed, graduate degrees 14, 000 alumnae and alumni 1079 undergraduate women in the College of Arts and Sciences 300 resident students/325 maximum housing capacity currently 90% African American, Latina, International students 70% Pell Grant Recipients TOP MAJOR PROGRAMS Undergraduate: Human Relations Nursing Business Administration Psychology Graduate: Business Administration Communication International Security Criminal Justice Communications International Affairs Biology Education Counseling School Leadership • • $20, 970 full-time undergraduate tuition (Fall 13) $31, 591 total full-time undergraduate cost/tuition-room -board-fees 40% discount rate (average Trinity grant of $8, 000) $520 per credit hour SPS undergraduate tuition $670 per credit hour Nursing (NHP) tuition $700 per credit hour graduate tuition $740 per credit hour MBA program FINANCES • • • $35 million budget for Fiscal 2013 $12 million endowment 60% of budget = personnel costs $1 million Annual Fund in Fiscal 2012 $15 million outstanding debt All debt covenants met HUMAN RESOURCES • • 88 full-time faculty and instructional staff 230 adjunct faculty 200 staff employees $68, 500 average 10 -month faculty salary 57