The Erskine College & Theological Seminary Board of Trustees met Thursday and Friday, February 20-21 for its first meeting of 2014. The trustees focused on financial considerations which must precede the approval of a budget for fiscal year 2014-15, a task they anticipate taking up at the May meetings.
Representatives from CapinCrouse LLP, the consulting audit firm Erskine engaged two years ago, met with trustees and advisors on Thursday. The firm’s presentation highlighted the areas that need special attention for the overall financial health of the institution. Trustees then conducted a seminar style session sharing their findings from books the auditors had suggested they read in preparation for the discussions.
In their report, the auditors explained to the trustees that Erskine’s financial health required focused attention in three primary areas: optimizing revenue, increasing income from charitable giving, and reducing annual draws on the endowment. They stressed that Erskine possesses considerable strengths in its academic offerings (its “product”) and its capital assets such as the buildings and grounds.
Noting that the size of Erskine’s endowment is suitable compared to peer institutions, the auditors emphasized that the institution faces the challenge of adjusting its revenue model to reduce its reliance on the endowment. CapinCrouse told trustees that the endowment spending rate must be addressed quickly and prudently to secure Erskine’s future financial health and to preserve the endowment fund.
At the meeting, Senior Vice President for Finance and Operations Greg Haselden summarized the input he had received from CapinCrouse and SACS representatives by saying that Erskine’s primary challenge lies in generating and optimizing revenue.
On Friday the board took two significant initial steps toward addressing the areas outlined by the auditors. First, trustees charged the administration with drafting a 2014-15 budget that reflected a reduction of approximately $600,000 in spending from the endowment.
Second, the board voted to keep tuition in both the college and seminary at current levels for the 2014-15 fiscal year. Setting tuition is among the preliminary steps taken annually to allow for the creation of the final budget. For several years, the board has approved tuition increases. Acting President Dr. Brad Christie said that keeping tuition flat next year “demonstrates Erskine’s commitment to affordability in a continuously challenging economy.”
Closely related to tuition and endowment spending are Erskine-funded scholarships and grants, the largest single expense line item in the budget. Haselden noted that achieving a balanced budget within the parameters set by the board may require some adjustments in that area. “While tuition will remain the same, our fixed costs are likely to increase simply due to inflation. The budget will have to reflect those realities,” he said. However, he noted, in keeping with spirit of the board’s decision not to increase tuition, this would be done with an eye toward minimizing the net impact on total out-of-pocket costs for students and their families.
Board Chairman David Conner, reflecting on the board’s discussions said, “Erskine is addressing some sobering financial challenges. We have asked God to provide according to His good providence, specifically praying for the wisdom and resolve necessary to address issues in a way that ensures Erskine’s long-term financial well- being.”
In other business:
- Trustees heard reports on the updates to Erskine’s liberal arts core curriculum recently approved by the faculty and the receipt of a grant to fund several initiatives that seek to bring the Christian concept of vocation and calling into the heart of Erskine’s identity and mission.
- The Committee on Trustees and the ARP Synod’s Subcommittee on Nominations for Erskine presented a proposed slate of new board members that will be submitted to the ARP Committee on Nominations for approval at Synod in June.
- The board passed a motion to begin renovation work on the roof of Philomathean Hall, Erskine’s oldest building; 75 percent of the necessary designated funds have been received and the remainder are pledged within one year.
- The Seminary Committee reported the renewal of a five-year contract with the U.S. Army Medical Command (MEDCOM) to provide training to chaplains through the Doctor of Ministry degree program. The Seminary has for many years been privileged to provide training for chaplains from all branches of the U.S. military and estimates that as many as ten percent of current active duty Army chaplains have studied at Erskine Seminary.
- The trustees established the Dr. J.L. Maloney Scholarship Fund within the seminary’s endowment fund as designated by a gift from the Catawba Presbytery of the ARP Church.
- The board authorized the granting of degrees to students as approved by the faculties of the college and seminary.
- Trustees elected officers for the 2014-15 year: Bill Cain, chair; Bobby McDonald, vice chair; Max Bolin, secretary.