APPENDIX A INFORMATION REGARDING BRADLEY UNIVERSITY

Transcription

1 APPENDIX A INFORMATION REGARDING BRADLEY UNIVERSITY NOVEMBER 2017

2 BRADLEY UNIVERSITY SUPPLEMENTAL INFORMATION RELATED TO BOND ISSUANCE (APPENDIX A) November 2017

3 TABLE OF CONTENTS Page THE UNIVERSITY... 1 General Information... 1 Governance... 1 Current Members and Officers of the Board of Trustees... 1 Selected Members of the Administration... 3 Academic Programs... 4 Turner School of Entrepreneurship and Innovation... 5 Faculty and Employees... 5 Student Enrollment... 6 Distance Learning Initiative... 6 Student Recruitment... 7 Extracurricular Activities and Campus Life... 7 Tuition and Fees, Room and Board... 8 FINANCIAL INFORMATION CONCERNING THE UNIVERSITY Financial Aid Management s Discussion of Financial Results Future Capital Improvements Endowment Gifts, Grants and Bequests Debt Outstanding Physical Plant Insurance i -

4 THE UNIVERSITY General Information Bradley University (the University ) is an Illinois not-for-profit corporation which owns and operates a private, nonsectarian university located on an 85-acre campus in Peoria, Illinois. The University was founded as Bradley Polytechnic Institute in The University was formed through the generosity and determination of Mrs. Lydia Moss Bradley on 17.5 acres in Peoria. Bradley became a four- year college offering bachelor s degrees in 1920, and a full university offering graduate programs in 1946, at which time it was renamed Bradley University. The University serves an annual average of approximately 5,400 undergraduate and graduate students. The University offers a comprehensive array of undergraduate and master s programs in liberal arts, science, education, communications, health sciences (including nursing and physical therapy), business, and engineering. The University is highly-ranked in national and regional educational review publications and is known for its combination of liberal arts program with professional undergraduate and graduate programs in education, business, nursing, physical therapy and engineering. The University also operates a successful distance learning initiative with initial focus in graduate nursing and counseling programs. Graduates of the University have become leaders in every field of endeavor with more than 67,000 alumni world-wide. The University is the only comprehensive post-secondary and graduate institution based in the immediate area. It shares post-secondary education with a community college (a two year institution) and the University of Illinois College of Medicine-Peoria campus. A large state university and three small liberal arts colleges are within a 45 mile radius. Peoria is the center of an industrial and agricultural region whose productivity helps make Illinois one of the nation s largest exporters to foreign countries. Governance The Articles of Incorporation of the University provide that the management of the corporation be entrusted to a board of trustees. The number of trustees may not be less than 15 and no more than 30 and the elected membership includes the University President (ex officio voting member) and two alumni trustees. There are currently 23 members. Except for two alumni trustees who each serve one four-year term, trustees are elected for a term of four years and may serve for two consecutive four-year terms. A trustee serving for two consecutive four-year terms is eligible for re-election after one year has elapsed after the end of the second term. Current Members and Officers of the Board of Trustees The following is a list of the current board of trustees of the University and their principal business or professional activity: Trustee Mr. Douglas S. Stewart, Chairman * Mr. Calvin Butler, Jr., Vice Chairman * Mrs. Joan Janssen, Secretary * Principal Activity Retired Regional President, PNC Bank, Peoria IL CEO, Baltimore Gas & Electric Company, Baltimore, MD Community Volunteer, Peoria, IL A-1

5 Mr. David P. Bozeman Mr. Gary A. Burk * Mr. Robert J. Clark * Ms. Cheryl D. Corley * Mr. Michael Cullinan Trustee Mr. Stephen Gorman * Ms. Georgina E. Heard-Labonne Ms. Kathleen M.B. Holst * The Honorable Robin L. Kelly Principal Activity Vice President, Amazon, Seattle, WA Retired COO & Vice Chairman, Duke Realty, Indianapolis, IN Chairman/CEO, 3Bear Energy, LLC, Denver, CO Midwest Correspondent, National Public Radio, Chicago, IL Chairman, United Contractors Midwest, Inc., Peoria, IL CEO, Borden Dairy Company, Dallas, TX Executive Director, Cosmopolitan Chamber of Commerce, Chicago, IL President, RCMS, Warrenville, IL U.S. House of Representatives, Matteson, IL Mr. Wayne G. Klasing Retired President/Chief Executive Officer, Klasing Industries, Inc., Joliet, IL Mr. Jonathan E. Michael Chairman/CEO, RLI Corp., Peoria, IL Mr. Gary M. Peplow Attorney & Retired Managing Partner, Heyl, Royster, Voelker & Allen, Peoria, IL Mr. Gary R. Roberts President, Bradley University, Peoria, IL Dr. Lindsey R. Rolston Orthopedic Surgeon, Henry County Hospital, New Castle, IN Mr. George E. Ruebenson Retired President, Allstate Property Liability Co., Lincolnshire, IL The Honorable James E. Shadid * Chief U.S. District Judge, Central District of Illinois, Peoria, IL Mr. Gerald L. Shaheen Retired Group President, Caterpillar Inc., Peoria, IL Mr. Mel Smith * President, Investment Concepts, Inc., Chicago, IL Mr. Rajesh K. Soin Chairman/Chief Executive Officer, Soin International, Dayton, OH Mr. W. Philip Wilmington Chairman, STS Capital Bancshares Corporation, St. Charles, IL * Member of the Executive Committee. The Board of Trustees meets quarterly. The Board is supported by a committee structure that includes Executive, Academic Planning, Finance and Property, Nominating and Governance, Compensation, Student Affairs, Advancement and Audit Committees. A-2

6 Selected Members of the Administration President. Gary R. Roberts graduated from Bradley University in 1970 with a Bachelor of Arts degree in economics and minors in history and speech. He received his J.D. in 1975 from Stanford University. He is considered one of the foremost sports law experts and scholars in the country. He is Dean Emeritus and was the Gerald L. Bepko Professor of Law of the McKinney School of Law at Indiana University in Indianapolis, where he served as Dean from Prior to that, he spent 24 years at Tulane University Law School serving as Vice Dean, Deputy Dean, and the Sumter Davis Marks Professor of Business Law. He was also the Founder and Director of the first sports law program in the United States while at Tulane. After graduating from Stanford Law School, he clerked for Judge Ben Duniway of the U.S. Court of Appeals for the Ninth Circuit in San Francisco for a year before going into private practice with the law firm of Covington & Burling in Washington, D.C. Roberts has continued to practice law part-time throughout his academic career with a focus on antitrust and sports law. He has been a frequent commentator on broadcast and in print media on sports-related legal and business issues. He was the on-air legal analyst for the NFL network and a lead analyst for other national media outlets during the National Football League lockout in He has testified before congressional committees on nine occasions on sports matters. Provost and Sr. Vice President for Academic Affairs. Dr. Walter Zakahi received his undergraduate degree from Bradley University in 1978, his Ph.D. and his M.A. in Communications Studies from Bowling Green State University. He joined the Bradley University community in July 2016 as Provost and Sr. Vice President for Academic Affairs. Prior to coming to Bradley, Dr. Zakahi was Provost and Vice President for Academic Affairs at Keene State College in Keene, New Hampshire, since Previously, he had served as Dean of the College of Arts and Humanities at Minnesota State University at Mankato and had held various faculty and administrative positions at New Mexico State University, West Virginia University and Rutgers University. Sr. Vice President for Business Affairs, Treasurer. Gary Anna has served as Vice President for Business Affairs and Treasurer, since He was also the University s interim president from June 1999 until June Prior to being named Vice President, he served two years as University controller and was previously employed six years by PricewaterhouseCoopers. He is active in the community and, among other community involvement, currently serves as Treasurer of the Bielfeldt Foundation and is past Chairman and current member of both the Advisory board of OSF St. Francis Medical Center Community and the Human Service Center. He is a member of the American Institute of Certified Public Accountants and the Illinois CPA Society and graduated from Bradley University in 1975 with a B.S. in accounting. Vice President for Student Affairs. Nathan Thomas was named Vice President for Student Affairs in June He oversees Campus Recreation and Facilities, Fraternity/Sorority Life, Multicultural Student Services, Student Activities, Student Judicial System, Learning Assistance, Student Support Services, Academic Exploration Program, Orientation, Advisement, Transfer Student Services, Health Center, Counseling Center, Residential Living, Wellness Programs, Leadership and Public Service, University Experience Course, and Smith Career Center. Prior to becoming V.P. for Student Affairs, Mr. Thomas was the Interim V.P. for Student Affairs, Executive Director for Residential Living and Leadership and Director of Greek Life. Mr. Thomas received his Bachelor s degree in business at Southeast Missouri State University and Master s degree at Eastern Illinois University. He is currently pursuing his doctorate in Educational Administration at Illinois State University. Previously he was the Director of Chapter Services Phi Delta Theta General Headquarters. Vice President for Advancement. Jacob Heuser joined the Bradley Office of Advancement in 2007 and played an active role in the successful completion of the Campaign for a Bradley Renaissance. A-3

7 In his role as Vice President for Advancement, he is responsible for the institution s fundraising and alumni engagement initiatives. During his time on the hilltop, he has assisted in the development efforts for the Caterpillar College of Engineering & Technology, the Foster College of Business, Corporate & Foundation Relations, and the Bradley Fund. Prior to arriving at Bradley, Mr. Heuser worked in development at Saint Louis University focusing on the areas of Planned Giving and the University s primary capital initiative a new on-campus athletic arena. Subsequently, he spent time with the Gabriel Group as a fundraising consultant and with the Phi Delta Theta International Fraternity. Mr. Heuser has a B.S. in marketing management from Missouri State University. Vice President for Enrollment Management. Dr. Justin Ball has been at Bradley since 2012 and was appointed Vice President for Enrollment Management in As the chief enrollment officer, his portfolio includes undergraduate admission and recruitment of both freshmen and transfer students, student financial services, admissions operations and records, and all of the technology associated with enrolling Bradley University's next class of new undergraduate students each year. Dr. Ball has most recently worked at St. Ambrose University in Iowa. He earned his Bachelor of Science in Computer Science, Bachelor of Arts in Theology, and M.B.A. from St. Ambrose University, and his Ph.D. in Educational Policy and Leadership Studies from University of Iowa. Controller. Pratima Gandhi has served Bradley as Controller since 1997, having joined the University in 1993 as the Chief Accountant and Assistant Controller. As Controller, she participates in meetings of the Finance and Property and Audit Committees of the Board of Trustees. She provides support in all financial matters to the Sr. Vice President for Business Affairs, Treasurer. Her responsibilities include all financial functions, student financial services, payroll, ID card systems, grants and sponsored programs, and endowment accounting. She is active on several boards of directors in the community. She has a B.S. in accounting from Indiana University-Purdue University. She also has previous experience as a Director of Finance for a human services agency and as an Internal Auditor at Virginia Polytechnic Institute and State University. Academic Programs The University currently offers undergraduate and graduate academic programs in business, communications, education, engineering, fine arts, health sciences, liberal arts and sciences, and technology. The University is accredited as a master s-level degree-granting institution by the Commission on Institutions of Higher Education of the North Central Association of Colleges and Schools and received a 10-year reaccreditation during the academic year. The University s professional accreditations for colleges, departments, and selected graduate programs include the following: AACSB- The International Association for Management Education, Accreditation Board for Engineering and Technology, American Chemical Society, American Council for Construction Education, American Dietetic Association (didactic program approval), Commission on Accreditation in Physical Therapy Education (undergraduate), Council for Accreditation of Counseling and Related Educational Programs, Council on Accreditation of Nurse Anesthesia Educational Programs, National Association of Schools of Art and Design, National Association of Schools of Music, National Council for Accreditation of Teacher Education, and the National League for Nursing Accrediting Commission (NLNAC). The University is also committed to serving the public and private sectors of Central Illinois through its research and creative productions, a variety of outreach programs and centers, as well as workshops, short courses, and certificate programs. The University s independence allows it to adapt its programs effectively to meet the current and future needs of society while maintaining excellence in those A-4

8 programs. Throughout all of its programs the University emphasizes collaboration, teamwork, and active learning. Regardless of academic major or professional aspiration, all students are required to complete a program of general education which is heavily supported by the humanities. This curriculum is designed to give all students a common background and prepare them to participate in a global society. Thus, the University s graduates not only possess the technical skills of their professions, they become professionals in a more profound way because they have been educated to be flexible and adaptive, to appreciate diversity and change, and to be responsible citizens and individuals who appreciate humane values. Turner School of Entrepreneurship and Innovation The University has established the first stand-alone School of Entrepreneurship and Innovation in the country that involves all five undergraduate colleges and builds upon Bradley s applied programs and entrepreneurial expertise. The Princeton Review and Entrepreneur magazine has ranked Bradley University s entrepreneurship program among the top 25 in the nation. Faculty and Employees The University s highest priority is excellent teaching supported by research, scholarships and creative activities. Faculty not only provides personalized attention in learning and academic advising, but also serve as mentors and professional guides to their students. The University has a distinguished full-time faculty of 355, of whom 57% have tenure. Approximately 94% of the tenured and tenure-eligible full-time faculty members hold terminal degrees in their respective fields of study. The student faculty ratio in the fall of 2017 was 12 to 1. Faculty are not represented by a union. The University has labor agreements with unions representing approximately 160 support service employees. These employees work principally in the facilities support service areas and the police department. No work stoppages have occurred since inception of these labor agreements, the earliest of which was effective in Retirement benefits are available to all full-time employees of the University through Teachers Insurance and Annuity Association - (TIAA), a national organization which funds pension benefits for educational institutions. Under this fully-vested plan, the University and plan participants make monthly contributions to TIAA to purchase individual annuities equivalent to accrued retirement benefits. A-5

9 Student Enrollment Recent enrollment trends for the University are as follows: APPLICATIONS, ACCEPTANCES AND ENROLLMENTS (FALL SEMESTER) Undergraduates Applications Freshmen 8,969 9,009 9,186 9,786 10,232 Transfers 1, Total 10,244 9,889 10,046 10,657 11,093 Acceptances Freshmen 6,004 5,793 6,033 6,832 7,313 Transfers Total 6,696 6,283 6,521 7,318 7,805 Enrollments Freshmen 1, ,093 1,265 Transfers Total 1,351 1,175 1,148 1,295 1,508 For additional discussion relative to historical and estimated enrollment trends of the University, see also FINANCIAL INFORMATION CONCERNING THE UNIVERSITY Management s Discussion of Financial Results herein. FRESHMAN PROFILE (FALL SEMESTER) Total enrollment 1, ,093 1,265 Mean ACT Mean SAT 1,135 1,148 1,140 1,101 1,094 ENROLLMENTS Undergraduate Graduate Actual (Fall) New Freshmen New Transfers Headcount for Undergraduates Headcount For Graduate Students Total Full-Time Equivalent , , , , , , , , ,473 1,125 5, , ,649 1,195 5,272 Distance Learning Initiative The University, in partnership with Pearson Embanet, recently launched five accredited distance learning programs as follows: Master of Science in Nursing Nursing Administration (RN to MSN); A-6

10 Master of Science in Nursing Family Nurse Practitioner (BSN to MSN-FNP); Family Nurse Practitioner Certificate (MSN to FNP); Doctor of Nursing Practice Family Nurse Practitioner Track (BSN to DNP); Doctor of Nursing Practice Leadership Track (MSN to DNP). The coursework for these programs is 100% online and is priced at the graduate student tuition rates of the University. Graduate headcount enrollment in the above table includes 687 graduate distance learning students in Student Recruitment The University s enrollment management operation emphasizes a strong value proposition and uniqueness of a high quality educational experience at a mid-sized comprehensive institution located just three hours from three major metropolitan areas: Chicago, St. Louis and Indianapolis. This strategy is a hub for an expanded geographic recruiting strategy. The enrollment management division has developed a comprehensive financial assistance program that has allowed for management of the new student class with sustained quality and a manageable discount rate. The use of technology has also played an important role in this context as well. A user friendly electronic application option allowed more students to apply to the University in their desired mode of communication and a financing calculator available on the University s website ( was used to reinforce the manageability of an investment in an education at the University. Enrollment management continues to build on the University s strong reputation in the Midwest and in targeted areas nation-wide. The University s competitors for students are both private and public. A few of the competitors Marquette, Butler and Drake are also private medium-sized universities. The University of Illinois is the University s greatest competitor for students as measured by application overlap. Other institutions with which the University competes include larger public universities like Northern Illinois University, Illinois State University, Purdue University and the University of Iowa; and smaller private institutions like Illinois Wesleyan University and Augustana College. Extracurricular Activities and Campus Life The nature of the University s educational experience places a premium on involvement in extracurricular activities. There are more than 240 sponsored organizations and activities that reinforce the opportunity for students to value collaborative efforts and the concept of teamwork in co-curricular and extracurricular activities. The University is a residential campus with over 80% of students living on or immediately adjacent to the University. Programmed activities occur within the student residential, Greek and off-campus student organizations as well as featuring the Markin Family Student Recreation Center. Activities are coordinated through a variety of efforts involving student government, residential hall staff, Greek leadership, Student Activities Council of the University, and the Lewis Burger Center for Student Leadership and Public Service. The University has a Division I intercollegiate athletic program and offers the opportunity for the University s students to participate at the highest levels of the NCAA playing field. The University fields a total of 15 men s and women s teams that compete at the NCAA Division I level. In addition, the University sponsors a variety of club and intramural competitions. A-7

11 Tuition and Fees, Room and Board The University funds a principal portion of costs for educational programs through tuition. The following table lists the standard charges for a full-time student for the through academic years: % Inc % Inc % Inc % Inc % Inc. Tuition & Fees $29, % $30, % $31, % $32, % $32, % Room & Board 1 9, % 9, % 9, % 10, % 10, % Total $38, % $ % $41, % $42, % $43, % 1 Double occupancy for room. Certain other fees may be charged or reductions in board costs may be experienced depending upon the course of study or meal plan selected, respectively. [Remainder of page intentionally left blank] A-8

12 SUMMARY OF TUITION RATES SELECTED PRIVATE INSTITUTIONS Institution One-Year Change Two- Year Change Three-Year Change Bradley University $30,844 $31,480 $32,120 32, % 4.6% 6.8% Illinois Private Institutions De Paul 35,071 35,680 37,020 38, % 7.7% 9.5% IIT 41,645 43,680 45,214 46, % 5.7% 10.8% Ill. Wesleyan 40,844 42,520 44,142 45, % 7.8% 12.3% Knox 40,497 41,847 43,285 44, % 7.4% 11.0% Millikin 29,620 30,630 31,924 33, % 8.3% 12.0% Augustana 37,236 38,466 39,621 40, % 6.3% 9.9% Northwestern 47,251 49,047 50,855 52, % 7.4% 11.5% Average * 38,881 40,267 41,723 43, % 7.2% 11.0% Midwest Regional Peer Institutions Tulsa 35,370 39,571 41,024 42, % 6.4% 19.1% Butler 35,652 37,010 38,360 40, % 8.6% 12.7% Evansville 31,776 32,946 33,966 35, % 7.4% 11.4% Creighton 35,360 36,422 37,606 38, % 6.4% 9.6% Drake 32,246 33,696 35,206 39, % 15.9% 21.1% Marquette 35,930 37,170 38,470 39, % 7.3% 11.0% Average * 34,389 36,136 37,439 39, % 8.6% 14.1% Comprehensive Area Leaders Santa Clara 43,812 45,780 47,112 49, % 8.9% 13.8% Valparaiso 34,760 36,160 37,450 38, % 7.2% 11.5% Richmond 46,680 48,090 49,420 50, % 5.9% 9.1% Villanova 46,116 47,616 49,430 51, % 7.7% 11.2% Average * 42,842 44,412 45,853 47, % 7.4% 11.3% As noted above, the University also competes for students with a number of public universities in Illinois, primarily the University of Illinois at Urbana-Champaign, Northern Illinois University and Illinois State University. The average tuition and fees charged by these three public universities for the academic year was $14,064. * Averages do not include the University. Includes mandatory fees. A-9

13 FINANCIAL INFORMATION CONCERNING THE UNIVERSITY Financial Aid The University makes every effort to assist its students with their demonstrated financial needs by combining various forms of financial assistance. These resources include scholarships, grants, loans and student employment. For the academic year, over 94% of the University s students received some form of financial assistance. Some of the federal and state financial aid programs apply to tuition and fees, whereas others provide for living expenses such as transportation, housing and personal expenses. The following table sets forth a five-year summary of financial assistance administered by the University for its students: Bradley University $49,893,150 $48,901,362 $51,393,487 $54,472,758 $62,770,076 Federal Grants (1) 5,831,610 5,409,243 4,899,425 5,719,490 $6,926,909 Loans (2) 22,692,459 21,420,012 20,599,143 19,886,612 $20,932,915 State Grants (3) 5,793,596 4,962,635 4,951,684 4,971,380 $5,822,279 Other (4) 22,477,432 21,623,321 21,450,789 29,038,084 $32,287,661 Private loans 7,163,224 8,145,139 9,343,901 8,564,862 $9,236,974 $113,851,471 $110,461,712 $112,638,429 $122,653,186 $137,976,814 (1) Includes Pell Grants, Supplemental Educational Opportunity Grants and College Work Study support. (2) Includes Nursing Loans, Federal Perkins Student Loans and undergraduate Federal Direct Student Loans. (3) State of Illinois Monetary Award Program. (4) Includes Parent s Loan Program, employee tuition remission, graduate Stafford loans and other. Various external sources of capital, particularly the federal and state governments, for certain of the University s financial aid programs have either changed or proposed changes to their programs in recent years, usually as a result of fiscal constraints, and additional changes or proposed changes may occur in the future. The University closely monitors these changes and proposed changes to determine their potential impact on the University. The University cannot predict the ultimate impact of these changes or proposals on its ability to assist students in financing their education. Financial Information/Summary of Statements of Activities Set forth below are summaries of the University s Statements of Activities for unrestricted funds for the past five full fiscal years. Such summaries have been excerpted from the University s audited financial statements for such fiscal years. The following summary statements of activities should be read in conjunction with the University s audited financial statements for the fiscal years ended May 31, 2016 and 2015 attached to this Official Statement as Appendix B and the notes thereto. A-10

14 SUMMARY OF STATEMENT OF ACTIVITIES (UNRESTRICTED FUNDS) (dollars in thousands) Fiscal Year Ended May OPERATING REVENUES AND OTHER ADDITIONS Tuition and fees $142,795 $150,835 $150,402 $151,726 $157,126 Tuition allowance (46,513) (49,291) (49,196) (51,326) (55,403) Contributions 1, ,580 1,858 1,951 Government grants and appropriations 7,090 6,550 5,897 3,453 2,944 Contracts 1, ,111 1,167 1,250 Investment return designated for current operations 10,688 11,788 11,392 12,179 11,247 Auxiliary income 22,879 23,505 23,390 22,165 23,404 Other income 7,017 7,081 6,491 6,443 6,650 Net assets released from restrictions 3,604 3,722 3,360 3,220 2,995 Total Operating Revenue and Other Additions $150,919 $155,860 $154,427 $150,885 $152,164 OPERATING EXPENDITURES: Instructional and research $54,747 52,897 52,687 53,547 55,710 Operation and maintenance of plant 9,908 9,521 9,744 10,060 9,478 General institutional 26,937 27,466 27,454 29,439 25,920 Student services 8,813 9,009 8,724 9,297 9,455 General administrative 6,528 6,980 6,428 6,144 5,922 Library 2,718 2,683 2,765 2,562 2,766 Public service, information and fundraising 4,273 3,887 4,086 3,606 3,559 Auxiliary 25,990 24,857 24,121 22,329 22,748 Interest on indebtedness 3,850 3,679 3,548 3,441 3,599 Depreciation 13,454 13,778 13,953 13,140 13,196 Total Operating Expenditures $157,218 $154,757 $153,510 $153,565 $152,353 CHANGE IN NET ASSETS FROM OPERATING ACTIVITIES $(6,299) $1,103 $917 $(2,680) (189) NONOPERATING REVENUE& EXPENDITURES Net appreciation (losses) on investments Capital Gifts Capital Gifts release from restriction Loss on demolition of asset Swap contract gain (loss) Post-retirement benefits related charges $28,162 1, ,072 (446) $18, ,618 $(2,047) (357) (10,069) (3,274) $(20,669) (218) 17,099 $21, ,257 1,464 (915) Non-recurring transitional costs Change in donor restrictions 1,521 (610) (13) 1,775 (815) Changes in split interest arrangements (129) (148) (93) 4 (72) CHANGE IN NET ASSETS FROM NONOPERATING ACTIVITIES $ 32,988 $ 20,600 $(15,513) $ (1,704) $26,494 TOTAL CHANGES IN NET ASSETS $ 26,689 $ 21,703 $(14,596) $ (4,384) 26,305 NET ASSETS AT BEGINNING OF YEAR 266, , , , ,083 NET ASSETS AT END OF YEAR $293,360 $315,063 $300,467 $296,083 $322,388 A-11

15 Management s Discussion of Financial Results The University s changes in net assets from operating activities for fiscal years 2013 through 2016 reflect results from volatility in undergraduate enrollments. The current Fall 2017 junior and senior undergraduate classes were small classes as incoming freshmen, containing 929 and 948 incoming students, respectively. Such smaller classes have negatively impacted overall full-time equivalent enrollments and related tuition, room and board revenues of the University. The Fall 2016 freshman class included 1,093 freshmen and the Fall 2017 freshman class size is estimated to be in the range of 1,250 to 1,270 incoming freshmen. All of these classes have similar academic ACT test profiles within a range. University management expects that stabilization of freshman enrollment in an expected range of 1,080-1,120 annually, coupled with retention and a continuing discount for the blended undergraduate student population of % will sustain the University s financial operations and place full-time undergraduate enrollment at approximately 4,850-4,900 in Fall 2019 (compared to 4,343 in Fall 2016). The sustainability of enrollment levels achieved in Fall 2016 and estimated in Fall 2017 is anticipated given Bradley s value pricing, institutional profile and the applied nature and breadth of academic program offerings. It should be noted, however, that the University does not have academic program delivery infrastructure to sustain annual freshman enrollments of 1,250. Therefore the ongoing annual freshman enrollment targets are in the range of 1,080-1,120. Net cash provided by operating activities for the fiscal year ending May 31, 2017 is estimated to be $13.7 million as compared to an average of $8.3 million in the four preceding fiscal years. Underpinning the University s capital structure is a $300 million endowment that is comprised of assets 54% unrestricted in nature. Future Capital Improvements The centerpiece of the University s intermediate capital plan is the construction of an approximately $100 million business and engineering facility known as the Convergence Center. The Convergence Center project is expected to house the University s Caterpillar College of Engineering and Technology and the Foster College of Business. The facility is expected to house innovation and commercialization laboratories where multidisciplinary teams will design, develop, prototype, finance, market, pilot, manufacture and distribute productions; an auditorium for meetings, presentations and workshops; technically sophisticated classrooms and additional conference rooms; public areas for students and faculty from both colleges for ad-hoc study groups and social activities; and offices for the Turner Center for Entrepreneurship and the Dean of each college. The facility is expected to support the delivery of the University s engineering and business programs and enable distinctive interaction of the disciplines in the learning environment while maintaining the disciplinary rigors of the underlying academic business and engineering curricula. Construction of the approximately 270,000 square foot facility has begun under a fixed price contract. The project timetable will allow for initial academic use beginning in Fall The University s financing plan with respect to the facility includes the privatelyplaced Series 2017A Bonds and Series 2017B Bonds in a combined principal amount not to exceed $50 million, which bear interest at a rate which is fixed for the first five years following issuance. The remaining costs of the facility are expected to come from fundraising. A-12

16 Endowment The market value of the University s endowment and life income funds as of May 31, 2017 was $299 million. As of May 31, 2016, the University s endowment had a market value of $274 million. Of the total endowment market value, funds functioning as endowment represented approximately $161.6 million and $148.7 million on May 31, 2017 and May 31, 2016 respectively. The current endowment value is approximately $299.8 million at June 30, In addition to endowment assets, the University administers several life income and annuity pools and charitable remainder trusts. These arrangements enable donors to make gifts to the University while enjoying life income benefits from their gifts. These life income funds had a combined market value of $9.1 million and $9.0 million as of May 31, 2017 and May 31, 2016, respectively. The following table shows the growth of the University s endowment and life income funds market values over the last five fiscal years. ENDOWMENT AND LIFE INCOME FUNDS Market Value (dollars in thousands) Fiscal Year Ended May Funds Functioning as Endowment $145,301 $155,852 $156,477 $148,666 $161,564 Other Endowment * 114, , , , ,570 Life Income Funds 9,317 9,552 9,544 8,954 9,123 Total Endowment and Life Income Funds $269,348 $290,027 $290,974 $273,960 $299,257 * Includes endowed scholarships and other restricted funds. Investment policies and guidelines are established by the Finance and Property Committee of the Board and supported and monitored by the University Treasurer with assistance from appropriate external consultants. The University endowment portfolio is a diversified, multiple manager portfolio with a longterm strategic allocation target that will generally range within 40-60% in equities/equity equivalents, 5%- 15% in fixed income, 10%-30% in private equity/hedge funds and 5%-25% in real assets. The equity allocations include domestic and international large and small capitalization stocks (with allocations to both growth and value styles). The fixed income allocations result in a diversified portfolio with multiple managers and varying investment maturities. The purpose of the University s endowment is to increase the purchasing power of the fund in order to provide an increasing level of support to University programs and initiatives. Accordingly, the funds are invested so as to achieve maximum total return with acceptable risk while preserving and hopefully enhancing the principal of the fund. The spending formula provides for up to a 5% spending rate of average principal balances for a trailing three-year period. The University s endowment performance compared to its allocation index, net of fees, for the one-, three- and five-year periods ending June 30, 2017 as compiled by NEPC, LLC is as follows: A-13

17 6 months ended 6/30/ year ended 6/30/ years ended 6/30/ years ended 6/30/2017 Total Endowment Fund (gross of fees) 8.7% 12.7% 3.3% 7.1% Reference Index 7.1% 12.4% 3.5% 7.2% Performance in excess of index 1.6%.3% -.2% -.1% Gifts, Grants and Bequests Private gift and grant collections, as reported by the development office, for the past five years by fund are as follows: GIFT REPORT (dollars in thousands) Bradley University Fund: Unrestricted $ $538 $466 $366 Restricted 6,805 4,939 5,300 10,852 9,034 Endowment: 4,450 2,205 2,523 1,551 4,810 In-kind: Total: $12,782 $8,072 $8,458 $13,026 $14,324 The resource development program at the University combines a centralized and decentralized program. All gift processing and prospect research are centralized along with the positions of corporate foundation relations, major and planned giving, executive director of development, and vice president for advancement. The decentralized portion is composed of college-based development officers who report to the executive director of development but whose functions are to raise private resources for their academic colleges. In addition, a phone/mail program drives the annual Bradley Fund and works in conjunction with all development personnel. This structure has supported three successful campaigns with the latest being a successful $150 million campaign that raised $161 million as of The University presently has undertaken a facility-focused fundraising effort towards its Convergence Center project. The Convergence Center campaign has received over $37.5 million in pledges, approximately $13 million of which have been collected, along with up to $10 million of additional unrestricted collected funds available to the project if needed, as of June 30, [Remainder of page intentionally left blank] A-14

18 Debt Outstanding The annual debt service requirements of the University s long-term indebtedness (notes and bonds) as of May 31, 2017, are as follows: Debt Service Schedule for Existing Debt as of May 31, 2017 Fiscal Year Series Ending 2007 A Series 2008 A* Series 2008 B** Total Debt Service 5/31/18 3,447,850 1,335, ,650 5,672,298 5/31/19 3,453,250 1,335, ,650 5,677,698 5/31/20 3,458,500 1,335, ,650 5,682,948 5/31/21 3,455,250 1,335, ,650 5,679,698 5/31/22 3,458,780 1,335, ,650 5,683,228 5/31/23 3,453,500 1,335, ,650 5,677,948 5/31/24 3,459,750 1,335, ,650 5,684,198 5/31/25 3,456,750 1,335, ,650 5,681,198 5/31/26 3,459,750 1,335, ,650 5,684,198 5/31/27 3,463,250 1,335, ,650 5,687,698 5/31/28 3,462,000 1,335, ,650 5,686,448 5/31/29 3,466,000 1,335, ,650 5,690,448 5/31/30 3,459,750 1,335, ,650 5,684,198 5/31/31 5,893,500 1,335, ,650 8,117,948 5/31/32 5,900,000 1,335, ,650 8,124,448 5/31/33 5,909,250 38,385, ,650 46,518,698 5/31/34 6,480, ,650 7,369,150 5/31/35 5/31/36 5/31/37 5/31/38 1,365, , , ,650 25,390,000 2,253, , ,650 25,390,000 Total Less Bond Disct. Plus Bond Prem. Less Bond Issue $70,502,630 $58,421,970 $43,163,000 $173,423,398 (104,858) 1,401,607 (958,825) $173,761,322 * Interest calculated at a rate of 3.48%, which is the swap rate under a swap agreement relating to the Series 2008A Bonds. Actual principal payments could vary. ** The Series 2008B Bonds are variable rate bonds calculated at a rate of 3.50%. Actual interest rate payments could vary. A-15

19 Physical Plant The 85-acre campus is located within a residential section in the City of Peoria, Illinois. Facilities include over 40 major buildings with an insured value in excess of $611 million. With the exception of the three original buildings on campus (vintage 1900) most have been constructed since During the last six years, over $130 million has been expended on campus facilities, including a state-of-the-art recreation center, parking deck, new athletic facility, alumni center, and a renovation and significant addition to one of the original campus buildings. The University has started construction of a new engineering and business facility which involves $85 million in contracted costs with a total commitment expected to approach $100 million. University residential facilities have a capacity of approximately 1,984 students and as of fall of 2017, were 93% occupied. The St. James complex houses 568 upper class students and is 92% occupied. Freshmen and sophomores are required to live in either University administered housing or Fraternity units. Insurance The University maintains comprehensive insurance coverage on its assets. Real and personal property are insured on a replacement value basis with a $100,000 deductible. For the policy year, campus properties are insured for an aggregate amount of approximately $611 million. losses. Blanket crime insurance is carried to protect the University from theft, premise losses and transit Bodily injury and property damage is provided under a comprehensive liability policy, excess or umbrella coverage, in an amount deemed reasonable by the administration of the University. The University provides coverage for workmen s compensation as required under the laws of the State of Illinois. The University also maintains insurance coverage for automobile liability, professional liability, cyber liability, travel accident, umbrella liability and certain other risks of the type and in the amounts as are customary for institutions of similar size and scope of activities. * * * A-16