System Financial Resiliency Framework Board of Trustees Finance and - PowerPoint PPT Presentation

System Financial Resiliency Framework Board of Trustees Finance and Facilities Committee January 2015 Minnesota State Colleges and Universities The Minnesota State Colleges and Universities system is an Equal Opportunity employer and educator.

System Financial Resiliency Framework  Stemmed from Board request to evaluate each college and university’s financial condition and ability to withstand enrollment declines  Initial design shared with Board at their September retreat  Design seeks to provide advance awareness of financial capacity to absorb negative impacts 2

System Financial Resiliency Framework  Incorporates enrollment and financial measures  Enrollment measures:  Volatility  Momentum 3

System Financial Resiliency Framework  Financial measures:  CFI  Net income/loss  Change in unrestricted net assets  Cash position 4

Design Notes  Financial activity composite score:  Average of the four financial measures  With both balance sheet and income statement measures, the impacts of short term events evened out  Expected to become more meaningful as years of results are compared  Enrollment activity composite score:  Average of two enrollment scores  Value of measures will be determined over time 5

Financial Activity Composite Score 10 9 8 7 Number of Institutions 6 5 4 3 2 1 0 1.0-1.9 2-2.4 2.5-2.9 3-3.4 3.5-3.9 4-4.4 4.5-5 Score

Enrollment Composite Score 12 10 8 Number of Institutions 6 4 2 0 1 1.5 2 2.5 3 3.5 4 4.5 5 Score

CFI – Two-Year Average 12 10 8 Number of Institutions 6 4 2 0 1 2 3 4 5 Score

Net Income/Loss 30 25 20 Number of Institutions 15 10 5 0 1 2 3 4 5 Score

Change in Unrestricted Net Assets 16 14 12 Number of Institutions 10 8 6 4 2 0 1 2 3 4 5 Score

Cash Position 25 20 Number of Institutions 15 10 5 0 1 2 3 4 5 Score

Enrollment - Volatility 25 20 Number of Institutions 15 10 5 0 1 2 3 4 5 Score

Enrollment - Momentum 16 14 12 Number of Institutions 10 8 6 4 2 0 1 2 3 4 5 Score

Conclusions  Both colleges and universities scored higher on the cash and UNA measures and lower on the CFI and net income/loss measures  Framework identified areas where the system was more resilient (cash position and net assets) and less resilient (net income/loss)  Highlighted areas where more work could be done to support resiliency (enrollment projections)  Improved ability to evaluate financial condition  Correlates closely with other measures of financial health the system monitors 14