Waubonsee's financial landscape remains strong

The game of Taboo challenges players to describe a word for their team members to guess, but strikes certain words from the list of clues that may be used.

For example, you might be asked to describe the word "circle" without using the words round, arc, circumference, or diameter. A keen ear from the other team will, of course, try to catch you in the disqualifying act of using one of the taboo words as you race against the clock.

As Waubonsee's senior finance official, I think one of the most important things I can - and should - do is help stakeholders understand the college's financial health and circumstances. I don't like to do this with lots of charts and numbers, but rather with some very basic and straightforward concepts.

Think of this like finance or accounting for the non-major or, better yet, like a game of Taboo, where I get to explain finance and accounting stuff but can't use numbers or dollar signs.

I like to describe the financial health of any business or organization, Waubonsee included, first from the "balance sheet" perspective. This report quantifies and lists what the college owns (assets) and what it owes to others (liabilities). The college's balance sheet has benefited from a history of strong financial management practices and decision-making. Our assets include:

• Beautiful campuses and buildings;

• State-of-the-art instructional equipment;

• Liquidity to pay our bills;

• Long-term investments to ensure ongoing viability.

Our liabilities exist primarily as bonds, which we've sold to investors over the years to finance our construction and remodeling projects, very similar to the mortgages homeowners often have. When we subtract what we owe from what we have, we refer to the difference as "net position."

The second statement of importance for the untrained eye is the "income statement." It quantifies and lists what the college receives (revenues) and what it spends (expenses). The most prominent revenue sources for Illinois community colleges are tuition, local property taxes, and state support.

Expenses include salaries, benefits, tuition waivers, and pretty much anything we purchase - computers, instructional equipment, books, supplies, etc.

In the corporate world, the difference between revenues and expenditures would be called a profit or loss. As a nonprofit organization, though, "profits" do not get distributed to shareholders, but rather get added to our assets at the end of the year. This means that instead of profit or loss, we refer to the difference between our revenues and expenditures as "change in net position."

Waubonsee Community College is accountable to many stakeholders:

• The board of trustees, elected by our district residents to be responsible stewards of their tax dollars.

• Students who entrust their tuition dollars to us with an expectation of a high-quality education.

• Employees who rely on us to support them and the high-quality services they provide to our students and the community.

From a financial health perspective, how do we know how we are doing? I'll break the "no numbers" game rule here to describe two measures of particular importance: the public Composite Financial Index (CFI) and our Bond Rating, both of which collapse dozens and dozens of financial metrics into simplified, aggregated scores.

Our accrediting agency, the Higher Learning Commission, requires us to report our CFI every year. On a scale that ranges from -4 to +10, Waubonsee's most recent score was 6.6 and has been on a general upward trend for the last 10 years.

Our bond rating agencies use a letter-based grading scale. Akin to an academic grade scale, A-level ratings are the highest, but the rating agencies have multiple levels for each letter. With a rating of AA+, Waubonsee's creditworthiness is just one notch shy of the highest possible rating of AAA. The primary financial variable within our control to eventually achieve the AAA rating would be to further increase the balances of our savings accounts (our supply of cash and long-term investment balances).

Even before the pandemic, the higher education sector was experiencing a gradual but steady decline in enrollments nationwide. Recognizing the importance of tuition as one of the three primary revenue sources on our income statement, a negative bottom line, or in other words, a reduction in net position runs the risk of eroding the college's financial strength.

Accordingly, we continually monitor both enrollments and tuition rates.

In light of the pandemic, though, we have been able to leverage the college's financial strength to benefit both our students and our taxpayers. Last semester, the college funded two scholarship programs, a Spring Forward scholarship of $40 per credit hour for every registered student, and an application-based Pandemic Relief Scholarship.

In addition to nearly $3,000,000 in savings for students provided by these two programs, the board endorsed maintaining a level tuition and fees rate for the academic year 2021-2022. And our district taxpayers recently received their property tax bills, which reflect a decrease in the Community College District 516 detail line.

While the amounts of those reductions vary based on property values, the aggregated savings to district taxpayers was nearly $9,000,000.

We will continue to work with all of our stakeholders to maintain and strengthen the college's financial footing while providing outstanding education and services to our students and the district.

Even though I may have bent the Taboo game rules a bit, simply remember the college's financial standing is sound. We are well-positioned to continue serving our students and our community because we diligently manage our annual revenues and expenditures.

• Doug Minter is Vice President of Finance and Administration at Waubonsee Community College in Sugar Grove.