Reinhardt University SACSCOC Compliance Certification
Comprehensive Standards - Financial Resources
|3.10.2||Financial Aid Audits|
|3.10.3||Control of Finances|
|3.10.4||Control of Sponsored Research/External Funds|
|Part 1||Signature Attesting Integrity|
|Part 2||Substantive Changes|
|Part 4||Inst. Summary Form|
|3.10.1 Financial Stability
The institution's recent financial history demonstrates financial stability. (Financial stability)
Reinhardt University has a history of sustaining a sound, stable financial base and of demonstrating financial stability. The University’s audited financial statements for the fiscal years ending June 30, 2015, 2016, and 2017 will attest to the overall financial health and stability of Reinhardt. , , 
The University is diverse in the sources of revenue streams available to meet its mission and for the support of its programs and services. This diversity allows the University not to be overly dependent on any one single source of revenue. As noted in the Schedule of Revenue by Source, specifically for FY 2017, the largest portion of revenue is derived from student tuition and fees at 78.4%. The next largest source is gifts, grants, and contracts at 8%. 
In the excerpt from the Financial Statement Audit FY17, the Statement of Activities show Unrestricted Revenue has trended at a consistent level, with increases in FY14 and FY17. In FY17, Unrestricted Revenue grew $4,536,779, with $1,753,213 of the increase attributed to increases in enrollment, tuition and fees, and $2,212,199 attributed to an increase in fundraising and gifts.
Source: Financial Audits, Statement of Activities FY15-17
Net tuition and fees has grown consistently for the past five years. In that same period, the University has consciously introduced new academic programs as well as athletic programs to increase enrollment. From FY13-FY17, Reinhardt launched programs such as an MBA, MPA, MFA, Football, JV Soccer, JV Volleyball, and a Nursing Program. Before a program is started, a business proposal is made demonstrating the cost to fund the new program and the projected increase in enrollment. These new programs have contributed to the increase in net tuition and fees by $2,670,403 over a three year period, and $4,574,027 from FY2013-FY2017. , 
Source: Financial Audits, Statement of Activities FY13-17
Private gifts and grants have also been successful the past five years. In addition to an annual fund budget, gifts have been raised for capital projects to support programs, such as a new athletic facility, and a future performing arts theatre. In FY17, private gifts and grants increased by $2,212,199. 
Source: Financial Audits, Statement of Activities FY13-17
The Schedule of Expenditures by Function demonstrates that over the last three years, expenditures in each functional area have remained relatively consistent in comparison to total expenditures. 
While expenses had been relatively stable in prior years, they increased $2,342,021, or 8.53% in FYE17. This is attributed to specific areas, such as launching a Nursing Program that incurred start-up costs in the year prior to enrollment; contracting with a consultant to create an enrollment program for increasing retention; increasing the budget for additional costs related to changing food service providers, and increasing operating budgets associated with increased enrollment. These budgetary increases were planned as part of the budget process. As an example of a Feasibility Study, we present the Nursing Program, which included multi-year budget projections. The schedule also demonstrates the University's ability to manage financial resources to respond to the University's growing needs, especially in the area of instruction. 
Source: Financial Audits, Statement of Activities FY12-17
Enrollment at Reinhardt University has increased from 1,265 students in Fall 2012 to 1,537 students in Fall 2017. This is an increase of 272 students, or 21.50%. Enrollment is comprised of undergraduate students, on and off-campus students; graduate students at off-campus instructional sites; and on-line students. 
While the largest enrollment was 1,493 students in Fall16, the University also contracted with a consultant who specializes in retention initiatives where faculty and staff work jointly to increase fall to fall enrollment. The focus is primarily on improving specific areas that impact retention such as helping students understand their financial obligations; monitoring student progress towards a degree; orienting students to campus life; creating a positive first-year experience; and striving to help athletes manage their time between sports, academics, and their role on campus. 
Investment in capital assets, net of related debt, increased by $3,243,311 from FY15 to FY17. The University is committed to ensuring facilities, technology, and adequate resources are available to support student success and growth. During that period, the University purchased the Post Office Building, and constructed an indoor Batting Practice Building, and an Art Shed, in addition to major renovations of the President’s home. 
The University was approved by the USDA for funds appropriated to construct a Black Box Theatre, a new Residential Hall, and to expand the Gordy Dining Hall. The increasing enrollment has created a need for additional residential halls. The University has been over 98% residency capacity the past three years and the school has been tripling students in rooms. In addition, the dining hall can no longer seat enough students during peak meal times.
The University has bonds, with variable interest rates ranging from 2.35% to 3.58%, that were issued by the Waleska Development Authority (WDA). The bonds are due serially until 2033 and are secured by pledges of the facilities’ revenues to which they relate and certain other revenues and fees of the University, including state appropriations. The bonded indebtedness with the WDA included long-term liabilities on the Statement of Net Position, which totaled $18,712,757. 
In addition, Reinhardt has a $2 million revolving line of credit with a variable rate at June 30, 2017 of 3.50% with a local bank for temporary working capital needs. The line was not used the past three years and has no outstanding balance. The University is required to meet a debt service coverage ratio, liquidity and maximum debt covenant. Reinhardt passed all ratios and covenants in FY17 and had no unexpended debt proceeds at June 30, 2017. 
In order to determine how best to meet the facility needs, campus leadership conducted a Financial Feasibility Study to determine expansion options. An application was submitted to the USDA to refinance existing variable rate debt for a lower fixed-rate, and for new construction. On August 25, 2017, the Finance Committee voted to move forward with financing the construction of these new facilities through USDA financing. The application called for construction to begin in 2018.
Endowments at RU are managed by Reinhardt University’s Investment Committee. The Investment Committee meets quarterly with consultants to review investments and make any necessary changes. The University has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment asset. Investments are to provide a total return equal to or exceeding 5% greater than the anticipated rate of inflation as measured by the Consumer Price Index to ensure real and reasonable long-term asset growth beyond inflationary adjustments. Managers are expected to establish targeted asset allocations and benchmarks consistent with the rate of return.
The investment pool has a spending policy designed to balance the University’s current operating needs with the long-term growth of the pool. The University has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment asset. Investments are to provide a total return equal to or exceeding 5% greater than the anticipated rate of inflation as measured by the Consumer Price Index to ensure real and reasonable long-term asset growth beyond inflationary adjustments. The spending objective policy is calculated on quarterly market values based on a three-year moving average. Spending objectives of the investment pool within the limits of legal requirements may be adjusted by majority vote of the Board of Trustee. The University complies with the Uniform Prudent Management of Institutional Funds Act (UPMIFA). 
Reinhardt University’s endowment consists of individual funds established for a variety of purposes. As required by GAAP, net assets associated with endowment funds are classified based on the existence or absence of donor-imposed restrictions. The University does not use restricted endowment earnings to support its current operating budget. Endowment gifts are held as restricted assets and the earnings from endowments are used for the purpose stipulated by the donors. Thus, earnings are used for scholarships and other forms of academic support, including professorships.
For June 30, 2017, the year-to-date rate of return was 7.56%, the 1-year rate was 12.93%, and the 5-year rate was 9.6%. 
Qualifications and Experience
The CFO manages the institution’s financial stability. The Controller oversees the Business Office which is responsible for daily operations and management of the University’s fiscal resources and the establishment and communication of financial policies and procedures. Qualifications for these individuals and their respective responsibilities are found here and are discussed in more detail in Comprehensive Standard 3.10.3, Control of Finances.