Faithful Finance

In the fall of 1990, as a high school senior, I reconsidered my plans to attend my state university. Having attended Christian schools since kindergarten, I realized a faith-based education was important. I landed at JBU thanks to the affordable price tag and scholarships.

Twenty years after graduating, I returned to JBU as an employee. Early on, through interactions with the administration and detailed financial meetings, I saw the university officials’ commitment to stewardship and people.

In 2021, JBU President Chip Pollard added me to the President’s Cabinet, an eight-member team setting JBU’s strategic direction and overseeing planning, budgeting and policies. This firsthand view of the budgeting process has only deepened my gratitude for God’s faithfulness and the generosity of donors and magnified my respect for how JBU’s leaders have been faithful with the university’s resources throughout the decades.

Financial strength is crucial as the number of college-aged Americans declines, and many small colleges struggle. Since March 2020, 40 public or private nonprofit colleges have closed or announced closures, and 32 have merged or announced mergers.

Against this challenging backdrop, JBU has maintained a stable financial position with over $300 million in assets — including around $195 million in endowment funds — and an extraordinarily strong debt-to-asset ratio, with only 2% of JBU’s assets financed through debt. Today, the university only carries long-term debt from the construction of the Walker Residence Hall in 2004. Capin Crouse audits JBU’s financials annually, examining reserves, net income, return on net assets and viability ratios. JBU’s composite financial index score of 6.7 is more than double the target score of 3, with auditors noting its financial strength and effectiveness.

But numbers only tell part of the story. Having experienced four annual budget cycles as a Cabinet member, I can offer a firsthand look at the careful stewardship, strategic priorities and intentional processes that have helped JBU navigate economic challenges while staying true to its mission.

We’re here for the students. Providing a Christ-centered education to students of any means has been JBU’s mission since 1919. This means keeping tuition low while providing a rigorous academic experience that prepares students to use their God-given talents in their vocation. Financial priorities trickle down from this student-first approach, both short-term and long-term.

“Chip [Pollard] is really careful about considering who’s not in the room when we’re having budget discussions — students and their families,” said Kim Hadley, executive vice president. “What would they value? What’s most important for their experience?”

Even with the generous gifts from donors each year, investment returns and a healthy endowment, tuition, room and board revenue is the primary driver of the budget, accounting for around 60% of JBU’s annual $50 million operating budget. Therefore, each year’s budget is determined mainly by two factors: the number of students and the cost of tuition.

Hadley explained that when setting costs for the upcoming year, the administration considers inflation, how JBU is placed competitively with other institutions and what is necessary to provide a quality education for students. Over the last decade, the average annual increase has been around 2.75%.

Fundraising for capital projects and student scholarships is prioritized by University Advancement, which receives gifts for the annual JBU Scholarship Fund and named endowed scholarships. The latter has grown dramatically, providing $3.4 million in scholarships for 571 students this year. In addition, many students receive institutional merit and program-based scholarships (i.e., art and music), decreasing the average net tuition students pay.

JBU’s commitment to fundraising for capital projects — new buildings and major renovations — helps keep tuition low by avoiding debt payments, which is unusual among universities. Since 2000, the university has added 449,000 square feet of space, totaling $84.1 million in project costs, all covered by generous supporters. For non-revenue producing buildings (i.e., academic buildings), the university raises an amount beyond the building costs to help cover ongoing operating costs and routine maintenance.

In September, the budgeting process begins with the vice presidents creating a list of new ongoing budget requests from their departments, whose directors usually seek input from the people on their team. The requests range from new positions to technology needs and other resources. As the lists are compiled, the vice presidents work with their teams to prioritize the requests before bringing their list to Cabinet. Approximately 100 employees speak into the budget requests in some way through this process. During this prioritization process, teams are asked to rank a general increase in the employee compensation pool (typically between 2-3% annually) among the other new requests.

Payroll and benefits account for the most significant expense for the university — approximately 60% of the operating budget. While many industries can cut budgets by increasing efficiency and using technology to decrease payroll costs, Hadley explained that Christian higher education is a “high touch” industry that necessitates highly skilled and mission-minded people. Therefore, the university must invest in its people to maintain its mission, and that is why Cabinet asks teams to include compensation increases in the budget prioritization rankings.

Miguel Rivera, JD, assistant professor of criminal justice and faculty representative to the Dean’s Council, experienced this process for the first time in the fall. As a newer faculty member with extensive experience in corporate and government sectors, Rivera offers a unique perspective on JBU’s budgeting.

“I am very impressed with the care, fiscal responsibility and prayerfulness with which JBU approaches all of its decisions, especially budgeting,” Rivera said. “There are many worthy programs, ideas and challenges that compete for limited resources and demand the administration’s attention. Being fiscally responsible and prayerful about these decisions, I think, really impacts the deliberation and results in the best overall decisions — appreciating that there will be and are real-world impacts, both positive and sometimes negative from an individual perspective, that require empathy and grace.”

In October, Cabinet starts a series of budget meetings to create a balanced budget based on the new tuition, room and board rates, increases in unavoidable institutional expenses — energy, insurance and health care, for example — and data-driven predictions on the number of students expected in the next academic year. All of this is laid out and displayed on a giant conference room screen for Cabinet to see via a complex and detailed set of spreadsheets expertly managed by Hadley and Tom Perry, chief accounting and budget officer.

With those initial figures plugged in, Cabinet gets the first look at whether the budget predicts a surplus or a deficit. In the last 20 years, there have been both. While some organizations let a deficit budget pass, and often for multiple years, JBU is proactive in its adjustments, maintaining a balanced budget even though it sometimes means making difficult decisions about programs and people. If reductions need to be made, Cabinet undertakes another thorough review process to determine, as Hadley says, “What is the best budget prioritization in terms of serving students? What’s the overall impact on the student of all these decisions?”

When the initial calculation shows a surplus, a collective cheer comes from the Cabinet members. Usually, that good mood is tempered a bit when Hadley scrolls to the cell that displays the total dollar figure for new budget requests. It consistently exceeds the surplus, often by hundreds of thousands of dollars. Thus begins the task of weighing each request and determining what makes it into the new budget.

You might think that process involves members battling it out for the limited budget dollars. But it’s less arm wrestling and more like a thoughtful family meeting where Cabinet works together to prioritize what truly benefits the JBU community.

This process continues over a half dozen meetings with adjustments here and there as costs are finalized and predictive data changes. Then, the budget goes through an approval process with the board of trustees in February.

To continue thriving as an institution and growing enrollment, JBU is constantly evaluating the market and requests from students to expand program offerings. The startup cost for new programs is a critical factor in the process. Sometimes, JBU can create a new major from existing courses that faculty are already teaching (possibly with one or two new courses taught by industry-expert adjuncts). In some cases, like computer science, a seven-figure gift helps jumpstart the program, and generous gifts can even provide endowment funding for faculty positions. In the last four years, the university has added 10 new programs, including robotics, artificial intelligence, humanitarian and disaster relief, and integrated marketing communications, without adding substantial cost to the budget. Today, 253 students are in those programs.

The institution’s financial position also makes it possible to be innovative rather than reactive when unusual situations arise. Last year’s federal FAFSA overhaul and the delays in FAFSA form availability predicted by the Department of Education are prime examples. Ryan Ladner, vice president of enrollment management, grew concerned that delays in offering financial aid packages to prospective students would dramatically affect enrollment. Early news from the Department of Education predicted a delay in FAFSA form availability that, in the end, was even worse than expected.

After a brainstorming conversation between Ladner, Hannah Bradford ’09, executive director of admissions, and David Burney ’08, chief student finance officer, they jointly brought an innovative idea to Hadley for consideration. New students would complete a detailed “online net price calculator” with their family financial information. JBU would send early financial aid awards that guaranteed the JBU-based aid if their final FAFSA score was within 10%. After calculating the potential economic risks, Hadley supported the innovative plan.

“Traditionally, financial aid administrators are very regimented because there are so many regulations. Most of my colleagues at peer institutions were surprised JBU took such a seemingly risky approach,” Burney said. “As it turned out, the delays went much longer than the Department of Education predicted, and many schools wished they had been able to do the same thing. I’m thankful the JBU leadership responds to these ideas.”

It paid off in the long run with record enrollment numbers, and student financial services still remained within budget for financial aid spending.

Hadley explained, “JBU was able to execute this innovative solution because we are blessed with reserve funds to absorb the downside risk.”

Hadley takes her role seriously in stewarding JBU’s resources, including refinancing debt at lower interest rates, maximizing interest income from cash flow investments and carefully evaluating investment portfolios and endowment spending. To offset the costs of serving students and to keep tuition rates lower, the university also seeks to maximize supplemental revenue sources, including renting JBU facilities to external groups, leasing space on our radio tower and offering Walton Lifetime Health Complex community memberships.

However, stewardship is a value that extends beyond the administration.

“Kim is so good at explaining the university’s complex financial budgeting process that she empowers others to find ways for JBU to operate more efficiently,” Pollard said. “She cares deeply that we steward each dollar, whether from a donor or student, to maximize our mission and serve students well.”

Hadley said there is an ethos of stewardship across the university.

“I know I’m cognizant that I am making decisions on how we spend a student’s tuition dollar and a donor’s gift,” Hadley said. “But it’s not just me — there were decades of good stewardship under Marion Snyder and Pat Gustavson. I also feel like our employees spend with the same level of carefulness they do with their home budget.”

There’s also a culture of working collaboratively to find ways to do things more effectively and efficiently, whether increasing energy efficiency in our buildings and systems or changing the university’s health care coverage to save money for the university and employees.

In one particularly tight budget year, Hadley put together a cross-departmental task force whose goal was to find $100,000 in yearly savings in the budget. They looked at everything from how often we watered the grass to the number of lunch meetings and whether employees getting cell phone reimbursements were required by their roles to be accessible 24/7. We found $100,000.

Reflecting on my journey from cost-conscious student to Cabinet member, I’m struck by how JBU’s commitment to financial stewardship has remained constant throughout leadership changes and unexpected circumstances. While higher education challenges have evolved dramatically since my undergraduate days, JBU’s foundational principles haven’t changed: prioritizing students, maintaining careful oversight of resources and pursuing innovation while staying true to our mission. These practices, combined with God’s faithfulness and the generosity of our donors, position JBU to continue providing quality, Christ-centered education for generations to come.

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