Present – Michael Abraham, Prince Charles Alexander, Dennis Cecere, Peggy Codding, Peter Cokkinias, Beth Denisch, Marti Epstein, Rich Grudzinski, Danny Harrington, Jeff Perry, Wendy Rolfe, Jackson Schultz, and Will Silvio.
Management – Larry Simpson, Jay Kennedy, Bill Whitney, Kari Juusela, Matt Marvuglio, Darla Hanley, Jeanine Cowan, Amelia Koch, John Eldert
Jackson opened the meeting. Financial update, Mac Hisey made a presentation on the financial status. Our rating is from Moody’s and S&P. The income is tuition and dorms – everything that comes in goes back into the institution, just in different ways. Since 2007, Berklee has spent 45-50 million on properties, over 8 million a year on maintenance of the buildings, and now the 160 Mass Ave and Valencia. Any money left over is a surplus, we borrow money for the bigger projects; we don’t take it out of the operating budget. The ratings institutions watch us based on our surplus, since we issued a bond last year, they are watching very closely. The forecasting we do to gauge our surplus is not always 100% accurate, we look for trends and try to build in wiggle room. Our surplus should be around 4%, as we watched our expenses increased our surplus was forecasting around 1%. We are in no means in panic mode – we try to be ahead of the trends and adjust our budgets, both short term and long term to manage the surplus. There is a big difference between a deficit and a lower surplus; we are not running at a deficit. A number of different contributors: certain summer programs, academic affairs 5% over budget – 2% (money for renegotiations, conversions from staff to faculty) 2% (CRI, ET 3x a week, 50 minute lessons), 1% (additional). We have been trying to cut costs all across the college. We are comfortable with all the results, the process was not as smooth as we liked, but we are working on that. The changes we implemented this year are a one-time savings, we are looking at ways we can cut costs over the long term.
Peggy: Has our rating gone down, and do you see it going down any time soon?
Mac: We don’t anticipate any fluctuation in our rating; there was a slight drop after we issued the bond in 2011. A concern for the rating is that we are a tuition driven institution. We are looking at revenue diversification, Berkleemedia, 160 Mass Ave dorms, etc. Concerns are our high amount of debt for a school of our size. We are an A, Harvard is an AAA. One key strength, we are a dominant player as a music college, we have a high enrollment and a high number of applicants. Our endowment is currently 250 million, higher than Emerson, the recovery after 2008 was better than most.
Larry: We are being very aggressive with our fall 2012 class; we have admitted the largest class in the history of the college. We do not know how many of those people will actually show, we are not sure how many will say, “thanks, but I don’t have the money.” We are hedging our bet on the high side just to be sure we make the mark.
Jackson: the college is overexposed, to many projects, Valencia, 160 Mass Ave., our relationship with the bond holders are effecting your decisions, the part-time faculty are bearing the brunt of all these budget cuts, with classes being held. The overleveraging is effecting the students, faculty, and creating a destructive environment. With 5.9% tuition increase there are many students will not be able to continue.
Mac: we worked hand and hand as we issued the bond last year; they are a big stakeholder in our financial future. We are not freaking out about the lower surplus; all the funds go back into the college.
Dennis: what is our current debt?
Mac: 265 million. We are watching the level of our debt. We should be able to pay that back with great efficiency. Our payments are tied to our surplus each year.
Jackson: we are going into bargaining next summer, this will NOT affect our stance, and this will NOT affect our raises.
Larry: 421 days before we start bargaining, we are aware and will be ready to discuss the issues at hand.
Larry: In regards to held classes we are not targeting part-time faculty, or part-time faculty on 3-Year contracts, we feel that we are offering too many sections of classes; we are trying to keep the space issues in mind, etc.