Disclosure Policy & University Update
Wilkes University provides information to investors in the form of both covenanted continuing disclosure (posted on EMMA – the Electronic Municipal Market Access website maintained by the Municipal Securities Rulemaking Board: www.emma.msrb.org) and voluntary disclosure of supplementary information of interest to investors, at times offered in the form of Frequently Asked Questions (found below).
On February 19, 2021, Standard & Poor’s published a new rating report for the University. In that report, S&P explains its decision to downgrade the University from BBB negative outlook to BBB- stable.
The University’s current Fact Book is also available for review.
Questions not addressed through information obtained from EMMA or in the FAQs on this site may be posed to the University by email sent to this address: firstname.lastname@example.org. The University makes every effort to respond to inquiries subject to the application of its policies on continuing disclosure. Responses will be included in additional FAQs posted on this website.
Undergraduate enrollment for the Fall semester of the 2020-2021 academic year is below the original budget goals (which were set in January – pre-pandemic) but exceeds the University’s more conservative budget goals included in the final budget for FY 2021, which was approved by the University trustees in late August 2020. Also unexpected was strong demand for on-campus housing the University currently has 881 residential students (exceeding the budget of 750). Graduate enrollment for Fall 2020 is significantly higher than expected, primarily due to a new partnership between the University and Keypath Education that led to a significant increase in graduate nursing enrollment. The University is optimistic that these enrollment and housing demand trends will continue into Spring of 2021.
Update on Academic Programs
The academic portfolio of programs offered by the University remain under review by a Task Force formed in December 2019 by the Provost. The Task Force has completed an initial review and evaluation of every academic program to ensure ongoing student interest and each program’s relationship to the University’s mission and competitiveness. The work of the Task Force is now shifting to an engagement of faculty in the review process. Decisions on the possible elimination of programs, and on the development of new programs to address student interest and enhance institutional competitiveness, may be made as early as Spring 2021.
The University realized an operating deficit of $2.5 million for the fiscal year that ended on May 31, 2020, which reflected continued enrollment pressure but also the net cost of the pandemic. This loss follows a $1.9 million operating loss sustained in FY 2019; prior years beginning with FY 2011 had produced consistent operating surpluses.
In response to the FY 2019 operating loss, and given the University’s failure to reach its enrollment goals for FY 2020, the University committed during the development of the FY 2021 budget to “right size” its revenue projections to reflect changing demographics in the Northeast that are now impacting admissions.
Given the decline in current year enrollment over original estimates and the impact of the pandemic on the cost of operations, offset by the anticipated receipt of $3.9 million in CRRSAA funding during the Spring semester, the University is anticipating reaching breakeven or reporting a modest operating surplus for FY 2021.
The University remains committed to balancing its operating budget for FY 2022.
Update on Impact of COVID-19 Pandemic
Following the WHO pandemic declaration on March 11, 2020, the University joined other colleges and universities in closing residence halls and moving to remote instruction. All courses were delivered remotely for the remainder of the 2019-2020 academic year. The University delivered all undergraduate and graduate summer courses remotely.
Like many colleges and universities throughout the country, Wilkes University developed a detailed and comprehensive plan for managing activities on campus in the interest of minimizing the impact of the pandemic on operations. Those plans included testing, guidelines on face coverings and social distancing, and options available for online instruction. As of October 5, 2020, the University has had thirty-five positive cases on campus. The University utilizes a dashboard to track COVID cases; current information may be found here. To date, the University has managed its on-campus housing effectively enough to ensure that sufficient quarantine space is available for students who may have come into contact with someone who tests positive. The University remains optimistic that these initiatives will allow it to avoid a disruption of operations in the Fall, and that this approach will continue through the Winter Session and into the Spring semester.
Student recruitment is now exclusively through virtual visits and phone contact with prospective students. The University continues to recruit students internationally but will be budgeting for no increase in international enrollment, given current circumstances. The current international student population is primarily limited to students from Central America and the Middle East.
Wilkes University received $2,403,446 under Section 18004(a)(1) of the Higher Education Emergency Relief Fund (HEERF). Fifty percent ($1,201,723) was distributed directly to students impacted by campus disruptions due to the Coronavirus. As of August 31, 2020, all funds were distributed to 896 eligible students. Of the total HEERF funding received, $2.4 million was reported as income in FY 2020. The University also took advantage of the Employee Retention Credit, resulting in a reduction in payroll tax liability of $118,000 which will be reflected in the FY2021 financial results.
The University was ineligible to participate in the Paycheck Protection Program and does not anticipate participating in the Main Street loan program for not for profit institutions.
In response to the decision to close residence halls in mid-March, the University joined a majority of other colleges and universities throughout the country in granting pro rata refunds/credits to residential students for housing, meal contracts and parking fees. The total value of those refunds/credits is approximately $3 million. This loss of revenue was largely offset by a reduction in institutional aid, savings in operating expenses (including those related to cancellation of events and food service), and 50% of the University’s HEERF funds (approximately $1.2 million). After these unexpected changes in revenue and expense for FY 2020, the University reported an operating loss of $2.5 million.
The University is expecting to receive $3.9 million in Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (CRRSAA) funding during the Spring semester for use in providing additional support to students and in offsetting COVID-19 related costs and revenue lost due to the pandemic.
Update on Liquidity
The University’s cash position remains stable but it continues to receive significant attention, given recent operating losses and capital expenditures that have impacted liquidity, and in light of an unpredictable short-term future.
In November, 2019, the University issued $10 million in taxable bonds to pay off short term debt intended to bridge public financing for capital projects now on hold, which has enhanced liquidity. This line of credit has not been drawn in the past 10 years.
Last Update: 2-2021
Next Update: 5-2021