wfn.org | LCMS - Report says Concordia University should address

[Worldwide Faith News <wfn@igc.org>]

The Lutheran Church--Missouri Synod
Board for Communication Services

February 11, 2003,  LCMSNews -- No. 12

Report says Concordia University, Ann Arbor, should address financial
concerns

A report on Concordia University, Ann Arbor, Mich., says the school "serves 
an effective purpose in the larger design of higher education in the LCMS" 
but needs to address some financial concerns.

The report, prepared by a five-member LCMS Board for Higher 
Education/Concordia University System (BHE/CUS) transition-review 
committee, recommends that even before naming an interim president, the 
school find another financial institution to hold letters of credit and a 
line of credit.

BHE/CUS policies call for a transition-review study of any CUS school that 
wants to call a new president.

When Dr. James M. Koerschen announced last fall that he was retiring as the 
Concordia, Ann Arbor, president at year's end, a press release from the 
university said that a search was under way for an interim president to be 
in place by Jan. 1.

Dr. William F. Meyer, BHE executive director, said that Concordia's current 
letters-of-credit holder, Allied Irish Bank (AIB), has asked the university 
to find another holder of the letters, since "Ann Arbor failed to meet some 
critical indicators for operational effectiveness which were included in 
[its] covenants" with AIB.

Although he declined to elaborate on the "critical indicators," Meyer said 
that Koerschen's decision to retire was "not related to the matter of the 
letters of credit."

The letters are for tax-free bonds issued from the Michigan Educational 
Authority.  Meyer said that those funds are for "capital costs for 
renovation and expansion of facilities over a number of years" at Ann Arbor.

"As soon as the refinancing of the bonds is completed, Concordia will 
engage an interim president to replace President Koerschen," said Meyer, 
who indicated that the university "is presently discussing letter-of credit 
relationships with a number of entities."

Concordia, Ann Arbor's transition review, now complete, "is intended to 
provide ... insights regarding the future viability of the institution as 
well as recommendations for the continued effective operations of the 
institution," Meyer said. "In a sense, it offers potential candidates for 
the office of president basic information to hit the ground running."

Meyer provided an "executive summary" of the transition-review report.

"The bottom line of the transition review," the summary concludes, "is that 
Concordia, Ann Arbor, has a future.  It serves an effective purpose in the 
larger design of higher education in the LCMS."

"A review of the management of the institution indicates there is no 
impropriety in the operation of the institution," the summary says.

It points, however, to several "concerns" for the university:

-- "low enrollment" as "a problem it has continued to address. ... In 
today's educational environment, [an] institution with less than a thousand 
students struggles with maintaining financial strength even though it 
fulfills its primary mission.  Concordia, Ann Arbor, will need to address 
this situation in the coming year."

-- "whether or not the congregations and members of the [LCMS] Michigan 
District have adopted Concordia as their institution"; and

-- insufficient "third-source income ... to offset operational budget 
expense. ... Capital costs for renovation and expansion of facility 
requires third-source income."

"In summary," the executive summary says, "the transition review notes 
there are significant revisions to operations that need to take place 
immediately in order for Concordia, Ann Arbor, to be an effective 
educational institution in the future."

The summary lists the following as ways the concerns are being addressed:

-- "Alternative financing of debt issues are being addressed";

-- "Consultations from the [CUS] to assist in areas that have potential are 
in place";

-- "The Michigan District Office is supporting the transition";

-- "Expansion of the recruitment process and productivity of 
faculty/student ratios is in review";

-- "The BHE/CUS office staff is serving in the interim as an administrative 
team to assist Concordia to make significant decisions on effective 
educational operations for the future"; and

-- "The board of regents will appoint an interim president as soon as 
financial concerns are clarified."

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