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LCMS - Report says Concordia University should address
Worldwide Faith News <email@example.com>
Tue, 11 Feb 2003 14:21:46 -0800
The Lutheran Church--Missouri Synod
Board for Communication Services
February 11, 2003, LCMSNews -- No. 12
Report says Concordia University, Ann Arbor, should address financial
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
-- "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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