Washburn University Reserves & Debt Ratios
February 1, 2007
Mr. Bob W. Storey
3649 SW Burlingame Road
Topeka KS 66611
Dear Mr. Storey:
I have reviewed the Debt Management Ratios that President Jerry Farley distributed to the Washburn University Board of Regents Budget and Finance Committee members on January 16, 2007. The Debt Management Ratios for June 30, 2004 and June 20, 2003 were presented as part of the Greek Village Project agenda item.
I have several concerns regarding these ratios.
1. What are the ratios for June 30, 2006?
The audit report for June 30, 2006 has been issued. It seems that these ratios should be updated and presented to the Board on an annual basis, perhaps as part of the audit review.
2. Could the administration provide definitions of the terms used to calculate the ratios?
I have attempted to trace the June 30, 2004 numbers to the June 30, 2004 audited results. It is impossible to do this without knowing how the “adjusted change” in net assets is defined, or what the difference is in Available Net Assets and Expendable Net Assets.
3. The ratios should be independently verified.
I worked with President Farley the first year that these ratios were calculated. His approach to these ratios is far from conservative. I am concerned as to what is included in the “Expendable Net Assets”. At a minimum, he should provide a detailed calculation that can be tied back to the audit reports.
I have enclosed my calculations of the June 30, 2006 ratios based upon my review of the FY 06 audited financial reports, with a comparison to President Farley’s 2004 ratios. As the Board is considering a significant commitment of university reserves to fund the new Athletic Conditioning Center and Whiting Hall renovation, I believe it is imperative that you have current, reliable and written net asset analysis, including verifiable debt ratios, before committing university reserves to this project.
I am requesting that you, as chair of the WU Board of Regents Budget & Finance Committee, consider a work session meeting to specifically analyze and understand the remaining university reserves and debt ratios. It is disconcerting to watch such an important issue so loosely discussed at a full Board of Regents meeting.
Thank-you for your consideration of this request.
Sincerely,
Mary Lou Herring