Monday, September 18, 2006

Saluki Way - bond payment and how much more SIUC is making these days.

One of the problems I have with Saluki Way is that SIUC's current administration seems highly incompetent by almost any measure. I don't think you can begin to consider investing your money with them. Now Glenn Poshard is a different matter, he is good (even if I'm willing to ask him questions that are hard to answer in public). Poshard seems to be willing to stake his professional reputation on building all these buildings at SIUC. I started running the numbers, trying to figure out if they can afford to do it.

Simple bond idea - $100,000,000 loan at 5.5% over 20 years. $5.5M payment per year, balloon on year 20 for the initial loan $100M plus $5.5M. Or you can pay back interest, plus $5M per year over 20 years and have money left over (interest part will go down over time as you make principle payments). Can SIU afford $10M or so payments on Phase 1 of Saluki Way? I'm pretty sure they can, let's figure out how much they have increased revenue over the last few years.

SIU has a tuition calculator on their webpage (it kind of sucks because they give you a spread sheet output, but don't allow you to save it as CDF. Every accountant and business person must be nashing their teeth. :)). Looks like tuition and fees are $3220.50 for Fall 2005 if you enrolled in 2004. If you enrolled in Fall 2005 for Fall 2005 the bill is $3415.50. If you enrolled in Fall 2005 for Fall 2006 it is $3648.45. If you enrolled prior to 2005 you are looking at $3663.45. $3220.50 to $3648.45? I tell you 13% here and 13% there and soon you are looking at real money. SIU wasn't kind enough to include historical tuition rates on their webpage, so let's guess at them so we can figure out how much money is coming in - let's call the increases 25% over the previous to years. By my guess the tuition and fee numbers were $2415 two years before in 2003 ($3220.50 * .75).

Today's base is $3648.45 and 2003's $2415 so the difference is $1233.45. Wow! That is a number! My rough estimate is that SIUC is taking in $1233 per student each forward going semester starting now compared to 2003. Assume 40,000 full-time semesters (20,000 Fall and Spring and Summer I'll give them for free as a rounding error) and you get around $49,000,000 per year of extra revenue.

I need to get on with my day, so later today or tomorrow I will estimate how much in additional expenses SIUC has and guestimate how much additional money is in Uncle Walt's piggy bank. I'm thinking that $10M per year on Saluki Way phase 1 is in the bag.

$49M of additional revenue and about 3% increased salary base per year? Sounds like SIUC might be flush with extra cash doesn't it?

2 comments:

Anonymous said...

I've wondered about the bond issue for a long time for project like this. Why has no one raised it? Does SIUC have the authority to issue such a bond?

These are the kinds of basic, financial questions that the media completely misses. I would think (hope) that SIU heads are addressing these questions.

Hope your health is better. Being sick isn't good for keeping up with the aerobic Joneses, you know. LOL

PeterG said...

Everything SIUC builds is bonded, so that is pretty normal. For example, the apartments they are building next to the rec center and improvement in university housing they bonded $13M. That new building they didn't need at Dunn-Richman was bonded. Just like taking a morgage, it makes sense to pay for the buildings without needed 100% of the cash up front.

I'm back at the gym as of last week. Will be leaving to sit on my bike and watch MNF highlights soon. :)