Update on the Economy and Bethel University Page 2

Current situation

Several indicators give us reason to be optimistic as we head toward completion of the 2008-09 fiscal year. On a positive note, fall 2008 enrollment in the College of Arts & Sciences came in above what we planned for, and spring semester appears to be on par with 2008. Enrollment is actually up at Bethel Seminary, the College of Adult & Professional Studies, and the Graduate School. Given the economy, this is cause for rejoicing, and I am thankful for the good work of our enrollment management team.

This reminds me, however, how key each of us is in helping to maintain enrollment. Each time one of you goes out of the way to help a student solve a problem you become a vital part of the enrollment management team.

Our alumni, friends, and donors continue to show a deep commitment to Bethel with total giving in calendar year 2008 slightly ahead of 2007. However, Annual Fund giving for this fiscal year is estimated to be 12 percent less than planned, an expected shortfall of $400,000. For perspective, many private colleges and universities are experiencing a 20 percent decline in annual fund contributions. Here, too, I am thankful for the excellent work being done by our development team.

Likewise, our endowment investments have been affected. Unlike institutions with large endowments, we do not rely on endowment income for a significant part of our operating budget. Our current fiscal year assumes significantly less endowment income.

Despite these challenges, with continued, prudent management of expenditures at all levels I am thankful to say that we expect to be able to balance our revenues and expenses for this fiscal year.

Planning for next year

Many of the unknowns, including fall enrollment, state grant appropriations, and donor giving, continue to challenge our planning for the future. Accordingly, at the direction of the Board of Trustees, I have asked the Strategy Team to develop revised plans for next year focusing on what we now estimate to be our most-likely, worst-, and best-case revenue scenarios, along with applicable plans for wise use of our resources and reducing expenses across the institution.

Our current analysis indicates that we have nearly a $7 million gap to address. We are assuming a smaller increase in tuition than recent years, more families needing financial aid, and a slightly smaller College of Arts & Sciences enrollment. For Bethel Seminary, the Graduate School, and the College of Adult & Professional Studies, we expect only steady or slightly increasing enrollments. We also are not assuming an increase in Annual Fund or endowment income. And although applications for fall 2009 are up compared with last year, we are keenly aware of how the economy could influence enrollment between now and then.

Next: What does this mean?