Michigan State University

Division of Residential and Hospitality Services

Financial Administrator Development Program Bob Patterson

Chief Financial Officer April 24, 2015

Overview

• RHS mission statement: DOSE - Delivering Outstanding Spartan Experiences

• Residential and Hospitality Services (RHS) is a self-supporting auxiliary of MSU

• Except for $680,000 in MSU Union general funding, no tuition or State of Michigan higher education appropriations go to RHS

• RHS operations compete with the private sector for the majority of our services

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Overview (cont.) • 17,100 Residence Hall beds • 11 Dining Halls • 1,100 apartments • 7 million square feet of building space • $2.5 billion building replacement cost • 160 Kellogg Hotel guest rooms • 40,000 meals served per day • 800+ full time staff, 3,300+ student employees • 36 golf holes, 8 indoor tennis courts, 12 bowling

lanes, Chapel, 15,000 seat student event center • 3 Starbucks locations • 1 snowmobile

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Overview (cont.) • $240 million in annual revenues • $ 12 million in annual Just-In-Time repair costs • $ 36 million in annual food/stores costs • $ 13 million in annual utility costs • $279 million in long term debt ($285 million max) • $ 16 million in annual debt service costs • Reserve range $12 million minimum to $52

million. (minimum = 5% of annual revenues)

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MSU RHS Financial Ratio Analysis FY13-14

• Debt Service Coverage Ratio (net operating come/debt service cost) = 1.84 (min. = 1.0)

• Net Profit Margin (net profit after debt service costs/revenue) = 5.3% (min goal = 4.96%)

• Reserve Ratio (end of year unrestricted reserves / revenue) = 11.4% (target goal = > 5%)

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MSU RHS Organization Chart MSU DIVISION OF RESIDENTIAL AND HOSPITALITY SERVICES (RHS) / VPAE & Admin Services

RESIDENCE EDUCATION CULINARY SPARTAN HOSPITALITY

AND HOUSING SERVICES SERVICES GROUP

*Residence Halls *Residential Dining *Kellogg Hotel & Conference Center

*University Apartments *Retail Dining / Sparty's *Spartan Signature Catering

*MSU Union *Concessions *Breslin Student Events Center

*Vending *Akers Golf

*MSU Tennis Center

*Alumni Memorial Chapel

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Residence Education and Housing Services - Campbell Hall

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REHS – University Village Apartments

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Culinary Services – South Pointe Dining at Case Hall

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Culinary Services – Sparty’s Holmes Hall

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Breslin Student Events Center

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MSU Union / North Engagement Center / Mosaic Multicultural Center / Shopping / Rec

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MSU Alumni Memorial Chapel

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Forest Akers Golf Course

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MSU Tennis Center

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MSU Division of Residential and Hospitality Services - FY13-14 Operating Revenues

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MSU Division of Residential and Hospitality Services - FY13-14 Expenditures

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MSU - FY13-14 Expenditures

MSU RHSFunds Flow Summary

MSU Auxiliary / Housing Accounts: XH (closed to reserves at June 30)

Residence Education Culinary Services Spartan Hospitality Groupand Housing Services *Residential Dining *Kellogg Hotel & Conf Ctr.*Residence Halls *Retail Dining *Spartan Signature Catering*Apartments *Concessions *Akers Golf*Summer Conferences *MSU TennisNet Operating Income Net Operating Income Net Operating Income

MSU RHS Reserve Account # PT054216Deferred Maintenance: $12 millionminimum balance for emergencies/VPFO

MSU Investment and FinancialManagement OfficeLong term debt service MSU RHS Plant Cashcost principle & interest JIT and RenovationA/C #'s PTXXXXXX Accounts

A/C #'s PNXXXXXX

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21 30,000,000)

20,000,000)

10,000,000)

$-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

Revenues Accrual Basis

Expenses Cash Basis

Net Income Accrual Basis

Net Income Cash Basis

RHS Cash Reserve Balance

MSU RHS FY13-14 Financial Results

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MSU RHS Ten-Year Pro-Forma Income Statement after Debt Service Costs • FY15 projected = $13,819,000 • FY16 budget = $13,177,000 • FY17 forecast = $12,555,000 • FY18 forecast = $10,054,000 • FY19 forecast = $12,046,000 • FY20 forecast = $12,113,000 • FY21 forecast = $14,176,000 • FY22 forecast = $14,316,000 • FY23 forecast = $16,454,000 • FY24 forecast = $16,672,000

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MSU RHS FY13-14 Net Operating Income • REHS: Residence Halls $15 million • REHS: University Apartments $3.5 million • Culinary Services: Residential Dining $11 million • Culinary Services: Retail Dining $4 million • SHG: Kellogg Center Hotel $0.86 million • SHG: Spartan Signature Catering ($0.24 million) • SHG: Breslin Student Events Center $0.34 million • SHG: Akers Golf $0.1 million • SHG: MSU Tennis $ .039 million

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MSU RHS Renovation Summary • 2006 University Village Apts. $16 million

• 2007 Sny-Phi Res Hall + Gallery dining $29 million • 2009 Mayo Res Hall $14 million • 2010 Owen Dining Hall $10 million • 2009-2014 Brody Square Dining + 6 Brody

Neighborhood Res Halls $140 million • 2012 South Pointe Dining at Case Hall $20 million • 2013 Vista Dining at Shaw Hall $13 million • 2014 Landon Res Hall and Dining $19 million • 2015 Akers Hall Dining $19 million

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MSU RHS Debt Schedule by building DRAFT 4/3/15

prepared by Bob Patterson, MSU RHS 355-7458

Estimated Projected EstimatedJanuary 31, 2015 Future Debt Total Projected Construction Construction

Description adjusted debt total Expenditures Debt Expenditures Start Date End Date************************************************* ****************************************** *********************** ***************** *******************Brody Hall Renovations 47,221,426$ -$ 47,221,426$ May 2009 July 2011Brody Water Works 1,142,923$ -$ 1,142,923$ May 2009 July 2010Emmons Hall Renovations 13,661,419$ -$ 13,661,419$ May 2010 July 2011Bailey and Rather Halls renovations 32,082,060$ -$ 32,082,060$ May 2011 July 2012Armstrong and Bryan Halls renovations 29,752,276$ -$ 29,752,276$ May 2012 July 2013Butterfield Hall renovations 15,856,452$ 23,548$ 15,880,000$ May 2013 July 2014Case Hall 1st Floor Renovations of Dinin 19,980,030$ -$ 19,980,030$ May 2011 December 2011Shaw Hall New Dining Center 13,450,000$ -$ 13,450,000$ May 2012 December 2012Landon Hall renovations 19,098,561$ (25,233)$ 19,073,328$ May 2013 July 2014Akers Hall Renovation 16,943,387$ 2,311,613$ 19,255,000$ May 2014 December 2014MSU Union Food Court renovation 676,000$ -$ 676,000$ May 2012 December 2012Snyder/Phillips/Gallery/RCAH 29,039,233$ -$ 29,039,233$ University Village Apartments 14,977,505$ -$ 14,977,505$ Mary Mayo Hall renovation 8,626,556$ -$ 8,626,556$ Shaw Hall res hall renovation 4,926,336$ -$ 4,926,336$ Spartan Village Apartments electric upg 2,430,829$ -$ 2,430,829$ EDC- Golf 2,174,805$ -$ 2,174,805$ Hubbard Hall fire protection 1,415,947$ -$ 1,415,947$ Student Data Service 1,340,064$ -$ 1,340,064$ MSU Union Renovation final phase 1,231,299$ -$ 1,231,299$ Res Halls Data Access phase 5 of 6 1,120,405$ -$ 1,120,405$ Case Hall-Elevator Replacement 810,751$ -$ 810,751$ Holden Hall Renovation 829,414$ -$ 829,414$ McDonel Elevator Replacement 725,549$ -$ 725,549$

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Housing

Total Debt Service as of 8/31/14 (does not estimate future use of CP for any projects)

Total Payment Principal Interest Balance

FY 2001 785,916 0 785,916 20,625,233 FY 2002 429,391 0 429,391 20,625,233 FY 2003 993,364 0 993,364 24,044,550 FY 2004 1,005,159 0 1,005,159 24,631,357 FY 2005 1,014,595 0 1,014,595 24,631,357 FY 2006 1,983,793 284,568 1,699,225 43,121,792 FY 2007 2,520,553 623,405 1,897,148 60,776,137 FY 2008 4,425,694 1,069,315 3,356,379 59,706,822 FY 2009 3,853,340 1,111,628 2,741,712 77,120,511 FY 2010 15,589,238 12,355,707 3,233,531 179,100,490 FY 2011 9,760,281 2,289,289 7,470,995 176,811,201 FY 2012 9,718,942 2,393,237 7,325,705 190,840,392 FY 2013 11,587,552 3,985,446 7,602,107 225,199,967 FY 2014 14,856,805 4,496,881 10,359,924 257,506,677 FY 2015 16,589,035 6,413,921 10,175,113 251,092,756 FY 2016 16,547,124 6,629,588 9,917,536 244,463,168 FY 2017 16,545,017 6,894,104 9,650,913 237,569,064 FY 2018 16,542,760 7,169,289 9,373,471 230,399,775 FY 2019 16,540,328 7,455,576 9,084,752 222,944,200 FY 2020 16,582,997 7,753,417 8,829,580 215,190,783 FY 2021 16,565,345 8,049,788 8,515,557 207,140,994 FY 2022 16,533,947 8,340,576 8,193,371 198,800,418

RHS Monthly Consolidated Income Statement

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MSU DIVISION OF RESIDENTIAL & HOSPITALITY SERVICESCONSOLIDATED STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETSInformation Source: KUALI G/L - COGNOS BI FIN070 REPORT & RES HALL/APT ACCRUED REV

February 28, 2014 FY13-14 Period 8

Accrual Basis 1 Month Actual 1 Month Actual FY14 - FY13 FY14 - FY13Accounting: February 2014 February 2013 $ Increase % Increase

********************************** ******************** ******************* **************** ***************+ Revenues 24,116,925$ 24,182,286$ (65,361)$ -0.3%

- Expenses (18,792,740)$ (18,718,547)$ (74,193)$ 0.4%

Transfers In / (Out) (48,742)$ (556,633)$ 507,891$ -91.2%

= Net Income from Operations 5,275,443$ 4,907,106$ 368,337$ 7.5%

- Debt Service Costs (3,672,701) (3,195,225) (477,476) 14.9%

- Plant Cash/ JIT Costs (432,825) (227,000) (205,825) 90.7%

= All Funds Net Income 1,169,917 1,484,881 (314,964) -21.2%

EBS BI FIN070 Query

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EBS BI FIN070 monthly report Acct # MSU RHS EBS FIN070 FEB. 2014 Feb revs Feb trfr in Feb exps Feb trfr out

GU100013 MSU 90 OPB Aux OH abate $2.7 mill budget FY13-14 - - (300,000) - GA011211 MAU 70 GF union salary $691 k budget FY13-14 - - 56,788 - DC022146 MAU 78 PAYROLL DEFAULT ACCOUNT - - - -

XH022701 RES DINING REV HOLDING ACCOUNT (8,575,982) - 278,081 -

XH022702 SOUTH FACILITIES - - 258,397 -

XH022703 BRODY FACILITIES - - 206,450 -

XH022704 Res Hall Rev Holding Account (6,278,472) - (3,760) -

XH022708 Design Construction Management Admin. 3,292 - 132,999 -

XH022709 HOUSING SERVICES 1,580 - (525) -

XH022710 COORDINATOR, FOOD SERVICES - - - -

XH022714 Design Constr. Mgt. Furnishings/Flooring 129,660 - 177,175 -

XH022720 RHS PREVENTIVE MAINT & REPAIR 42,137 - 61,797 -

XH022730 KELLOGG CENTER BEVERAGE 65,781 - 45,926 -

XH022731 KELLOGG CENTER PARKING RAMP 57,944 - 6,777 3,500

XH022732 KELLOGG CENTER FOOD SERVICES 510,201 - 521,678 -

XH022733 BROOK LODGE - - 21,941 -

XH022734 KELLOGG CENTER CONF. AUDIO VIS 21,831 - - -

XH022739 NORTH RES ED 1,248,615 - 435,853 -

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RMS Res Hall Assignment R&B billing

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Dtl_Ctgry_Efctv_TermDtl_Code CountOfDtl_Dtl_Amount SumOfDtl_Amount count sum billing sumRH FS13 DOUBLE -447 -1,818.00 -812,646.00RH FS13 DOUBLE 2 1,785.24 3,570.48RH FS13 DOUBLE 12068 1,818.00 21,939,624.00 11,623 21,130,548.48$ RH FS13 TRIPLE -3 -1,818.00 -5,454.00RH FS13 TRIPLE 141 1,818.00 256,338.00 138 250,884 RH FS13 QUAD -125 -1,818.00 -227,250.00RH FS13 QUAD -1 -1,785.24 -1,785.24RH FS13 QUAD 1375 1,818.00 2,499,750.00 1,249 2,270,714.76$ RH FS13 SINGLE -13 -3,154.00 -41,002.00RH FS13 SINGLE 1043 3,154.00 3,289,622.00 1,030 3,248,620 RH FS13 PRMSNG 112 2,638.00 295,456.00 112 295,456.00$ RH FS13 TRANS2 6 1,212.00 7,272.00 6 7,272.00$ RH FS13 OWN22 50 3,336.00 166,800.00 50 166,800.00$ RH FS13 OWN22U 14 4,596.00 64,344.00 14 64,344.00$ RH FS13 OWND1 -1 -4,390.00 -4,390.00RH FS13 OWND1 27 4,390.00 118,530.00 26 114,140 RH FS13 OWND1U 1 5,650.00 5,650.00 1 5,650.00$ RH FS13 OWNP1 -3 -3,896.00 -11,688.00RH FS13 OWNP1 526 3,896.00 2,049,296.00 523 2,037,608 RH FS13 OWNP1U -2 -5,156.00 -10,312.00RH FS13 OWNP1U 84 5,156.00 433,104.00 82 422,792 RH FS13 VANA1 7 5,412.00 37,884.00 7 37,884.00$ RH FS13 VANA2 19 2,706.00 51,414.00 19 51,414.00$ RH FS13 VANA3 24 1,804.00 43,296.00 24 43,296.00$ RH FS13 VANA4 19 1,353.00 25,707.00 19 25,707.00$ RH FS13 WIL22 -1 -2,072.00 -2,072.00RH FS13 WIL22 119 2,072.00 246,568.00 118 244,496 RH FS13 WILD1 52 3,408.00 177,216.00 52 177,216.00$ RH FS13 WILP1 11 2,892.00 31,812.00 11 31,812.00$ RH FS13 APTSNG 7 3,636.00 25,452.00 7 25,452 RH FS13 APTDBL -1 -2,292.00 -2,292.00RH FS13 APTDBL 98 2,292.00 224,616.00 97 222,324.00$ RH FS13 APTTRP 6 1,527.00 9,162.00 6 9,162 RH FS13 SILVER -64 -2,585.00 -165,440.00RH FS13 SILVER 10478 2,585.00 27,085,630.00 10,414 26,920,190.00$ RH FS13 GOLD -19 -2,585.00 -49,115.00RH FS13 GOLD 2701 2,585.00 6,982,085.00 2,682 6,932,970.00$ RH FS13 PLATIN -11 -2,585.00 -28,435.00RH FS13 PLATIN 1229 2,585.00 3,176,965.00 1,218 3,148,530.00$ RH FS13 SELE70 -1 -560.00 -560.00RH FS13 SELE70 30 560.00 16,800.00 29 16,240.00$ RH FS13 EARLY 21 16.00 336.00RH FS13 EARLY 17 276.00 276.00 38 612.00$ RH FS13 RESAPP -1 -40.00 -40.00RH FS13 RESAPP 103 40.00 4,120.00 102 4,080.00$

total = 29,697 67,906,214.24 29,697 67,906,214.24

MSU RHS

• Mission > Margin • Margin provides Mission. • Effective is doing the right things. • Efficient is doing things right. • Effective > Efficient • Understand and own your business. • Prepare and review your financial statements on

a regular, periodic basis.

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Questions ?

Bob Patterson Chief Financial Officer

W186 Holmes Hall E-mail: patter35@msu.edu Phone: (517) 355-7458

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