OFFICE OF EXECUTIVE VICE PRESIDENT FOR FINANCE LIFE UNIVERSITY, INC. CERTIFICATE OF COMPLIANCE OF BUDGET WITH COVENANT RATIOS I, William D. Jarr, hereby certify that I am the duly appointed and the Executive Vice President for Finance of Life University, Inc. (the "University"), and further certify on behalf of the University, that I am familiar with the terms of the Loan Agreement dated as of August 1, 2008, as amended June 1, 2010 and December 1, 2012 (the "Loan Agreement") between the University and the Development Authority of the City of Marietta and to the best of my knowledge the Board approved University budget for the fiscal years ended June 30, 2018 and 2019 are in compliance with the Debt Service Coverage Ratio requirements of Section 8.09(a) and the Days' Cash on Hand and Long-Term Indebtedness Ratio requirements of Section 8.09(b) of the Loan Agreement based on the rates, fees and charges to be instituted and the operating expenses projected for the fiscal years then ended. IN WITNESS WHEREOF, the undersigned has hereunto set his hand as Executive Vice President of Finance of the University this 15th day of May, 2017. LIFE UNIVER ~ By: 1269 Barclay Circle * Marietta, GA 30060 * (770) 426-2623 * www.life.edu
Statements of Operations: Cash Flow 2018 Budget By Academic and Non-Academic Area 4/25/2017 6:46 Summer Fall Winter Spring 17/18 First 17 /18 Second 17/18 Third 17/18 Fourth Fiscal Year DRAFT Qtr Budget Qtr Budget Qtr Budget Qtr Budget 2018 Budget FY 2017 Variance Enrollment: D.C. Summer Fall Winter Spring Undergrad 1,556 1,655 1,652 1,594 Masters 461 692 663 621 181 235 229 238 Revenue College of Chiropractic $12,351,687 $13,137,560 $13,113,745 $ 12,653,335 $ 51,256,327 $54,035,035 (2,778,708) Undergraduate 1,615,489 2,408,951 2,309,339 2,165,073 8,498,851 7,654,576 844,276 Masters Program 439,586 570,733 556,161 578,019 2,144,498 1,658,666 485,832 Institutional Scholarships and Disc1 (787,193) (787,193) (787,193) (787,191) (3,148,770) (3,148,770) 0 Other: Grants, Federal Work Stud'J 378,793 378,793 378,793 378,792 1,515,172 1,615,172 (100,000) Gifts, Donations 150,000 150,000 150,000 150,000 600,000 850,000 (250,000) Interest and Dividends 62,500 62,500 62,500 62,500 250,000 150,000 100,000 Clinic Receipts 203,777 203,777 203,777 203,777 815,109 815,109 a Auxiliary/Departmental Revenue 1,098,559 1,098,559 1,396,270 1,396,270 4,989,658 2,841,527 2,148,131 Total Revenue $15,513,198 $17,223,680 $17,383,392 $ 16,800,575 $ 66,920,845 $66,471,315 449,530 Net Operating Expenses Instructional and Research $ 5,357,085 $ 5,459,312 $ 6,189,119 $ 6,131,138 $ 23, 136,654 $23,405,528 (268,874) Public Service 156,403 155,583 183,815 181,397 677,198 835,276 (158,078) Academic Support 842,753 821,931 1,074,368 915,443 3,654,495 3,872,375 (217,880) Student Services 2,252,742 2,265,117 2,511,618 2,504,565 9,534,042 9,369,219 164,823 Institutional Support 3,105,832 3,201,329 3,137,769 2,889,602 12,334,532 13,299,892 (965,360) Operations and Maintenance of Pl, 1,119,455 1,144,557 1,225,234 1,217,189 4,706,435 4,802,795 (96,360) Scholarships 82,704 82,704 82,704 82,704 330,817 330,817 (0) Auxiliary 1,280,051 1,346,533 1,380,965 1,381,514 5,389,063 3,271,371 2,117,692 Debt Service Interest 1,156,653 1,156,212 1,155,766 1,155,316 4,623,947 4,657,945 {33,998l Total Net Operating Expense $15,353,678 $15,633,278 $16,941,358 $ 16,458,868 $64,387,183 $63,845,219 541,964 Net Operating Cash Flow $ 159,520 $ 1,590,402 $ 442,034 $ 341,707 $ 2,533,663 $ 2,626,096 (92,434) Depreciation 1,050,000 1,050,000 1,050,000 1,050,000 4,200,000 5,300,000 {1,100,000} Change in Net Assets $ (890,480) $ 540,402 $ (607,966) $ (708,293) $ (1,666,338) $ (2,673,904) 1,007,566 Capital Equip/Improvement $ 1,072,500 $ 322,500 $ 322,500 $ 322,500 $ 2,040,000 $ 2,040,000 0 Debt Service/Lease $ 305,709 $ 305,994 $ 306,342 $ 306,572 $ 1,224,617 $ 1,368,857 (144,240) Commons Write Off 307,433 307,433 307,433 307,433 1,229,730 1,229,730
Life University, Inc. Budget Assumptions 1. College of Chiropractic tuition will remain at three point five percent (3. 5%). Undergrad and Masters was adjusted to five percent (5%) an increase of one point five percent (1. 5%) from FY 2017 commencing July 2017. Enrollment levels are budgeted as follows: Summer Fall Winter Spring DC UG Masters 1556 461 181 1655 692 235 1652 663 229 1594 621 238 New Students: DC UG Masters 114 92 50 186 207 63 116 76 31 65 55 47 2. Institutional Scholarships and Discounts budgeted at $3.lM, a five point one percent (5.1%) of tuition 3. Gifts and Donations budgeted to generate $650,000 which represents a $250,000 decrease from prior year 4. Clinic Receipts - Neuro Life Institute - $377,615 C-HOP - $437,494 5. Auxiliary-The major components of auxiliary and departmental revenue are budgeted as follows: a. Life Village Retreat - $2.8M (a net 12.1 % increase) b. Vital Life Clinic - $1.4M c. Life Vision - $262,000 d. Life U Shop - $232,732 e. Post Grad - $197,000 f. Athletic Field Rental - $50,000 6. Budgeted total revenue $66.9M
University, Inc. Budget Assumptions -18 1. A two percent (2.0%) compensation increase for faculty and staff has been budgeted to commence October 2017. 2. Adjunct and overage rate adjustment based on a percent increase to market based rate to be achieved over a period not to exceed four years of approximately $260,000 per year. 3. Changes in payroll and operating expense by area Instructional: Operating Increase $64,627 Reallocation of Operating ($330,000) Public Service Payroll Reduction ($32,136) Operating Reduction ($408,285) Reallocation of Operating $281,183 Academic Support Payroll Increase $212,082 Operating Reduction ($37,300) Reallocation of Operating ($392,662) Student Services: Payroll Increase $373,163 Operating Reduction ($98,336) Reallocation of Operating ($110,005) Institutional Support Payroll Reduction ($273,251) Operating Reduction ($1,007,375) Reallocation of Operating $315,267 Operations and Maintenance of Plant Payroll Reduction ($117,860) Operating Increase $21,498 Auxiliary Payroll Increase $1,145,483 Operating Increase $972,209
Life University, Inc. Budget Assumptions FY -18 4. Vital Life Clinic: Revenue Payroll Operating Net Loss $1,430,896 1,007,972 922,294 ($500,000) 5. Capital Expense budgeted at $2M 6. Contingency expense has been budgeted as follows: a. President b. Administrative Contingency c. Provost Contingency d. Academic Contingency $125,000 $200,000 $62,500 $50,000 7. Total operating expense budgeted at $64.4 M (Note: this does not include depreciation). Fifty-six point four percent (56.4%) of the total operating budget is related to Instructional and Research, Academic Support, and Student Services. Institutional Support comprises nineteen point two percent (19.2%) of expenses. 8. Debt service is budgeted at $5.8M which includes the bonds, 1450 Barclay Circle, and annual leases related to the Lupo Family turf field, and cafe com poster.
Statements of Operations: Cash Flow 2019 Budget By Academic and Non-Academic Area 4/25/2017 8:34 Summer Fall Winter Spring 18/19 First 18/19 Second 18/19 Third 18/19 Fourth Fiscal Year DRAFT Qtr Budget Qtr Budget Qtr Budget Qtr Budget 2019 Budget FY 2018 Variance Enrollment: D.C. Summer Fall Winter Spring Undergrad 1,554 1,657 1,649 1,591 Masters 508 881 867 827 231 300 299 314 Revenue College of Chiropractic $12,691,805 $13,533,026 $13,467,688 $ 12,993,991 $52,686,510 $51,256,327 1,430,183 Undergraduate 1,837,554 3,163,285 3,113,526 2,971,356 11,085,721 8,498,851 2,586,870 Masters Program 583,783 758,160 755,633 793,541 2,891,117 2,144,498 746,619 Institutional Scholarships and Disci (875,000) (875,000) (875,000) (875,000) (3,500,000) (3,148,770) (351,230) Other: Grants, Federal Work Study 378,793 378,793 378,793 378,793 1,515,172 1,515,172 0 Gifts, Donations 150,000 150,000 150,000 150,000 600,000 600,000 0 Interest and Dividends 62,500 62,500 62,500 62,500 250,000 250,000 0 Clinic Receipts 203,777 203,777 203,777 203,778 815,109 815,109 0 Auxiliary/Departmental Revenue 1,359,416 1,359,416 1,359,416 1,359,416 5,437,664 4,989,658 448,006 Total Revenue $16,392,628 $18,733,957 $18,616,333 $ 18,038,375 $71,781,293 $66,920,845 4,860,448 Net Operating Expenses Instructional and Research $ 5,514,929 $ 5,619,953 $ 6,364,153 $ 6,305,015 $23,804,050 $23,136,654 667,396 Public Service 158,544 158,471 187,235 184,817 689,067 677,198 11,869 Academic Support 874,572 855,562 1,112,244 950,985 3,793,363 3,654,495 138,868 Student Services 2,286,160 2,299,689 2,550,960 2,543,857 9,680,666 9,534,042 146,624 Institutional Support 3,249,193 3,345,316 3,284,482 3,029,969 12,908,960 12,334,532 574,428 Operations and Maintenance of Pie 1,140,604 1,166,167 1,248,451 1,240,245 4,795,467 4,706,435 89,032 Scholarships 84,358 84,358 84,358 84,358 337,432 330,817 6,615 Auxiliary 1,304,286 1,372,961 1,407,995 1,408,555 5,493,797 5,389,063 104,734 Debt Service Interest 1 I 138,164 1,137,708 1,137,243 1,136,775 4,549,890 4,623,947 {74,057} Total Net Operating Expense $15,750,810 $16,040,185 $17,377,121 $ 16,884,576 $ 66,052,692 $64,387, 183 1,665,509 Net Operating Cash Flow $ 641,818 $ 2,693,772 $ 1,239,212 $ 1,153,799 $ 5,728,601 $ 2,533,663 3,194,939 Depreciation 1,250,000 1,250,000 1,250,000 1,250,000 5,000,000 4,200,000 800,000 Change in Net Assets $ (608,182) $ 1,443,772 $ (10,788) $ (96,201) $ 728,601 $ (1,666,338) 2,394,939 Capital Equip/Improvement $ 1,072,500 $ 322,500 $ 322,500 $ 322,500 $ 2,040,000 $ 2,040,000 0 Debt Service/Lease $ 331,337 $ 331,980 $ 332,619 $ 333,263 $ 1,329,199 $ 1,224,617 104,582 Note: The above schedule does not include increased revenues or costs associated with the new student housing or the expansion of Italy.
Life University, Inc. Budget Assumptions 18-1. College of Chiropractic tuition was adjusted to three percent (3. 0%) a point jive percent (0.5%) decrease from FY 2018. Undergrad and Masters was adjusted to four percent (4.0%) a decrease of one percent (1.0%) from FY 2018 commencing July 2018. Enrollment levels are budgeted as follows: Summer Fall Winter Spring DC 1554 1657 1649 1591 UG 508 881 867 827 Masters 231 300 299 314 New Students: DC 107 201 115 71 UG 98 303 81 59 Masters 55 77 36 53 2. Institutional Scholarships and Discounts - budgeted at $3.SM, a five point two percent (5.2 % ) of tuition 3. Gifts and Donations budgeted to generate $600,000 4. Clinic Receipts Neuro Life Institute - $377,615 C-HOP - $437,494 5. Auxiliary The major components of auxiliary and departmental revenue are budgeted as follows: a. Life Village Retreat - $2.8M b. Vital Life Clinic - S1.9M c. Life Vision - $262,000 d. Life U Shop - $232,732 e. Post Grad - $197,000 f. Athletic Field Rental - $50,000 6. Budgeted total revenue $71.7M
Life University, Inc. Budget Assumptions I. A two percent (2.0%) compensation increase for faculty and staff has been budgeted to commence October 2018. 2. Adjunct and overage rate adjustment based on a percent increase to market based rate to be achieved over a period not to exceed four years of approximately $260,000 per year. 3. A two percent (2.0%) increase for operating expenses was budgeted. 4. Capital Expense budgeted at $2M 5. Contingency expense has been budgeted as follows: a. President b. Administrative Contingency c. Provost Contingency d. Academic Contingency $250,000 $400,000 $125,000 $50,000 6. Total operating expense budgeted at $66M (Note: this does not include depreciation). Fifty-seven point five percent (57.5%) of the total operating budget is related to Instructional and Research, Academic Support, and Student Services. Institutional Support comprises nineteen point five percent (19.5%) of expenses. 7. Debt service is budgeted at $5.8M which includes the bonds, 1450 Barclay Circle, and annual leases related to the Lupo Family turf field, and cafe com poster.
6/30/2019 6/30/2018 Assets Cash and cash equivalents $ 9,678,564 $ 9,539,623 Pledges receivable, net 792,188 928,101 Other receivables 498,251 517,247 Other assets 845,326 925,468 Notes receivable, net 1,632,071 1,767,336 Investments 11,300,992 11,012,979 Deposits with trustee 7,410,629 7,344,124 Debt issuance costs, net 843,244 916,152 Property and equipment, net 73,311,819 76,271,819 Investments permanently restricted for endowment 1,544,111 1,882,124 Total Assets $ 107,857,195 $ 111,104,975 Liabilities and Net Assets Liabilities Accounts payable and accrued expenses $ 7,494,376 $ 9,981,026 Student predeposits and refunds 370,148 362,993 Deferred revenue 145,876 187,456 Deferred Compensation 50,000 Notes payable, net 63,398,377 64,803,682 Total Liabilities 71,408,778 75,385,157 Net Assets Unrestricted 30,536,699 29,703,290 Temporarily restricted 4,367,607 4,134,403 Permanently restricted 1,544, 111 1,882,124 Total Net Assets 36,448,417 35,719,817 Total Liabilities and Net Assets $ 107,857,195 $ 111,104,974 0 0
June 30, June 30, 2019 2018 Cash Flows From Operating Activities Change in net assets s 728,601 $ (1,666,338) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 4,992,396 4,192,075 Net realized and unrealized (gain) loss on investments 114,670 157,376 Provision for present value of pledges receivable (128,683) (128,683) Provision for uncollectible pledge receivable 84,435 84,435 Provision for uncollectible notes receivable 703,642 703,642 Gifts restricted for long-term investments 338,013 8,770 Decrease (increase) in operating assets: Pledges receivable 518,176 454,117 Other receivables (22,584) (90,016) Other assets 80,142 252,325 Increase (decrease) in operating liabilities: Accounts payable and accrued expenses (2,486,650) 7,548 Other liabilities (42,845) 7,229 Net cash provided by operating activities 4,879,314 3,982,480 Cash Flows From Investing Activities Purchase of property and equipment (2,040,000) (2,040,000) Purchase of investments (852,940) (658,815) Proceeds from sale of investments 450,257 450,257 Increase (decrease) in: Cash restricted to investment Deposits with trustee (66,505) (64,568) Notes receivable, net (568,376) (869,780) Net cash provided by (used in) investing activities (3,077,565) (3,182,907) Cash Flows From Financing Activities Gifts restricted for long-term investments (338,015) (8,772) Payments on long-term debt (1,324,793) (1,225,279) Proceeds from a note payable Net cash (used in) financing activities (1,662,808) (1,234,051) Net Increase in Cash 138,941 (434,479) Cash and Cash Equivalents, beginning of year 9,539,624 9,974,103 Cash and Cash Equivalents, end of year s 9,678,565 $ 9,539,624 Supplemental Cash Flow Disclosures Cash paid tor interest s 4,549,890 s 4,623,947 Non-Cash Investing Activities Assets acquired from capital lease obligation