Note to readers: This analysis is from Jon Canler who says, “I often read the SBC Voices blog, but I don’t comment. I did notice your question about SWBTS finances, a question I’ve been interested in since I was made aware of allegations of a significant borrowing of restricted funds for unrestricted use. I’m a graduate of SBTS; however, two of my pastors who have been a massive influence in my life are SWBTS grads. I want to see this SBC institution, from which my life has significantly been influenced for Christ, thrive in all respects; hence, my concern personally, not to mention my concern as a
Southern Baptist.”
We appreciate Jon’s effort here and his desire to see recovery and future success for SW. We share that positive and supportive approach. None of the Voices team has scrutinized all the data or conclusions.
The team here has reached out to key leadership at SWBTS and received no response whatsoever. It would be a simple thing in our view for the seminary to state that they appreciate the concern of Southern Baptists and are working diligently on all the challenges of the school going forward. Or, to state that information is being prepared and will be released when ready. We received no response. Others have expressed the same frustration that no information about his situation is coming forward from SWBTS.
We’re just pastors who are both observers and supporters. If there are sincere questions asked by Southern Baptists of our organizations, they should be answered if possible but certainly acknowledged.
We appreciate our brother who took the time to pore over public documents and gather this information.
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Finances for any SBC entity, from a big picture perspective, are not hidden if one knows where to look. Two helpful resources are the SBC Annuals found here and the Association of Theological Schools reports (for seminaries) found here. The most recent Annual was prepared for the 2018 SBC Annual Meeting, and it presents data for the 2016-2017 fiscal year (FY) ending July 31, 2017. The one unfortunate reality is that the data lags by a year or more at a time. Perhaps interim financial data is given to the Executive Committee for their Spring and Fall meetings that can be requested. That being said, the SWBTS financials thru 7/31/17 as recorded in the 2018 Annual reveal the following:
LOANS
The school had $20,378,678 dollars in notes (loans) to be repaid for 252 new student housing units. The loan was taken out in the 2012 FY. Of biggest concern is that $17,125,488 is due December 15, 2021, unless otherwise restructured. See note 12 in the Annual for details about the loan’s structure.
BORROWING RESTRICTED FUNDS
To add to the debt, the school has, over time, borrowed a cumulative $25,870,967 from restricted funds that needs to be reimbursed, with over $25M of the total coming from temporary restricted funds (funds that are released when the donor specified time and/or condition is met). One must also know that tens of millions can be released from temporary restricted funds each year as donor restrictions are met. In the 2017 FY, ~$21M was released and used as revenue to help offset annual expenses. However, with ~$25M of the total ~$30M of temporary restricted funds already borrowed, apart from an increase in temporary restricted fund giving in the 2018 FY that was also allowed to be released in FY 2018, the school seemingly only had access to approximately $5M for appropriate expenses if more than $5M was allowed to be released. Which brings me to…
RELIANCE ON RELEASED RESTRICTED FUNDS
Finally, the financial report shows that the 2017 FY operating revenue was highly dependent on temporary restricted funds coming available. Perhaps this is not unusual for an academic institution. On the year, the school brought in ~$3M more than what was spent (~$50M in revenue vs ~$47M in expenses), which is great. However, the ~$50M in revenue includes ~$21M in temporary restricted funds that were released. If SWBTS continued to spend anywhere near $47M in 2017-2018 and only up to $5M in temporary restricted funds were available to be released, it’s very feasible that the school could’ve spent millions and millions more than their revenue if additional unrestricted giving or even additional temporary restricted giving to be released in 2017-2018 did not come in.
In sum, the school faces ~$46M in debt (loan / borrowed restricted funds) to repay with possible operating budget losses per year. The school had almost $250M in net assets, the leader of SBC seminaries; yet, not enough is liquid.
THE GOOD NEWS
I think the school can survive this situation with the Lord’s provision and some decisive leadership. According to Baptist Press, the trustees set a 2017-2018 budget for the school at $36.8M, approximately $10M less than what was spent in 2016-2017. This gives me hope to believe that current trustees are actively working with the SWBTS administration to move the institution out of the present financial dilemma. Consequently, I’ve been led to believe that the school had a fruitful financial year in 2017-2018 and was able to repay approximately $12-$13M of the borrowed temporary restricted funds. FY 2018 financials will reveal much.
- The administration should strive to find ways to get auxiliary enterprises to break even, as opposed to losing money, to functionally gain ~$1M/yr.
- The administration may need to strive for a leaner staff. In FY 2017, the school spent $27.5M on instructional needs and institutional support for 1222 FTE students (4076 students taking 1 hr or more). In comparison, SBTS spent $27.2M for 2238 FTE students (5513 students taking 1 hr or more). If SWBTS staff was as lean as SBTS, based on FTE, SWBTS could save $12.6M/yr. Based on total students, the school could save $7.4M/yr.
- Furthermore, reversing the enrollment decline will help bring in more tuition/fees revenue and possibly more Cooperative Program revenue. It seems this reversal has been started as the Association of Theological Schools indicates a Fall 2018 FTE enrollment of 1521, up from 1222. If not already, the goal ought to be to create such a Christ-centered, theologically and academically robust, humble-minded, excellence-driven, ministry-equipping, church-serving, missions and evangelism-oriented culture that anybody west of the Mississippi, and even an easterner, doesn’t have to think twice about where to pursue seminary education because of what’s going on at SWBTS, particularly those from Texas, Oklahoma, and Arkansas.
- SWBTS could consider increasing tuition as the 2017-2018 SBC rate per hour was $250 versus $276 at SEBTS, $294 at SBTS, and $296 at MBTS. The result would be an additional ~$1M if bumped to $275/hr and slightly over $2M if bumped to $295 based on FY 2017 tuition income.
- Expanding the current donor base ought to continue to be an aim as well.
Just a couple of points. I would not be too concerned with the release of restricted funds. This is a normal part of accounting for contributions subject to restrictions. When the restrictions are met the funds move from one column to the next.
For me the items of concern are (1) (as mentioned by the author) the borrowing from restricted funds (not common in my experience), and (2) the “Net cash utilized by operating activities” on page 409 of the 2018 annual report. This line is intended to reflect the cash flow being generated from “operating” activities, as opposed to investing and financing activities. I did not review the 2017 or earlier reports, but if this is a continuing trend it is a troubling sign. Nonprofits routinely rely on non-operating (contributions, etc.) funds to survive, but persistently growing operating losses are a concern.
Also another interesting component on the same page in the investing section showing sale of investments with proceeds of $27.9 million and investment in construction in progress of $15.1 million, apparently for the school of evangelism and mission discussed on page 414.
Increase in tuition and student enrollment will only solve a portion of the problem. How small or large of a portion is left to greater accounting minds than my own.
One of the keys IMO to bringing SWBTS into more solid financial footing is who becomes the new president. He will have to heavily invest in new fundraising and seeking to reclaim donors who were lost during the Patterson administration. It will be difficult and he will need prayers.
When I read the post on Ben Cole’s blog, I was quite concerned about the 20 million dollar loan. This post has reassured me somewhat. Academic accrediting agencies do not count debt incurred for housing like they would ordinary debt. The reason is that rent money collected goes to pay off the loan. So, when accrediting agencies assess the financial health of an institution, debt on housing is not normally a concern. On the other hand the heavy draws on restricted funds presents a grave concern. If SWBTS is drawing down its endowment, that is a major problem. Normally, an institution only draws interest and dividends from its endowment. Usually, this is in the 4% range, though it might be higher in a good year for investments. It does seem that SWBTS has a professor/student ratio that is too low. Or, in other words, SWBTS has too many professors in relation to the number of students. The ideal faculty/student ratio is 1 to 20.
Mark…in order to pay the notes on mortgaged housing, you need students to occupy the units. See the problem? It’s why the note on the housing units, which were completed years ago, had to be restructured. There wasn’t enough money to cover the principal payment.
I am very glad that all these hidden issues have been brought to light. I am heartbroken for my seminary. All of us students ( I am a student) and faculty have been walking through a crucible of pain and heartache since this all began. I can not speak about the finances. These big numbers make my head spin. God has not left us, He will provide SWBTS with the right people to sort it all out. What I would like to convey to you ,Pastors , is please be aware that God is moving on our campus. Under Dr. Bingham’s leadership we have been able to keep a steady course and continue on as a student body. The Spirit of the Most Holy God permeates the campus, more now than in the past three years I have been a student. The reason is because I believe God is sustaining us in the midst of our brokenness. God has given us a most capable and godly leader to serve as interim President. I want to ask Bart Barber to go ahead and make him President. (Yes, I think Bart Barber walks on water and he can make it so! Haha)
I have the benefit of being an older student. I have to tell you Pastors, the students who will be coming to your churches and filling your positions are truly amazing. They are dedicated. They are evangelists, no matter what speciality they have trained for, because they are taught to be evangelists. They are passionate to serve God. They are mission oriented. They have always treated me with kindness and respect (I am an old lady in my sixties). They will be an asset to your church. They will listen to your instruction. They have had a valuable education outside the classroom. They are thriving in the midst of the uncertainty and heartache at SWBTS because they are learning to trust God when their foundations have been shaken.
I ask that while you are discussing SWBTS keep in mind that the seminary is more than buildings, it is God’s hallowed ground. SWBTS is made of of living breathing human beings who have been called by the Spirit of God to ministry. I know these pragmatic discussions about finances must take place. I know investigations must be done. I know serious change must happen. I trust God to put all the right people in place so these things can happen.
I just want you to remember the students and please know this-the faculty have led us through this by their godly example. They have been a shining light in the midst of this dark trial. They are the brightest scholars and the most caring people I know. They are truly pastor-theologians. I pray for my faculty. I would hate for them to be casualties in all this. I believe with my whole heart that God hears the broken cries of His children. I also believe God is in the restoration business. He restored me and brought me to seminary, after all.
This is a word well written, BSJ. We’ve been on SWBTS campus five times since May 30, and with only one exception, faculty staff and student have expressed tremendous gratitude for the concern about the school’s health and future that prompted our efforts to catalyze change. The transition is already underway, and despite the trustee stubbornness, the institution is preparing itself for a promising new leader.
Thanks, Bonnie, for reminding us of the human and spiritual aspects of Southwestern’s situation. I graduated from SWBTS, and I loved my years there. The faculty in the Fish School of Evangelism and Missions are my dear friends. I’m glad to know you all are having a good year on “the hill.” Speaking of seminary hill, I once asked Dr. Leon McBeth why people talked about seminary hill. I grew up in the Ozarks, and I never saw a hill in Fort Worth. Dr. McBeth laughed and told me that in the old days if one stood in downtown Fort Worth and looked to the south, the seminary campus did look like it was on a hill. He also told me that Scarborough Hall is built on the highest point in Tarrant County.
Dr. Terry, thank you for that info on seminary hill. I always wondered why it was called that. I have been so blessed being in seminary. Dr. Eitel has been one of my professors and this semester I get to take Contemporary Evangelism with Dr. Queen. I am very excited about his class because my heart is in missions and evangelism. I am in seminary now because I am convinced the women in our churches need a solid foundation in theology which leads to a solid foundation in missions and evangelism. SWBTS provides that foundation.
Seminary Hill is definitely NOT the highest point in Tarrant County. According to the 7 1/2 minute USGS topographic map, the elevation of the summit of the hill on which Scarborough Hall is located is 770 feet +/- 10 feet.
I only looked at the Ft. Worth quad to see if there were any higher elevations anywhere on that particular quad. There are a number of places where the elevation is greater than 800 feet. For example, the elevation at the intersection of McCart and Clovermeadow is 810 feet +/- 10 feet. The location I am describing is about 2600 feet north of 32 deg 37 min 30 sec N and about 1600 feet east of 97 deg 22 min 30 sec W. These distances were scaled from the USGS quad and are accurate to about 200 feet +/-
USGS Quads are published by the United States Geological Survey. The contour lines on the Ft. Worth quad are drawn 10 foot intervals.
If people don’t fact check stuff then we have urban legends springing up which become accepted as the Gospel truth.
Thanks for caring enough about SWBTS to continue to investigate. I know many people view you as a controversial writer. I think your style is impeccable. Even if people do not agree with you, they should read your blog. Your research is flawlessly executed and it is evident in your writing.
Bonnie – I too enjoyed my time at SWBTS (1993, MAComm; 2003-2006, MATh). I appreciated your words and thank you for your good human reminder.
I believe for many of us who are alumni, the pain you are reading is from the profs who were professionally and personally hurt by the previous administration. We are also writing from a place of grief that the crown jewel of SBC seminaries (even though SBTS alums might disagree) is now struggling financially and in reputation. You and the other current students deserve better. This is where our pain is germinating … at least mine.
Amy . . . you hit the nail on the head. The prime motivator for my efforts — which began in earnest in Nov 2017 — was the way professors and staff had been treated during the reign of terror. SWBTS profs are the lowest paid among the seminaries. They’ve had their retirement taken from them, their health coverage slashed, all while tens of millions have been spent on fake Dead Sea Scrolls, retirement homes for the Pattersons, stained glass windows for Jerry Falwell, Ronnie Floyd, Dick Land, et al, and a 5000 sqft addition onto the presidential home. Nevermind the $1000 a night hotels, household servants, personal chefs, etc. that have siphoned off seminary resources from paying these hardworking men and women an honest wage with competitive benefits. It made me sick and sad. And the trustees signed off on every single part of it.
And that’s why we keep pushing. The termination and eviction of Paige and Dorothy Patterson from their platinum palace does not address the root causes of Southwestern’s crisis. The problem is the complete breakdown of the trustees and their inability for more than a decade to protect the convention’s asset.
They had one job . . . and they mucked it up year after year.
This reply was meant to be posted under Baptist Blogger’s response to my post.
This article and it’s publication makes me very sad and drives me to prayer.
That’s all I’m going to say.
I’ve been asked to clarify my post as it’s apparently caused some concern in the mind of one of the admin team. After discussion with him He’s asked me to clarify – so here goes:
My sadness is based in two notions: first that if the financial situation described herein is anywhere near accurate…there continues to be grave issues at SWBTS. This, as I posted, is saddening and drives me to prayer.
My second reasoning was a slight annoyance in the anonoymous/name withheld nature of the original posting. In today’s climate ( in fact I had read one secular news article immediately before opening my email to find notification of this article) of constant and incessant “sources close to the investigation say…“ And “sources
known to us say….” I was annoyed.
This second concern has been remedied as the original post has been edited from a name withheld article to include the individuals name. So, for those concerned about it that measure of sadness has been assuaged.
Well I do certainly understand the need for anonymity in some cases… A commenter not known or identified to everyone or most reading is one thing… A name withheld (apparent fact rendering) opening article commended to us by the editorial team is a different animal in my view. But, that’s just my little ole opinion.
In this case the author indicated no problem with being identified by name, thus the updating of the article. All the data were gleaned from public reports anyway.
Other cases may be anonymous but we don’t do much of that. In any case, the SBCV team knows who the writers are. I’d guess that the high profile of SWBTS would make some reluctant to be identified. Those are handled on a case-by-case basis.
The controversy at the MO college had some anonymous material. With students involved there was the possiblity of retaliation. I only speak for myself here but I don’t care to do any more anonymous stuff on that college, especially critics who are MBC pastors.
Hope this helps.
Yeah. Thanks William. I didn’t mean to cause any consternation with Any members of the editorial team – I hope you weren’t bothered by my original comment of lament and inclination toward prayer – if you were I don’t know about it….I do see your points and agre with you on MBC.
As a pastor – it’s not uncommon, sadly, to have to deal with anonymous “fact rendering” and it almost always comes accross to me as suspect. That, and as I posted above, incessant anonymous/name withheld secular reporting – I guess I’m overly sensitive to it – even when I lean toward believing (or wanting to believe it) I’m still getting so tired of anonymity/name withheld stuff.
I’m probably alone here – so it doesn’t really matter that much anyway…lol.
Yes Dave, yet many continue to dfend the previous administration – even in light of the facts
Sorry, your comment is unfair and counterfactual. This pastor studied financial records and presented facts. If they didn’t fit your narrative, sorry.
You comment under a false name. Use your real name or future comments will be deleted.
actusl.
“Glenn” comments under the names Mark, Bill, and Billy. While we allow some people to comment under a nom de plum, these are folks who are identified to us. This will no longer be permitted, GlennMarkBillBilly. We do not permit people to comment under multiple names. I only recently realized GlennMarkBillBilly was doing this. I have not been paying attention.
Hiding your identity like that and using multiple names is not acceptable.
Use your name.
There are a few other problems that can be traced in the audit reports. Not the least of which was a change of auditors at a critical moment.
I appreciate this analysis of the finances of SWBTS from the author of this post. I wish someone, anyone, from the trustee board, who we rightfully all hailed as heroes for finally removing Paige Patterson from the seminary, would speak to the issues raised here and the issues Ben Cole is bringing to light.
I realize Ben is polarizing and some don’t like his style, but he is documenting carefully every accusation. At some point, the SWBTS trustees owe the seminary, the alumni, and the SBC an explanation of why they allowed themselves to be carried along by this wave of fiscal mismanagement.
My heart breaks for them because it’s embarrassing to be exposed in this way. But the silence is making it worse not better. And if there is info that renders some of Ben’s reporting inaccurate it needs to be brought to light, to restore some confidence in the trustee system.
I think many of us are trying to be patient and to trust the trustees, it trust without transparency only goes so far.
We think Ben Cole’s style is impeccable. That aside, cash flow at SWBTS is tight every pay period. Bingham is keeping spending in the school’s academic and student services divisions under tight control, but the years of overspending and borrowing are taking their toll. Without a dramatic uptick in student enrollment — the steady backbone that supports CP distributions — the problems will only get worse. Entire line items in the SWBTS budget need to be completely eliminated. The loans for housing were restructured to delay a problem, but between now and 2021 if enrollment (and thus occupancy rates) don’t climb, the problem will only be compounded. It’s like only paying the interest on a max’d out credit card. You only delay the inevitable bankruptcy.
Meanwhile, what is the seminary paying PP currently? What benefits is he receiving? His newly-named nonprofit foundation seemed to have $1 million to purchase a headquarters in Collin County. Is the school still providing him benefits, emoluments, severance, offsets, etc?
Maybe the Hat is going to list it on AirBnB? We keep checking to see.
Personally I like Ben Cole’s style. Lol
Yeah I saw the additional info promised about the “benefits” given to someone who left my alma mater in shambles and had to be forced out.
Are you suggesting that the $1M came from SWBTS or from former SWBTS donors who have redirected their giving?
Either is troubling.
I’m no expert in anything, especially seminaries. But, the question that comes to mind–one that is not new–is: why do we need six seminaries? A spin-off to that question might be: is a giant brick and mortar institution the most effective means to train pastors and leaders in the 21st century? Put cynically that question would be: is an institution like SWBTS a monument to man, or is it really a mission strategy?
I don’t have a good answer to any of those questions, but the current chaos at SWBTS certainly must lead anyone concerned about Southern Baptist missions to contemplate matters deeply.
I also think the same questions could apply to any of the six seminaries. All have, from time to time, experienced the same type of rough seas as SWBTS is now.
I don’t think a proposal to consolidate or innovate our training stands a snowball’s chance in Hades of getting serious consideration. Maybe that’s good. Maybe not.
Golden Gate Alumnus, 1982; SWBTS grad 2000.