The Northwest College Board on Monday approved a unique agreement between the college and the NWC Foundation that will use money from four different sources to raise the $5 million required to access nearly $9.4 million in state funding. That funding was set aside by the 2012 Wyoming Legislature to help build the planned Yellowstone Academic and Workforce Services Building, expected to measure nearly 50,000 square feet, on the college campus.
The plan is a partnership between Northwest College and the foundation. It outlines funding from four sources: $2 million from the college’s reserves; a $5-per-credit facilities fee assessed students, beginning next year; a loan (anticipated to be about $1.2 million) from a Park County financial institution; and a commitment from the foundation to raise another $1.2 million through donations.
The foundation board also agreed to pay back the loan over a period of four years, with the college reimbursing the foundation for money paid on the loan, plus 2 percent interest, over a period of about five years.
The board took the action at its monthly meeting, this time in Meeteetse, with trustees Gloria Hedderman and Rick LaPlante of Powell, Jim Sessions of Meeteetse and John Housel of Cody voting unanimously in favor.
Three trustees, Mark Westerhold and Marty Coe of Cody and Carolyn Danko of Powell, were absent.
The funding plan makes it possible to proceed with a design for the building. CTA Architects Engineers was selected by the Wyoming Construction Management Division for the project in late July.
The project is expected to go up for bid in March or April, with construction slated to begin in June, and college officials hope the building will be completed in September 2014 and ready for the 2014-15 school year.
“We’re delighted to be able to proceed with the building,” NWC President Paul Prestwich said. “It’s our top-ranked unmet need in the facilities master plan.”
“We’re immensely appreciative of the NWC Foundation’s generosity,” Trustee President Mark Westerhold of Cody said in a prepared statement. “We’re so fortunate to have such a strong and supportive foundation alongside us in this financing plan. For decades, the foundation has been there to help the college . . . now it joins us with a new level of support that’s critical to the college’s ability to move forward with the building. All of us on the board of trustees express our gratitude to foundation board members.”
“The Foundation’s previous focus on endowments has allowed us to build regular support for student scholarships and classroom enhancements,” said NWC Foundation President Jim Linton of Powell. “The added beauty is that we now have the financial strength to extend resources to Northwest College’s building project in some exciting new ways.”
The NWC Foundation, a private, nonprofit corporation, will begin its $1.2 million fundraising campaign in coming weeks, said Shelby Wetzel, foundation executive director.
Building construction in a budget-cutting environment
One of the funding options considered was asking Park County voters to increase the college’s mill levy, likely through a general obligation bond issue.
“It’s a particularly bad time to seek a tax increase,” Prestwich said. “Although substantial, the amount NWC must raise to use the state’s capital construction funds isn’t enormous; therefore, we wanted to accomplish the financing as creatively as possible and avoid a public vote.”
“Another major consideration we wrestled with is the strong likelihood of a state-imposed four-to-eight percent budget cut in 2013-14,” Westerhold added. “Having to reduce our budget in the future underscores the need for caution now, as we plan to take on debt.”
Funding new building construction, while at the same time preparing for budget cuts, will understandably be puzzling to the public, Prestwich said.
“While it may seem incongruous, the two are completely unrelated,” Prestwich explained. “The state’s capital construction money came to us in a one-time appropriation, while potential budget cuts would be ongoing.”
Coincidentally, capital construction dollars were appropriated for NWC during the same legislative session when natural gas prices had started to tumble, prompting Governor Mead to call for statewide budget cuts a year from now.
“To our knowledge, NWC has never received capital construction funds from the state’s general fund,” Prestwich added. “It would be irresponsible of Northwest College to not use the state’s $9.38 million appropriation.”
The college’s last public bond issue in Park County was in 1992, when bonds funded construction of a $6.16 million Science-Mathematics Building.
New $5 facility fee
The finance plan also includes a new $5 per-credit-hour fee which will be assessed among students starting in the fall 2013 semester to cover the balance.
“Any time the board considers increasing student fees, we do so with great caution because we want the cost of attendance to be as affordable as possible for our students,” Westerhold emphasized.
The potential of student assistance for the building was first mentioned at a trustees meeting last April while discussing finance options.
“In the last week or so, we communicated our intentions to Student Senators, including newly elected 2012-13 officers, and we’ll present the full plan when Freshman Representatives are elected in September,” Prestwich said.
At least two other Wyoming community colleges — Central Wyoming College and Casper College — implement such a per-credit-hour fee for facilities.
In addition to students benefitting from the building they help fund through the new fee, the college pledges that future proceeds will be used to fund enhancements that will improve students’ experiences, such as upgrading wireless Internet delivery throughout campus, Prestwich said.
While initial plans called for the college to commit $1.5 million from its budget reserves, the amount was increased to $2 million to help make the financing package possible.
“That takes our budget reserves down a bit more than we had originally planned,” Westerhold said, “so we’ll need to be very cautious about expenditures over the next few years, especially considering the likelihood of significant budget cuts a year from now.”
State law dictates that Wyoming community colleges’ budget reserves may not exceed an amount equal to 8 percent of their operating fund. The $2 million commitment will leave NWC’s reserves at approximately $1.3 million, or about 6 percent of its operating fund.
Trustee Gloria Hedderman noted during the meeting that the use of the reserves still leaves the college on sound financial footing in the event of unanticipated expenses.
Mitigating loan debt
As part of the process to secure a $2 million loan, the college will solicit proposals from all Park County financial institutions later this month, Prestwich said.
To help ensure that the college’s budget isn’t strained by loan debt, two funding vehicles will provide assistance—the NWC Foundation will step back into the picture, and help from future students will be called upon as well.
First, the NWC Foundation will commit up to $300,000 a year toward annual loan payments estimated at $525,000 for four years. NWC will repay the foundation over the next nine years.
“We believe the ability to leverage state dollars with private ones is a wise investment of the foundation’s current resources as well as for new donors to the project,” Wetzel said. “Repayment of foundation funds by the college is important, as it allows us to meet our obligations to donors who previously established endowments with the foundation.”
The proposed 49,700 square-foot building will provide diverse classroom, laboratory, and faculty office space, including much-needed space for growing career-technical, transfer and workforce training programs.
Two high-tech classrooms with podcasting capabilities are planned in the building, plus a 75-student-capacity classroom. In addition, a 300-seat conference facility with dividable spaces will accommodate workforce training programs, conferences, meetings, community events and credit-bearing classes.