Last year, Dr. Bowling addressed the Administrative Team with the dilemma the university was facing: funds were running out and municipal bonds were multiplying in number every year.
What seemed like a random email from the U.S. Department of Agriculture came to Dr. Doug Perry within the past year. “It caught my attention,” Dr. Perry said. “Now I read emails more carefully.” Sending it to his own team to check the credibility of the presuming spam email, it continued through the ladder of professionals until it reached Dr. Bowling.
This email turned out to be crucial for the financial future of Olivet. The USDA was offering Olivet Nazarene University a loan.
The loan itself is worth over 25 million dollars. It is an arbitrage loan, meaning money is borrowed and immediately able to invest somewhere else, while receiving interest. The loan has been set aside to gain a consistent interest until the year 2035 where the account will then either be opened by the board of directors at a value of $100 million, or continue to multiply while only minimal amounts are removed.
A significant benefit of taking this loan through the United States Department of Agriculture is that there is a fixed interest rate on the loan and there are no restrictions as to what the loan will be used for. What does this mean? Freedom in finances and freedom in the future.
“Through one year of hard work, municipal bonds (state funds) were consolidated into one big loan that was recapitalized to save the university money” Bowling said. Essentially, hundreds of hours were spent to get Olivet as close to debt free as possible.
Those hundreds of hours came from Director of Financial Services, Dianne Schaafsma and her team. Their constant diligence on the situation helped refinance debts and save the university millions. Dr. Perry recounts the process of “being up one day and down the next.”
Before this loan went through, the municipal bonds had contracts that restricted the university in spending money where the contract holders did not want money spent. For example: Olivet’s contract with the Chicago Bears could only be a yearly document due to a restriction one bond holder had. Many other restrictions were in place and limited the University’s flexibility with how it could function. “We were essentially living pay check to pay check,” Dr. Bowling said when discussing the contracts.
During the next board meeting, Dr. Bowling is approaching the Board of Directors with a policy statement regarding the loan and how it shall be used, knowing there is a great possibility of the funds giving great support to the future of Olivet.
Funds for projects and maintenance will come via the interest gained per year, roughly $2 million.
Here’s to a financial future that looks bright and fruitful for a university we know and love.
Photo by: Morgan Byers