Belhaven’s New Pilot

Belhaven Senior, Ethan Rodgers was notified this week at his Air Force ROTC Detachment at Jackson State that his application to be awarded a coveted “pilot slot” for the United States Air Force was accepted. He is the FIRST pilot to ever come out of this local ROTC program.

The speed with which he was tapped for this honor was amazing–he applied only 2 weeks ago and was told that there were rounds of picks and to expect to hear back in March or as late as April. The fact that he received the spot in only 2 weeks means he was a top pick, or a “first round draft pick” to put it in athletic terms.

Following Ethan’s May 2010 graduation from Belhaven, he will immediately become a commissioned officer in the USAF and proceed directly to flight training (which takes two years) at either Vance AFB, Oklahoma or Whiting Field in Milton, Florida.

The “pilot slot” carries an inherent value of about $2 million – the value of the training.

This is a big time deal, so be sure to congratulate Ethan when you see him.

You’re NOT Fired

I understand the business office scared some of you when you received an information packet at your home about COBRA insurance in the past couple of days. COBRA is the individual insurance that a company must provide employees if you’re laid off from a job – so that you can stay on the company insurance policy for 18 months at your own cost.

They should have put big letters across the envelope: “YOU”RE NOT FIRED” because some of you went through the envelope looking for what you assumed was an accompanying pink slip.

Sorry for the scare……got your adrenaline going I know.

1) We are required by the federal government to mail all of those statements to each employee. It has nothing to do with your work status at Belhaven, other than confirms you are an employee.

2) If we were going to lay off someone, that news would always be a face to face meeting with tears and prayers. I know of one ministry who left 45 pink slips on desks for when they arrived in the morning. Ouch! Not the right way to do things. I pray we never come to needing to cut back, but if we ever did, it would be done right.

3) Next year, the required COBRA letter will say in big letters YOU”RE NOT FIRED!

Lots of people are being let go right now, so that was a rough time to have that mailing go out. Sorry for the confusion it caused, but hopefully it drove you to your knees to thank God for the work He has called us all to together at Belhaven.

Harvard’s Financial Position……and Belhaven’s

Every day I study in detail a half dozen or more reports about how colleges and universities are dealing with the global economic crisis. By analyzing their decisions, it helps me to consider all of our options should the economic crisis worsen.

Fortunately, to date, Belhaven is doing wonderfully well financially – except for what are called “non-cash” items, namely our endowment where we have lost over $1.5 million. We always plan to take only a minimal payment annually from our endowment, so even that loss has not hurt our operational bottom line. This huge investment loss does hurt our year end balance sheet and our audit significantly – but only minimally impacts our general operational funds.

With the belt tightening we did this fall (ahead of the curve of most schools) we’ve been able to stay on a steady course which should bring us in with a positive bottom line for the year in our operational fund.

Our adult enrollments are at an all time high, and climbing. Our traditional applications for next fall are also at an all time high.

But we are seeing an increase in the number of students needing “special judgement,” which is a category the government gives us to provide a window for repackaging aid for students who have had significant fiscal change in their lives. And we know that as the economy gets even tighter (which it will) that strain will show in the financial picture of the families we serve.

For our part, we have announced our lowest tuition increase in decades for next year and are doing all we can to help students afford a Belhaven education. Of course, not having raises this year has hurt our employees, but we’ve been able to retain every position.

This economic crisis will likely be gone before most graduate, so we need to not allow them to miss the quality Christ-centered education they need just because the immediate times are tough.

If you are interested to know how the wealthiest school in the country deals with cut backs, you’ll find this story a good summary of their actions and challenges. They are laying off people, borrowing money long-term for immediate operational needs, cutting scholarships, and slashing programs – five steps Belhaven has not had to take, I believe, because we’ve always been good stewards of the funds God entrusts to us and we run very tight budgets every year.


February 21, 2009

Endowment Director Is on Harvard’s Hot Seat


Harvard may be the nation’s wealthiest university, but it is short on cash.

The school relies on its endowment to generate a third of the money for its operations, and the endowment is on the verge of posting its biggest loss in 40 years. With much of its money tied up for the long term, it is scrambling to meet some obligations.

Harvard has frozen salaries for faculty and nonunion staff members, and offered early retirement to 1,600 employees. The divinity school has warned it may not be able to cover tuition for all its students with need, the school of arts and sciences is cutting its billion-dollar budget roughly 10 percent, and the university president said this week than the unprecedented drop in the endowment was causing it to delay its planned expansion, starting with a $1 billion science center, into the Allston neighborhood of Boston.

The school has even added to its debt by issuing $1.5 billion in new bonds, its largest such offering ever.

Turning the ship around turns heavily on Jane Mendillo, who took over the Harvard endowment on July 1 — which in hindsight looks like the worst possible moment to step into a job once held by some legendary investors. The endowment, the largest of any university in the nation, has shrunk by at least $8 billion, to $29 billion, since she arrived.

Undoubtedly, Ms. Mendillo inherited a complex portfolio, with many investments involving leveraged bets on equities and commodities that are difficult to unwind. Within days of her arrival, oil prices peaked and, with other commodities, began a precipitous fall. Stock prices commenced a sharp decline. Then came the cash calls on her portfolio.

In an interview, she recalled the Sunday in September when she learned Lehman Brothers would file for bankruptcy — a night she was celebrating her 50th birthday — as the beginning of her 12-hour workdays. “Clearly, that was a big turning point,” she said, adding that her longer-term strategic goals were overrun by urgent needs, like raising cash.

“There were some things that I knew were going to happen and be challenges,” said Ms. Mendillo, who speaks softly, choosing her words carefully. “There were others that I don’t think anybody could have foreseen.”

One she might not have anticipated was the intense pressure caused by the Allston expansion, according to one person with knowledge of the endowment. Several years ago, the university had envisioned an ambitious capital expansion program stretching for more than a decade. Lawrence H. Summers, then Harvard’s president, had raised the possibility of locking in interest rates that appeared to be at historic lows, a plan the university adopted, said several people familiar with the endowment.

All went well at first. But in the second half of last year, interest rates plummeted, and Harvard turned to the endowment to meet hefty collateral calls, which could rise to $1 billion if rates remain weak, according to a person with knowledge of the university. According to a statement Friday from James R. Rothenberg, treasurer of the university, Harvard has taken a series of steps to reduce the risk associated with the transaction.

The endowment was squeezed partly because it had invested more than its assets, a leveraging strategy that can magnify results, both good and bad. It also had invested heavily in private equity and related deals, which not only lock up existing cash but require investors to put up more capital over time.

To free up cash, Ms. Mendillo has had to make some unpleasant choices, selling $1 billion in equities, including some in hedge funds with outstanding performances. A source familiar with the endowment identified Convexity Capital, run by one of her predecessors, Jack Meyer, as well as Baupost Group, led by Seth Klarman. Neither would comment for this article. Though she would not confirm relationships with specific managers, Ms. Mendillo said, “We have taken money from a lot of funds as the size of the portfolio has changed.”

She also sought to sell some of the endowment’s large private equity positions, to little avail.

Harvard, like other universities, has pushed into alternative investments, including private equity, which now constitute 13 percent of its total assets. In good times these investments return money as deals are completed. Now the returns have dried up, yet the commitments for new money remain, causing perhaps her greatest headache.

“The university needs cash, and we have investments that need capital,” Ms. Mendillo said.

She has raised the equivalent of 3 percent of assets for a cash reserve. “For a long time, Harvard had a negative 5 position,” she said. “That means that 105 percent of the assets are invested at most times.”

Her critics say that Ms. Mendillo’s overall investment strategy is unclear and that while the crisis erupted faster and with more magnitude than could have been predicted, she could have moved more quickly to manage the risk. Supporters counter that her predecessors essentially left her hamstrung with a portfolio that was illiquid, and give her high marks on investing acumen.

“She does not beat you over the head with her knowledge, although it is clear that it is there,” said Andrew K. Golden, who oversees the endowment at Princeton.

Harvard has said its overall endowment portfolio declined 22 percent from July through October and that it could end the fiscal year in June down 30 percent. That performance is in line with the average for university endowments, though some have done better. Yale’s endowment was off 13.4 percent in the comparable four-month period, while Princeton’s was down 11 percent, and both have projected a total 25 percent drop for the fiscal year.

Like Harvard, many schools are responding by taking on more debt. Princeton sold $1 billion in bonds recently, its first taxable offering since 1994.

Before landing on the hot seat, Ms. Mendillo ran the much smaller endowment of Wellesley College. But she honed her investing style earlier at Harvard. After graduating from Yale and its school of management, she was an equity analyst and a consultant. David Swensen, a friend who manages Yale’s fund, advised her to work for Mr. Meyer if she wanted to learn portfolio management. She started covering steel and insurance industries, because “that was what was left over” and stayed 15 years.

Mr. Meyer racked up a stellar record running the endowment, putting Harvard’s returns second only to Yale’s. But complaints about the size of managers’ pay packages, relative to the academics’ pay, ultimately prompted Mr. Meyer and many of his acolytes to leave in 2005.

A period of relative instability ensued. Harvard hired Mohamed El-Erian, who stayed just two years before returning to a top post with Pacific Investment Management Company. Before and after Mr. El-Erian’s stint, the endowment relied on board members as interim managers.

Though the Harvard endowment posted a strong 8.6 percent gain in the year before Ms. Mendillo arrived, David A. Salem, who heads the Investment Fund for Foundations, says he believes that Mr. El-Erian did the school a disservice by hiring people to implement certain strategies and then “jumping ship.”

Mr. El-Erian declined to comment for this article.

Mr. Salem, who knows Ms. Mendillo from the board of the investment fund, also said that Mr. El-Erian appeared to have left Harvard with an extremely illiquid portfolio, a situation complicated when a permanent replacement was not named for seven months after his departure.

According to two people familiar with Harvard’s strategy, the endowment had entered into swap agreements under which it paid short-term interest rates and received the returns on stock and commodities indexes. Those indexes declined sharply in the third quarter last year, and Harvard had to come up with collateral just as it was forced to meet other cash needs.

Though she has let go about 25 percent of her staff, or roughly 50 people, as the portfolio shrinks, Ms. Mendillo seems intent on keeping 30 percent of the assets under internal management.

She is also trying to manage expectations.

“I am preparing the Harvard portfolio for the next one to three years for returns that will not be as attractive as what we expected on average,” she said.

Report From Alumnus In Baghdad

The chief of Chaplains in Iraq is a Belhaven graduate.  Chaplain James Carter greeted the faculty and staff by video at the beginning of the school year, and has spoken in our chapel in the past.  He was head Chaplain at West Point before these tours of service in Iraq.

He is coming home today – and this is his final email from Iraq:

Dear Friends,

I have about six days left in Iraq. (and I’m reflecting and counting the days)  I want to personally thank all of you for your prayers and faithful support to me over the past 14 months.  This has been a tremendous tour of duty and I’m so thankful to our gracious Lord for His faithfulness.

This past week was an historic time in Iraq as the Iraqi’s went to the poll’s to vote, and it was a quiet and peaceful election day without any attacks.  This was unheard of a year ago when we were having 70-80 attacks a day.  It was also historic because of the record turn-out, and I was thankful and proud to observe and experience equality among the people, and for them to experience a taste of democracy.  Our Soldiers have labored, served, and sacrificed to set the conditions for this to happen. It was a tremendous experience to witness this for the Iraqi people and for our Soldiers to see the fruit of their labor.

I’ve also been very thankful to our gracious Lord for the dedication, devotion, and determination of our Chaplains and their Assistant’s. Over 4,000 worship services were conducted for the glory of God and thousands of counseling sessions were provided to our Soldiers to help them grow in their spiritual development by 70 Chaplains who moved throughout the battlefield and the dangerous roads of Baghdad to bring God to Soldiers and Soldiers to God. They risked much to ensure the grace, mercy, and love of God was shared, and it was encouraging to see
men and women grow in their faith. A number of them were in very hostile conditions which included mortar attacks, rocket attacks, and IED’s, but they continued to press on for the purpose of fulfilling their calling to share the love of God to Soldiers.   Please remember them in your prayers as they return home.  The moral compass of our Army is stronger and points true north as a result of our Chaplains and their hard work and ministry.

Finally, I ask you to take a moment and pray for our fallen and for their loved ones.  We lost 103 Soldiers over my 14 plus months in Baghdad.  We all understand that freedom comes at a price.  I went to all the Memorial’s here in Baghdad and last night we ended our combat tour by honoring our fallen by having our “End of Tour Memorial Dedication.”  I thanked God for their service and sacrifice, and I also shared how these Soldiers served and sacrificed for Freedom, Family, Faith, and to provide a brighter Future for America and for Iraqi.  It was a sacred time as our Chapel was packed with men and women who came to honor our fallen and to honor God for his goodness to us. “No greater love than this, that a man lay down his life for his brother.”  What a blessing it is to live in a country that recognizes this and to be able to enjoy the gift of freedom.

This will probably be my last major email as I transition in the next couple of days.  Thank you again and may the love of our Lord bless and keep all of you.  I look forward to seeing many of you in the months to come.

In Christ our Lord,

Crichton College Sold to For-Profit Company

Many of us at Belhaven have connections at Crichton College in Memphis. This fall and winter we’ve been working with them regarding options for their future. Crichton is also a member of the Council for Christian Colleges and Universities.

The sale of the College was announced today. We need to be praying for the faculty and staff of Crichton, many of whom are seeking a new place of service.

While many schools are suffering financially this year, God has blessed Belhaven and we remain solid during this challenging economic time. We’ve always been good stewards of the resources the Lord has given us, and so during these tough times did not have to “tighten the belt” so we can’t catch our breath, like is happening at too many other schools.

We are being extra careful in our spending, and as we have already announced, have only a minimal increase in tuition next year in order to help our students.  But we know who holds tomorrow – and while this recession may deepen, God has continued to give us all we need to not in any way diminish the Belhaven experience for our students.

Here is the story on the sale of Crichton from Inside Higher Education

Saving a Christian College
This may be about to become a familiar story: a small, tuition-dependent private college has agreed to become a for-profit enterprise.

Two weeks after Memphis-based Crichton College said it would eliminate its traditional daytime classes to focus on its evening college for adult students, the evangelical Christian institution’s Board of Directors announced that it had entered into a “strategic alliance” with a California-based investor who stepped in to rescue a failing business college in Cleveland last year. The investor, Michael K. Clifford, has been involved in several other such transformations in the past, including those at Grand Canyon University, another formerly struggling college with a spiritual mission.

Takeovers of small private colleges have occurred irregularly but in slowly growing numbers in recent years, and with the country’s economic situation in decline, predictions of major troubles for small, underendowed and tuition-dependent colleges may accelerate that trend. Crichton’s situation offers a case study of one such data point:

For years, Crichton had depended far more than is healthy on fund raising to make its budget work. When the college diverged from its longstanding emphasis on adult students by expanding its enrollment of traditional-age undergraduates earlier this decade — in large part through growth in its athletics programs — it extensively discounted what it charged students for tuition. That decision expanded the college’s revenue gap and required Crichton to regularly lean on funds from a small cadre of donors for up to a quarter of its annual $12 million budget.

Last fall, a consultant brought in by the college’s Board of Directors rigorously examined its financial situation, and the picture that emerged was bleak: a $4 million budget shortfall for the 2008-9 fiscal year, with a fund raising goal of $3.3 million to help fill it.

Last October, the board considered a wide range of “strategic alternatives,” from partnerships with colleges of various types to shutting the doors, said Sam Garrett, a vice president who was hired in 2008 to try to turn the college around. The board agreed to cut $1 million out of the budget through staff reductions and decided to wait until January to see how much money the college could raise.

Most of its fund raising dollars tend to come in by December, given donors’ end-of-year tax considerations, but by the end of 2008 Crichton had raised just $300,000 of the $3.3 million in charitable contributions it had budgeted for, said Garrett. Several multiyear commitments made by a “number of very generous donors” were expiring, and when they chose not to renew, the board realized that the numbers were not going to work.

By the board’s January meeting, Garrett said, its members “decided we needed to partner up” to survive.

The college’s consultants had had discussions with “several local and regional colleges about mergers,” as well as several for-profit investors, Garrett said. Many of them, he said, “would love to come in and take our adult population that already has a market in Memphis,” but “we were looking for somebody willing to continue the vision and the mission and the legacy of Crichton, as well as to help us transition into being sustainable.” The board settled on Clifford, and hammered out a deal in the last several weeks; the terms were not disclosed.

Clifford said he was attracted to Crichton by its emphasis on adult students and the “thought of focusing on preparing mental health professionals from a Judeo-Christian perspective.” “I love the mission and the curriculum, and we just need to put money, management and marketing to work.”

He said that assuming the deal can earn the approval of federal and state regulators and the Southern Association of Colleges and Schools, Crichton’s regional accrediting agency, he expected to pour $3 million to $5 million into the institution, expanding its ground-based operation but also expanding its online offerings.

“This is not going to be the University of Phoenix, we’re not going to have hundreds of thousands of students,” Clifford said. “But while there are a lot of places for 17-23-year olds to go to school in Memphis, there’s a big demand there for Christian mental health professionals.”

Top Ranked Division II Baseball Team Falls to Belhaven

Blazers Upset Top Ranked Delta State

Cleveland, MS-On a cold and windy day for baseball, the Belhaven baseball team traveled to Delta State University on Tuesday afternoon and came away with a 7-1 victory over the Statesmen. It was the Blazers sixth win of the season against just one defeat in 2009. Tuesday’s contest was the first game of the season for the Statesmen who entered the year ranked first in the NCAA Division II preseason poll.

The game was a pitchers duel through the first seven innings of play with the score tied at 1-1 going into the eighth inning. After the Blazers went down in order in the top of the first inning, Delta State scored their only run of the game in the bottom of the first when third baseman Kellen Boseman hit a two out single to bring home Clay Sartain from third base making it 1-0 Statesmen.

Belhaven got on the board in the fourth inning when Timmy Foster singled with one out to get the offense going. Foster was then forced out at second when Craig Westcott hit into a 6-4 fielder’s choice for the second out of the inning. Delta State pitcher Korey Cunningham then uncorked a wild pitch sending Westcott down to second with Craig Dean at the plate. Dean then shot a two out single into left field bringing in Westcott to tie the game at one a piece. Dean was thrown out trying to stretch the single into a double to end the inning.

The Statesmen would mount scoring threats in the bottom of the fourth when David Mooney led off the inning with double and in the sixth with a one out single by Bozeman and a subsequent balk by Hinton moving him to second. However, each time Hinton stepped up and made some quality pitches to keep Delta State off the board. The Statesmen made a bid to regain the lead again in the seventh, putting runners on first and third, but once again Hinton battled to keep the game tied 1-1.

In the top of the eighth, Brian McCormick was hit by a pitch to lead off the inning. Lake Eiland then came to the plate and bunted the ball back to the mound. Pitcher Toby Easterly tried to get the force at second, but McCormick hustled up the line and beat Easterly’s throw. Chanse Cooper followed with a textbook sacrifice bunt moving McCormick to third and Eiland to second.

It looked like Easterly might wiggle off the hook by striking out Shawn Diehl leaving runners at second and third with two outs. Timmy Foster came to the plate and fell behind in the count 0-2, but on the next pitch lined a two out single into left center field plating two runs. Westcott followed with a single and then Dean doubled down the right field line, driving home the third run of the inning giving the Blazers a 4-1 advantage.

Riley Galloway came in to relieve Hinton in the eighth and worked a scoreless inning to set up another three run frame by the Blazers. All three runs came with two outs and were unearned due to a key error by shortstop Devin Goodwin which gave Belhaven an extra out. Foster delivered again in the clutch blasting a two out double into left field with runners on second and third extending the Belhaven lead to 6-1. Westcott added another insurance run with a two out single up the middle sending home Cooper.

Galloway came back out for the ninth and slammed the door on the Statesmen to preserve the 7-1 Blazer victory and earn his first save of the season. Hinton earned his first victory of the year going the first seven innings allowing only one run on five hits. Easterly was tagged with his first loss of the season for Delta State.

Offensively, Belhaven was paced by Foster who went 3 for 5 with four RBI’S. Dean had three hits in four at bats and added two RBI’S. Westcott got credit for the other run batted in, collecting two hits in five at bats.

The Blazers return to action in their home opener Friday night at Smith Wills stadium as LSU-Shreveport comes to town for a three game Gulf Coast Athletic Conference series. Friday’s game is slated for 4 PM with Saturday’s double header scheduled to begin at 1 PM. All the play-by-play action can be heard via Stretch Internet through the Belhaven Athletics website.