When applied to Central’s housing and dining system, a 3-percent annual set-aside would equal more than $7 million on an asset valuation of around $240 million. So here we have a serious problem, as the annual cash generated from the system is typically between $3 million and $5 million. In order to generate more cash, rates would have to increase so far above what is bearable for students, and would put CWU so far out of what is reasonable in the marketplace, that it becomes an unreasonable answer. It seems far more reasonable to increase rates steadily over time, acknowledging that strategic choices will have to be made in the future. Housing and Dining has a 10-year asset renewal plan. The plan removes a significant amount of the deferred maintenance backlog and also makes visible improvements to student spaces. Using funds accumulated from prior operations as well as projected resources (including rate increases above general inflation), we plan to invest more than $40 million in asset stewardship over the next ten years. The chart below identifies the required reserve for CWU’s debt policy (equal to one year’s bond payments). The red line projects our reserve balance when we spend according to plan, but only increase housing and dining rates 3 percent annually. Clearly we would have to make other choices after 2021 in order to maintain compliance with our debt policy. The yellow line represents our projected reserve balance with a 4 percent rate increase annually, which would allow us to carry out our plan until about 2027. Finally, the green line represents a 5 percent annual rate increase, would allow us to fully fund our investment plan, and leave some funds available for the next investment plan after 2030.
CWU Housing & Dining Fund Projected Reserve Balance
$30 M
5 percent Rate increase
4 percent Rate increase
$20 M
$10 M
$ M
-$10 M
-$20 M
3 percent rate increase
-$30 M
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