Spring 2019 Update to the Rensselaer Community
From the President's Desk
As the spring semester begins, I welcome everyone back to campus. We are off to a strong start in 2019. I look forward to the rich and rewarding semester ahead, and would like to take this opportunity to share a few highlights of where we are as a university.
The demand for a Rensselaer education has never been stronger. We had over 20,400 applications for a place in this year's freshman class - another record - leading to a freshman class of 1,778 students. We were able to select, and enroll, an extremely talented and diverse group of students. The average SAT score of entering students was 1410, with a middle 50 percent range of 1330-1500. The Class of 2022 includes more women and underrepresented minorities than any class in our history.
Our students are attracted to Rensselaer because of the exceptional quality of our faculty, the strength of our distinctive programs, and our rising reputation. I thank our deans and department chairs for their leadership, and all of our faculty for their expertise, collaboration, and commitment.
Rensselaer Orchestra at Carnegie Hall
In October, we applauded the inaugural performance of the Rensselaer Orchestra at Carnegie Hall - a historic event for Rensselaer Polytechnic Institute, and a momentous occasion for our student performers, their family members, classmates, friends, and distinguished members of the Rensselaer community.
That night, we also marked the launch of our new Bachelor of Science in Music degree program, which focuses on educating musicians for careers in creative professions by combining depth in music with breadth in the sciences, media, and engineering - preparing them for the multiplicity of roles available to musicians in the 21st century, including interactive arts, social music networks, and music production for media such as video and film.
10th Anniversary of the Curtis R. Priem Experimental Media and Performing Arts Center
In October, we celebrated the 10-year anniversary of the opening of our Curtis R. Priem Experimental Media and Performing Arts Center, or EMPAC - one of the most technologically advanced performing arts centers in the world - which is a laboratory for immersive experiences, at human scale, of all kinds. The unique capabilities of EMPAC have allowed artists-in-residence, Rensselaer faculty and students, and researchers in science and engineering to turn their ideas into entirely original experiences, and scientific and technological advances. They have found here leading-edge environments for theater, image, sound, and immersion that integrate traditional and digital tools in entirely new ways - from a 360-degree "surround" screen - which can be assembled in the studios - to a new wave-field synthesis audio system comprising 576 independently controllable speakers. EMPAC has undergirded research in cognitive science, data visualization, artificial intelligence and machine learning, and gamification. It has empowered exploration and served as inspiration.
We completed a successful second pilot of The Arch, our unique program for expanding the perspective of our rising juniors with personal and professional development opportunities, as we prepare for the full launch this summer. Under The Arch, all rising Rensselaer juniors remain on campus the summer after their sophomore year, taking junior-level classes and benefiting from the undivided attention of their professors and our Student Life staff. This allows our students to spend a semester or more away from campus during the traditional junior year, and still graduate on time.
With the help of our Center for Career and Professional Development, students will choose an away semester experience that suits their interests and passions, whether an internship or launching a business, or a volunteer or research experience, or an approved Individual Learning Experience.
Investment for Results and Financial Position
Thanks to our strategic investments in students, faculty, and the campus, as well as increases to the endowment and declining debt, we are well-positioned for the future.
Our market position and financial status continue to strengthen. Fiscal Year 2018 results reflect an 18 percent increase in net assets, an exceptional operating result of $23.5 million, one of the strongest in its history, and strong cash flows from operations of nearly $10 million.
Over the past 20 years, Rensselaer has invested $1.4 billion in the implementation of the Rensselaer Plan, of which more than $850 million has been invested in campus facilities. Over $200 million of investments were made in core infrastructure improvements including the upgrade and expansion of classrooms, labs, student life program facilities, residence halls, and dining facilities, as well as the expansion of electrical capacity enabling the creation of the most powerful computational capabilities at a private university. We also have invested in facilities for the hiring of new faculty. Additional investments were made to develop the Curtis R. Priem Experimental Media and Performing Arts Center (EMPAC), the Center for Biotechnology and Interdisciplinary Studies (CBIS), and the East Campus Athletic Village (ECAV). These investments have enhanced the student experience, enabled the development of new academic programs and the expansion of research into new areas. These key investments were funded through a combination of gifts, internally generated cash, and debt.
We remain committed to ensuring that commitments made to retirees, faculty, and staff who are participants in the legacy defined benefit pension plan will be honored by ensuring the plan has the necessary assets needed to meet its obligations. As part of this commitment, Rensselaer has made over $226 million of contributions to this plan since fiscal year 2000. Of these contributions, $138 million was funded through long-term borrowings, contributing to the growth in long-term debt. Given the improvement in the financial position of the Institute since 2015, no additional debt has been incurred in support of the pension plan and future contributions are anticipated to be funded with cash from operations. Fiscal Year 2018 contributions to the plan were $15.7 million. While we have seen volatility in the pension liability over the past several years - driven by changes in key actuarial assumptions such as the discount rate utilized for determining future obligations, the assumed rate of investment return on pension assets, and participant life expectancy - we have seen significant reductions in the pension liability in both Fiscal Year 2017 and Fiscal Year 2018. In Fiscal Year 2018, the pension liability decreased from $125 million to $90 million at June 30, 2018.
To make the strategic investments and to ensure the health of the defined benefit pension plan, we incurred $750 million of debt (including $138 million for the defined benefit pension plan), peaking in Fiscal Year 2015. Because of the return on our strategic investments, in Fiscal Year 2017, we committed to "The Crossover," an eight-point cost-saving and asset-generation plan to consolidate and strengthen the balance sheet. A key milestone in this plan was to have long-term debt and endowment equalized by Fiscal Year 2020, a goal which was achieved by the end of Fiscal Year 2018, well in advance of the target date.
We have continued to strengthen the balance sheet and our financial position through the refinancing of our existing 2010 taxable debt, which was accomplished in December 2018. This was achieved through a combination of a taxable bond offering of $135 million, a private placement of $65 million, and a repayment of principal of $5 million. This has enabled us to reduce our ongoing interest expense, to limit our long-term interest rate risk, and to fully amortize the debt over the terms of the obligations. In Fiscal Year 2019, including the $5 million redemption of 2010 taxable bonds, we expect to reduce long-term debt by $14 million.
We remain committed to ensuring the health of the legacy defined benefit pension plan, and we expect to contribute approximately $12.8 million to that plan in Fiscal Year 2019, all of which will be funded with cash from operations.
Transformative: Campaign for Global Change
In October 2017, we launched our capital campaign, Transformative: Campaign for Global Change, which is well underway. The three pillars of the campaign are:
- Bridging the Gap: Create and build stronger endowment for student financial aid;
- The Faculty 500: Create new endowed chairs to attract and retain the best faculty; and
- Building the Third-Century Campus: Expand and equip the Troy campus for its third century.
Together with Institute leaders, I have been traveling across the country, and around the world, to engage with the Rensselaer community. We have made significant progress to date on the first pillar - Bridging the Gap. Since the launch of the campaign, Rensselaer has received more than $47 million in new scholarship commitments. In total, commitments to Bridging the Gap now exceed $111 million - due in no small part to the generosity of our alumni and industry partners.
I am also pleased to share that commitments in support of the second pillar - The Faculty 500 - have reached $50 million to date. Our intent for the third pillar - Building the Third-Century Campus - is to expand the Jonsson Engineering Center, to create the next generation of high performance computing infrastructure, to expand student housing and athletic facilities, and to build a new multidisciplinary Center for Science.
We are well on our way to our billion-dollar goal, and look forward to reaching the halfway point of the campaign in the near future. With the ongoing and robust support of the entire Rensselaer community and our partners, and a steadfast commitment to The Rensselaer Plan 2024, I have every confidence that we will succeed in building the endowment we need.
I personally thank everyone who has supported Rensselaer and the Transformative: Campaign for Global Change. Together, we will change the world.