The Man Behind Western's Plans: Baca credited with making bold campus projects financially feasible
Sept. 23, 2010 (by Chris Dickey, Gunnison Country Times) -- Alumni who are returning to Western State College for the first time in years for this weekend’s homecoming will no doubt recognize major changes in their alma mater. Chief among them will be the sweeping overhaul of campus that includes impressive new facilities, efficiently renovated academic buildings and a major face lift in the works to the college’s signature building, Taylor Hall.
They’ll likely take a tour of the new College Center. They’ll see the signs for two fancy new facilities planned — a student fieldhouse and a campus housing complex.
They’ll probably hear well-known President Jay Helman talk about how all of these capital improvements fit into a vision for the future of the institution, about how they are part of a plan for the college to position itself in a hyper-competitive higher education market.
And they’ll likely hear how the new-and-improving campus is the key piece in the plan to increase enrollment and retention at Western.
But they may not hear about the guy who came to work early and stayed late crunching numbers to make this transformation happen. With more than $50 million in capital upgrades taking place over the past couple of years, and another $50-plus million on tap, there has been a lot of financial info to get straight.
In a quiet and unassuming manner, he works mostly behind the scenes. But college leaders and others give him a great deal of credit for helping turn the dream of a transformed campus into reality.
“Brad Baca is the unsung hero of this whole thing,” President Helman said.
Baca has been Western’s vice president for finance and administration — otherwise known as the institution’s chief financial officer — since 2002, just eight years after the Trinidad, Colo., native earned his bachelor’s degree in government from Dartmouth and five years after receiving his M.A. in public policy from CU-Boulder.
He may be relatively young to hold such a high-level position (he’s still in his 30s), but saying Baca is a “quick study” is one of the most common refrains from those who work alongside him.
Helman doesn’t hesitate in calling Baca “the best CFO in the state.”
In June, Western closed on the largest financing project in school history, issuing more than $50 million in bonds to construct the two new facilities — for which the interviewing and hiring of architects and general contractors is happening right now. It was an ambitious, bold and in some ways fast-tracked deal.
Anytime money is borrowed there is risk involved. But that’s especially so for an institution borrowing about one-and-a-half times the amount of its overall annual budget and with enrollment — the source of paying back the debt -— not exactly trending skyward over the past several years.
But it was a concept college leaders believe in strongly. The students — although via a very slim margin in a campus-wide vote this past May — bought into it as well by agreeing to a new facility improvement fee.
And, perhaps most importantly, to the WSC Board of Trustees, the national rating agencies who analyzed the deal and the investors who purchased the bonds, the numbers worked.
“When we started out, there was a lot of skepticism,” recalled WSC Trustee George Delaney. As the former state budget director and current finance manager for the Denver Public Works Department, Delaney has a little experience analyzing spreadsheets and pro formas.
“Once Jay sold us on the concept and the need (for the facilities), then the board really focused on Brad’s work. The devil is in the details, and Brad’s role was to run through all the scenarios.”
It’s a very big commitment to go $50 million in debt, especially for such a relatively small institution, Delaney acknowledged. You have to feel really comfortable with the decision.
“The vote was unanimous,” Delaney noted. “I don’t know that we started out that way.”
“If you have a CFO who your board doesn’t feel confident in, you could never do this kind of bold stuff,” Helman added. “Brad just exudes confidence and competence.”
To many in the local community, construction of Western’s 70,000-plus square foot College Center — complete with two dining facilities, a new bookstore, state-of-the-art meeting rooms and Gunnison’s only movie theater — was a grand feat. Little did they know that college leaders were just getting started.
The Taylor Hall renovation is a big deal. But its $21 million price tag is being picked up by the state. Everything else is on the college’s tab.
Enter Baca to figure out how to afford it.
“We’d been talking about the concept of a capital improvement facility fee for at least two years,” Baca said in an interview this summer. “We started because we were looking at the state of the state, and the inability of the state in the future to finance capital projects for higher education.
“So we said, ‘If we’re going to do this, we’re going to have to take it on ourselves.’”
In addition to the two projects that have long been identified as a priority — building a fieldhouse for student athletes that will also house fitness and recreation facilities for the entire student body, and replacing out-dated campus living facilities, including the Shavano apartment complex that was originally constructed in the ’50s — a campus facility audit completed in the spring of 2009 showed $26 million in unfunded maintenance needs.
“Brad was the first to say we might have to go to a facility fee or these things are just going to collapse on us,”
Helman explained. “That evolved into us saying, ‘Well, what exactly do we have on our plate?’”
So last winter, planning began in earnest. Estimating the cost of constructing the two new facilities was the relatively easy part. The college also had to factor in maintenance costs — not only for the new buildings, but the backlog on other campus facilities.
A new student fee was identified as the revenue source — a concept that’s been used at plenty of other colleges, including two of Western’s chief rivals in Adams State and Mesa State. But how much was enough to cover the debt load without pricing Western out of the market? And what if enrollment drops?
Lastly, if they were going to increase the costs to students, Western officials wanted to carve out more financial aid for those most needy.
Baca began running financial models, and more models, and price sensitivity charts. He presented enough data and scenarios to make a non-numbers person’s head spin.
Yet the plan college leaders came up with touched on all of their goals. It called for upping student fees, beginning by about $400 a year and ramping up to an additional $2,600 over a 10-year period.
There was a tight time line, however, in which to pull it off: Not only were market conditions very favorable for borrowing and attracting competitive bids from hungry builders, but the clock was ticking on two government backed programs (Build America Bonds that subsidize a portion of their interest payment and a state “Intercept” program that allows Western to piggyback on the state’s credit) that made the deal feasible. It all had to be executed by the end of June.
“To a lot of people, it understandably felt rushed,” Baca said, acknowledging the criticism the proposal received from both students and staff. “As we started looking at all the circumstances, we felt this was our one shot. I think if we hadn’t done this we would have opened ourselves up to much greater criticisms down the road.
“I think, at the end of the day, we absolutely did the right thing.”
So the $50 million concept received the blessing from the students and then the trustees in late spring. The last people to sell were the bond rating agencies and underwriters. Baca and other college officials took a trip to San Francisco in June to do just that.
The package received solid “A” ratings and sold at an average interest rate of approximately 4.5 percent.
“This was not a typical package by any stretch,” explained Steph Chichester, a financial expert with North Slope Capital Advisors, who Western brought in as a consultant in January. “It was the first time WSC has made use of the Build America program. They are the first university in the state to sell what’s called Qualified Energy Conservation Bonds. It was the first time the college had gone to Moody’s Investor Services for a rating. And it was the largest bond issue the college had ever sold.”
Chichester walked away from a successful financing, with the bonds on the market and more than $50 million in Western’s bank account to move forward on its plan, feeling that Baca “is a standout among his peers.”
“It’s hard to simultaneously have the attention to detail and the grasp of the big picture,” she said. “You often find a professional who is good at one or the other. Brad does them both better than almost anybody I can think of.”
To Helman, who is largely seen as the face of Western State College, the whole experience reminded him of his days of being a basketball coach.
Back in the early ’90s he guided the Mountaineer men to their most successful seasons in school history. While he received a lot of the credit he knew most of the team’s success was due to factors such as a few incredibly talented players and an expert “X’s and O’s” assistant coach in Jim Russell.
“To have a CFO like Brad is gold,” Helman concluded. “I keep thinking to myself, ‘Geez Jay, like usual, you’re just riding the wave of all this brilliant talent.’”