Loyola No Longer Has Tax-Exempt Debt, According to New Form 990

Loyola’s most recent publicly available Form 990 tax form tax return, filed May 2024 for the previous fiscal year from July 2022 to June 2023 (FY23), revealed a change to Loyola’s finances which hasn’t occurred since the university first became a tax-exempt organization in 2007. 

Loyola no longer has any tax-exempt debt due to a significant refinancing transaction, according to Teresa Krafcisin, senior vice president and controller. 

As a tax-exempt organization, the university is required to file a publicly available tax return called Form 990. It is a complete picture of the university’s financial information, according to Krafcisin.

The question “Did the organization have a tax-exempt bond issue with an outstanding principal amount of more than $100,000” was marked “no” on Loyola’s tax form in FY23, where it had exclusively been marked “yes” in previous forms as far back as FY06. 

Filling out the Form 990 is a required of nonprofit organizations, which are tax-exempt. The Form 990 serves two main purposes, according to the Internal Revenue Service. 

First, in no particular order, according to the IRS website, they need the information from the Form 990 to determine how an organization should and shouldn’t be taxed. If you’re a tax-exempt organization, the big concern with Form 990 is being taxed.

“Companies that don’t comply with the IRS could lose their tax-exempt status,” Krafcisin said.  “That’s one of the big penalties.”

The Form 990 is also a delivery system of financial information for public inspection. The FY23 Form 990 provides information to the public about the inner workings of an organization’s finances from year to year. 

“It is part of the obligation of being a tax-exempt organization to provide this level of information,” Krafcisin said.

Prior to July 2022, Loyola held over $73 million in tax-exempt debt in the form of bonds. The university was able to refinance to a loan with a lower interest rate, reducing the university’s yearly expenses and essentially paying off tax-exempt debt, according to Krafcisin.

FY23 is the first fiscal year since FY07 the university didn’t have over $100,000 in tax-exempt bonds, according to 990 documents available on ProPublica.  Tax-exempt bonds are any bond not included in gross income, according to Cornell Law.

Krafcisin said the decision to refinance the $73 million was a slow and careful one, which accounted for fiscal trends not only within the university but at the global scale.

“It’s a process, and it always is something that we’re keeping an eye on,” Krafcisin said. “It’s part of the fiscal management of the university to understand what the markets are doing, how that relates to our financials and how we react to what’s happening.”

At the time of the transaction in July 2022, interest rates had generally been on the rise according to Krafcisin. Loyola was able to move the money to a loan with lower interest rates by keeping close attention to financial trends.

“In terms of Loyala’s fiscal discipline and Loyola’s fiscal management, we have a very strong financial position and it’s one that we are very protective of,”  Krafcisin said.

The protectiveness manifests in strong budgeting and strong forecasting — for instance, the university generates its financial results periodically throughout the year in order to note trends, according to Krafcisin. The process ensures Loyola is keeping in touch with how university operations are working and how they translate financially.

She said the effects of the freed up funds are evident in the $3.9 million reduction in interest expense from FY22 to FY23, and such savings would generally be available to university operations, including student aid.

Lingering effects from COVID-19 are visible on the FY23 form, but not concerning, according to Krafcisin. She said Loyola’s financial position is still very strong.

Loyola experienced a 7% drop in total revenue compared to the year before, from $1,069 million to $992 million. The primary reason for the drop was total revenue in FY22 included COVID-19 emergency relief grants, which the university didn’t receive in FY23.

Loyola’s total expenses have also increased by 17% in the last three years, and overall profit have fluctuated dramatically. Both phenomena are related to COVID-19, according to Krafcisin. 

“Despite the uncertainty during those years, it’s important to note that LUC navigated those uncertainties in a financially responsible manner,” Krafcisin wrote in an email to The Phoenix.

The Form 990 also reported the highest paid employee in FY23 still employed by Loyola is Carlton Valentine, head coach of men’s basketball. Valentine’s salary is $822,457, an increase from $470,000, Valentine’s compensation in FY22. 

The cumulative compensation of the top 5 highest paid employees was $4,151,165. Norberto Grzywacz, former provost and chief academic officer, was paid $921,804. Sam Marzo, dean of the Stritch School Of Medicine, was paid $770,423. Jo Ann Rooney, former president, was paid $886,938. Margaret Faut Callahan, provost and chief academic officer, was paid $688,421.

Krafcisin said compensation numbers are based on both salary and benefits. She said they’re used by companies to benchmark across other universities or other nonprofits of similar sizes.

Loyola has a new investment in Ireland in FY23. For at least the past decade, Loyola has only had domiciled investments in the United Kingdom, Italy and Vietnam, The Phoenix previously reported.

The information in the documents is interesting, Krafcisin said, but reading the 990s isn’t how she recommends students keep up to date with the institution’s finances.

“It’s a comprehensive document, but I think there’s more current data available,” Krafcisin said. “That’s why our CFO Wayne Magdziarz does the town halls, so that we keep the university abreast of the current and forecasted state, as opposed to, you know, always looking in the rear view mirror.”

The Phoenix reported on a financial town hall where Magdziarz, senior vice president and chief financial officer, relayed information on the university’s finances including Loyola’s current and projected position.

There are a lot of resources which offer a more up-to-date perspective, Krafcisin said, for students or any interested parties, such as Integrated Postsecondary Education Data System data. Form 990 is just one available tool which can show broader patterns over time.