Near-sighted Report
I am saddened to see In Trust once again engage in near-sighted reporting when it comes to Southern Baptists and their interactions with the Baptist General Convention of Texas (“Changing Scenes,” Autumn 2003). Clearly, “conservative takeover” is a pejorative term used by those who would cast a change in leadership through fair elections in a negative light. It is not the term that would be used in “balanced reporting.”

Your coverage belies a bent toward the Baptist General Convention of Texas and its perspective on the Southern Baptist Convention. Allowing an openly anti-Patterson partisan (Russell Dilday) to accuse Patterson falsely of having “himself elected as the president” of Southwestern Baptist Theological Seminary is also not balanced reporting. At least, never before have you seen fit to seek out or print that type of demonizing rhetoric against anyone else.

Perhaps in the interest of your stated mission, to help board members and leaders of institutions of theological education, you might consider an article describing the vibrant institution Patterson has left behind at Southeastern Baptist Theological Seminary, one of the world’s largest and most active seminaries, a dually accredited seminary that is succeeding in an educational and economic environment that is not friendly to such schools. You might note that Patterson completed the theological transition at Southeastern without firing even one professor and with the grudging respect of several who thought they would not like him. That is not the BGCT’s storyline, but it would be helpful to your readers.

Waylan B. Owens
Wake Forest, North Carolina

Waylan B. Owens is vice president of institutional effectiveness and assessment at Southeastern Baptist Theological Seminary.

A Success Story
The article “Bottom Lines Dropping” in the Autumn issue caught my attention. The three examples—Princeton, Episcopal, and Dallas—were interesting, but not very definitive or helpful to the rest of us trying to grow our institutions or protect our endowments. Questions: (1) Princeton: What allocation resulted in a loss of 25 percent of the assets? What investment strategies were used in the three funds? The fact that they hired a new CIO doesn’t help us avoid the Princeton mistakes. How about some specifics? (2) Episcopal: The article reports some minor cost-saving projects. Were any changes made in the management of the endowments to reduce losses or increase gains? If so, what was done? (3) Dallas: The size of the endowment makes it a small part of the annual budget. The fund-raising ideas were interesting and helpful for a seminary that has to raise most of its annual budget.

How about a success story? Saint Paul School of Theology in Kansas City, Missouri, has an endowment that has grown from $14 million to $25 million over the last five years for a cumulative investment gain of 60 percent while the U.S. equity markets declined 8.5 percent. This was accomplished with an asset allocation of 69 percent equities (24.5 percent long only, 44.5 percent long/short); 10 percent real estate, mezzanine financing, and high-yield bonds; 13 percent private equity and venture capital; and 8 percent absolute return (arbitrage strategies).

The secret to growing the Saint Paul assets in a declining equity market was the 44.5 percent long/short equity hedge funds, which went short to the equity markets in April/May 2000 and consistently gained during the three-year decline from the second quarter of 2000 to the second quarter of 2003.

The message for other investment committees is don’t believe the institutional money-management industry when they preach fear about investing in hedge funds. All don’t leverage or take more risk. Many are far more conservative than index funds! They are in a position to protect assets when the equity market declines. Ask yourself the question, “Is it more risky to expose your equity allocation to 100 percent market risk (index funds or long-only managers) or 10 to 30 percent market risk (many long/short equity managers)? We may give up a little gain in a roaring bull market, but the longer term results have proven to be very beneficial for Saint Paul.

Saint Paul has a spending policy of 5 percent of the trailing twelve-quarter rolling average as of December 31, which moderates volatility and allows plenty of time for budget preparation with a known amount for transfer from endowments.

All seminaries didn't have “Bottom Lines Dropping” over the last five years. But it did take innovative approaches to endowment management.

Mark L. Morris Jr.
Kansas City, Missouri

Mark L. Morris Jr. is the chair of the investment committee at Saint Paul School of Theology.

More Numbers
The article “Working the Numbers” (Autumn 2003), among other things, discusses two issues—the financial health of the seminary and the desirability for students to be full-time—along with the question whether the two issues are linked.

At Reformed Theological Seminary we want to consider this question of linkage more thoroughly, but our initial reaction is that the two issues, though both obviously important, are more separate than linked. We see the question of full-time versus part-time students as a both/and issue rather than an either/or issue. We would love to have more full-time students for a variety of reasons, including enrollment stability and student involvement in the seminary community.

At the same time, we want to reach as many people as possible with good theological education; and we believe that means making this education available, accessible and flexible. We do this through regional campuses and block classes along with distance-education courses.  There are many students today who are part-time for reasons other than finances, including their level of present ministry involvement and distance from the seminary campus.

In regard to the financial health of the seminary, obviously more students (whether full-time or part-time) and more tuition revenue are helpful as long as there are “empty seats” in the classroom and the additional students do not add too much to the required infrastructure of the seminary. Having been blessed by the Lord to raise over 50 million dollars in a campaign, Gordon-Conwell increased their scholarship grants significantly. This increase in scholarship grants was used to increase the number of full-time students.

The question is whether the additional endowment-created scholarship income helped the financial health of the seminary or whether the full-time students themselves did so. Would the additional scholarship resources help the financial health of the school whether those scholarships are used for full-time or part-time students? In our internal research of financial issues “net tuition” was found to be a key (tuition revenue less scholarship grants) and helped us increase our budget by almost $500,000 per year over the past three years while maintaining or increasing our enrollment.

I thank Gordon-Conwell for their good example and for their “collaborative spirit” toward other seminaries as well as internally. President Walt Kaiser, in particular, has been an encouragement and a help to me as a new ATS president.

Robert C. Cannada Jr.
Jackson, Mississippi

Robert C. Cannada Jr. is president of Reformed Theological Seminary