NAROPA UNIVERSITY Strategic Plan “Deliver Distinction With Excellence” September 19, 2008

NAROPA UNIVERSITYStrategic Plan“Deliver Distinction With Excellence”September 19, 2008

GOAL FOR TODAY • Review Naropa’s strategic plan for approval • Vote to approve the strategic plan

WORKFLOW AND TIMELINE Work Module Jan Feb Mar Apr May Jun Jul Aug Sep • Develop a baseline • Review all relevant planning work underway • Perform student survey • Analyze analogous institutions • Perform financial modeling • Define Naropa’s strategic direction • Develop criteria for assessing Naropa’s facilities-related decisions • Lay out an action plan • Meet with “Meta”-team • Meet with broader group of key constituents • Meet with Naropa’s board (1) (1) (1) Today • These meetings will be held by phone

AGENDA • 8:30 – 10:00am Summary of Naropa’s strategic plan • 10:00 – 10:30am Break / contemplative practice • 10:30am – 12:00pm Review of key targets • 12:00 – 1:00pm Lunch and contemplative practice • 1:00 – 5:00pm Discussion • Facilities • Advancement • Additional discussions as necessary

STRATEGIC PLANNING EFFORTS WERE LAUNCHED TO CHART THE NEXT STAGE OF NAROPA’S DEVELOPMENTA Key Element of the Planning Process was its Inclusiveness Board Meta team Action committees Stewardship Senior staff Broader community meetings 2006-2007 Interviews, focus groups, facilitated meetings Mission statement development Strategic themes & goals Add’l data gathering & analysis Strategic direction 2005-2007 Performa HE Stewardship 2007-2008 Wellspring Consulting Senior staff Action committees Planning-related efforts have been going on for four years, and there is mounting urgency to move to action

A STRATEGIC PLAN DRIVES ALIGNMENT AND ACTION Strategic initiatives Strategic objectives Mission • Action • steps • Who • What • When Performance metrics to measure activity and results

NAROPA’S CURRENT POSITION • Naropa University has key strengths and opportunities to draw upon • A unique position in the educational landscape coupled with a strong heritage • Highly dedicated and passionate faculty, staff, and trustees, all strongly committed to Naropa’s mission • A growing interest in contemplative practice in the greater society • However, amidst these strengths and opportunities are clear challenges for Naropa • Naropa requires greater financial stability both as an institution and as a workplace • Compensation is quite low vs. other relevant institutions • Faculty are overburdened and increasingly fatigued by their role • Staff turnover has been high in recent years which erodes stability • Faculty, staff and students express a strong desire for a greater level of community

IN SERVICE OF ITS MISSION(1), NAROPA SEEKS TO FULFILL SEVERAL ADDITIONAL OBJECTIVES • Provide an intimate educational experience for students with small class sizes and close relationships between students and teachers • Provide students with skills that will enhance their effectiveness in the broader world • Make a Naropa education accessible to students of all economic means • Compensate faculty and staff at a level comparable to peers at similar institutions • Provide a strong community experience that nurtures and develops all participants • Model a sustainable working and learning environment through its facilities and its practices • See Mission Statement included in the appendix for reference

Bubble size: Undergraduate enrollment Larger Enrollment 500 5000 SUCCESSFUL SMALL-CLASS-SIZE PEERS DIFFER FROM NAROPA ON AT LEAST ONE OF THREE DIMENSIONSHigher Tuition, Larger Endowment, and/or Larger Enrollment 2007-08 Undergrad Tuition ($) Bennington: 13 Hampshire: 16 Kalamazoo: 17 Lesley: 14 Higher Tuition Elon: 22 Naropa: 14 Warren Wilson: 14 Larger Endowment Columbia College: 17 Numbers behind school names indicate average class size 2005 Endowment / Expenses

RECAP OF MAY MEETING • Following a meta-team meeting where detailed information and analyses were shared and discussed, a strategic framework and supporting rationale were presented • Discussions were oriented around four questions • Do you support Naropa’s niche strategy: “Deliver distinction with excellence?” • Do you support the collection of components that define how Naropa will deliver distinction with excellence? • Do you support the measures – as a group – that Naropa will use to fund its strategic direction? • Do you support the summary statement of Naropa’s strategy as revised through our two day retreat? • At the end of the meeting the assembled group agreed unanimously on the conceptual framework of the strategic plan with more detailed planning work to come in the summer

WORK SINCE MAY • Detailed facilities analyses were conducted building on Action Committee F’s work to • Assess capacity as aligned with strategic plan growth projections • Flesh out the sequencing and financing of new construction as outlined in the strategic plan • An action plan was developed through many iterations with senior staff and executive committee trustees to lay out a path to realizing the strategy • V12 was sent to you • The action plan will continue to be reviewed through progress reports and will evolve as necessary • Detailed financial projections were created to assess the general feasibility of the plan • The snapshot financials shared in May were simply a first cut and did not provide timing details • Many detailed conversations and iterations occurred to estimate the investments required so that the meta-team and senior staff could be comfortable that the plan was feasible

THE STRATEGIC FRAMEWORK WAS BUILT AROUND A FEW FUNDAMENTAL PRINCIPLES • The view that Naropa needs to be a larger institution without being more fragmented and that it needs to realize a higher net revenue from its students and donors • That the above steps are needed to create sustainability for the university, its faculty, and its staff and that sustainability is critical for Naropa to continue to fulfill its mission and to expand its impact • Finally, to be able to grow and gain a higher net revenue from donors and students, Naropa needs to develop and deliver a clearer story of distinctiveness • This framework has remained essentially the same since May • Shown on the following pages, italics indicate any changes since May

DELIVER DISTINCTION WITH EXCELLENCEStrategic Framework (1 of 4) • Naropa will pursue a strategic position which builds upon and enhances its distinctiveness • Clearly define Naropa’s distinctiveness and what it delivers • Find and enroll more students who are truly seeking what Naropa offers • Deliver distinction with excellence Note: Differences from the May framework are indicated by italics

DELIVER DISTINCTION WITH EXCELLENCEStrategic Framework (2 of 4) • To deliver distinction with excellence, Naropa will: • Create mechanisms to build community • Invest to create community on all campuses – including a new student community and learning center • Acquire additional student housing • Strengthen the educational experience • Clarify and enhance Naropa’s approach to contemplative education • Broaden Naropa’s foundational undergraduate curriculum • Replace academic facilities at Arapahoe, upgrade academic facilities at other campuses • Expose students to a greater diversity of perspectives and cultures • Provide enhanced support for students facing Naropa’s introspective challenge • Be more intentional in preparing graduates to thrive and make a difference • Invest in faculty and staff • Raise faculty and staff salaries over five years, towards a target of the 50th percentile of peer institutions • Invest in training and development • Grow the institution • Grow residential enrollment to fill the current capacity of Naropa’s facilities • Grow online low residency programs • Make major facilities and infrastructure investments to support growth Note: Differences from the May framework are indicated by italics; “Grow the institution” used to read “Grow the institution in two phases” and the supporting dashpoints had indicators of order (first, second); The alteration was made to accommodate all of the facilities investments under the third dashpoint and also to include infrastructure in the third dashpoint to recognize the need to plan for technology investments at Naropa

DELIVER DISTINCTION WITH EXCELLENCEStrategic Framework (3 of 4) • Pursue a balanced portfolio of measures to make the university financially sustainable: • Raise net tuition by a combination of maintaining Naropa’s tuition rate growth just above inflation, and decreasing the undergraduate discount rate by several percentage points • Increase the average class size by 10% by department or program and, subsequently, creatively restructure ranked faculty teaching responsibilities in order to gain a 10% increase • Possibilities might include reducing the number of class preparations per faculty member while increasing the unit value of courses; restructuring the calendar; or allowing faculty variable course loads over multiple years • Restructure extended studies to achieve financial success, better serve the greater community, and work collaboratively with Advancement to meet the fundraising goals of the university • Use clarity of purpose and specific initiatives defined through Naropa’s strategic plan to boost net fundraising revenue […] • Building on past work, establish a small board/staff/faculty team that will explore innovative ideas for Naropa’s future – with the goal of enhancing Naropa’s distinction and delivery of excellence • Part of this group’s charter will be to look for strategic alliances with other institutions to achieve Naropa’s mission • Financial measures must be reassessed each year to reflect current economic conditions • The overall strategic plan should undergo a major review and reassessment after 5 years Note: Differences from the May framework are indicated by italics

DELIVER DISTINCTION WITH EXCELLENCEStrategic Framework (4 of 4) • To jumpstart this strategy, Naropa will utilize, as necessary, $1-2M of cash from: • Proceeds from the sale of Sangha House • Unused bond proceeds in place for the Nalanda campus • Recent bequests and other segregated funds Note: Differences from the May framework are indicated by italics

REVIEW OF KEY TARGETS • On the next set of pages is an overview of the work conducted since May and the outcomes of that work • There is additional supporting data available for your review in the appendix on each of these topics • We seek to review all five target areas in the next 90 minutes and use the time after lunch to return to any topics that require further detail and discussion • The priorities for the afternoon discussion will be determined based on the review of the five areas and the perceived levels of comfort or question

ENROLLMENT RELATED TARGETS AND BACKGROUND • In May, aspirational enrollment targets were discussed that were based on industry and analog research – 5% for undergrad, 3% for grad, 15% for online low residency • Since May, iterations were conducted with senior staff to modify the targets to remain aspirational but be somewhat closer to what they saw as feasible and to quantify investments that would be required to achieve that growth • The outcome • Growth ramping over 3 – 5 years to targets of 5% for undergrad, 3% for grad, 10% for online low residency • Tuition increases remained the same (6.5%) and the undergraduate discount rate now ramps down over 5 years to 25% • Investments included in new online low residency programs, admissions and marketing to help spur growth, and academic affairs to support improvements in Naropa’s offering

FACULTY AND STAFF RELATED TARGETS AND BACKGROUND • In May, targets for compensation increases were discussed based upon interviews and additional input received from the community, benchmarking, and analog interviews emphasizing the need to invest in faculty • In addition, as part of the package of financial levers, two elements of efficiency which would somewhat increase faculty load were discussed: increasing class size and increasing teaching responsibilities • Since May, further work has been conducted to flesh out the implementation of the efficiency elements • The outcome • Compensation philosophy has remained constant with core faculty and staff targeted at the 50th percentile over 5 years and adjunct faculty increases paralleling overall staff increases which brings them above the 50th percentile • The workload increases have been staggered: the class size increase being implemented in FY10 and the teaching load increase in FY13

FACILITIES OUTLINE (1 of 2) • In May, the desire and need for facilities were indicated as a student community and learning center, upgraded academic facilities, and additional student housing • Since then • Detailed facilities analyses were conducted to assess capacity and to more fully estimate the financial implications of the proposed facilities • Discussions were had regarding sequencing of facilities and planning including a master plan • A concern was raised regarding Naropa’s technological infrastructure and the need to plan better for technology expenses

FACILITIES OUTLINE (2 of 2) • The outcome • Three major facilities projects are included in the plan sequenced as follows: a build-out of the space at Nalanda, a student community and learning center at Arapahoe, and a new academic building at Arapahoe • With these three buildings, the enrollment growth contained in the plan and for the future are accommodated • A merger of the Paramita and Nalanda campuses at Nalanda is proposed as a hypothesis for master planning work • A master plan will be conducted to build upon this work and an academic enrollment plan is being developed to confirm and flesh out the details of the new facilities • Estimated construction costs – including upfront and ongoing payments – have been appropriately incorporated into the financial projections • Action steps regarding planning for future technology investments have been added

ADVANCEMENT RELATED TARGETS • In May, a first-cut model for advancement contribution was used which indicated an 8% increase over the full $1M base that advancement has traditionally raised • This $1M base included both restricted and unrestricted dollars • Since then, a proposed campaign with investments and more aggressive targets has been developed with an estimate of what portion of the total funds (restricted and unrestricted) might be applicable to strategic plan expenses • In meetings with the Budget & Finance committee of the Board, a desire was expressed to understand the implications on the overall plan if the aspirational advancement goals were not fully realized • The outcome • An aspirational advancement plan with a request for clear commitments is outlined and one plausible fallback scenario has been developed to help create boundaries and increase comfort levels

OVERVIEW OF STRATEGIC PLAN FINANCIAL PROJECTIONS • In May, a picture of investments and revenues was provided to give a sense of plan feasibility at a ballpark level • Since then, a financial projection has been constructed to assess the overall feasibility of the strategic plan • Originally based on FY07 financials, it has been updated to build off of the recently completed FY09 budget • These projections are for the purposes of testing financial feasibility at a summary level and do not replace the annual budgeting process • The financial projections show a profit and loss statement that balances including the build-up of monies to cover upfront facilities payments • Significant detail on these projections has been shared with the meta-team, senior staff, and the budget & finance committee • The working projection itself has been shared with Naropa finance

Do you support the strategic plan for Naropa University as laid out in this document on pages 12 – 16 • And as informed by data, analysis, and discussions related to the key targets? • Do you commit as an individual to do your part in furthering the strategic plan?

MOVING FORWARD • Today, the formal strategic planning process draws to a close • The strategic plan content along with the financial projections will be used as a guideline for further planning and budgeting work on an annual basis • The execution and evolution of the strategic plan will continue forward • The budget process will be started earlier than in previous years • Additional financial training is being provided to budget team members • Details of the 2010 budget will be developed in light of the direction laid out by the strategic plan, as well as evolving realities • Many efforts by staff, faculty and trustees, guided by the action plan, will be made in service of achieving the strategic plan objectives • The action plan and progress will be reviewed and continually refined

APPENDIX Page(s) Section 28 29 – 35 36 – 39 40 – 44 45 – 53 54 – 66 67 – 77 75 – 77 • Naropa mission statement • Summary financials and footnotes • Backup and financial detail for targets • Enrollment-related targets • Faculty and staff related targets • Facilities targets including discussion of accelerated timeline • Advancement-related targets including jumpstart funds and discussion of requirements • Action planning and metrics • Additional strategic plan displays

Mission statement MISSION STATEMENTNaropa University • Inspired by the rich intellectual and experiential traditions of East and West, Naropa University is North America's leading institution of contemplative education. • Naropa recognizes the inherent goodness and wisdom of each human being. It educates the whole person, cultivating academic excellence and contemplative insight in order to infuse knowledge with wisdom. The University nurtures in its students a lifelong joy in learning, a critical intellect, the sense of purpose that accompanies compassionate service to the world, and the openness and equanimity that arise from authentic insight and self-understanding. Ultimately, Naropa students explore the inner resources needed to engage courageously with a complex and challenging world, to help transform that world through skill and compassion, and to attain deeper levels of happiness and meaning in their lives. • Drawing on the vital insights of the world's wisdom traditions, the University is simultaneously Buddhist-inspired, ecumenical and nonsectarian. Naropa values ethnic and cultural differences for their essential role in education. It embraces the richness of human diversity with the aim of fostering a more just and equitable society and an expanded awareness of our common humanity. • A Naropa education—reflecting the interplay of discipline and delight—prepares its graduates both to meet the world as it is and to change it for the better.

Summary financials PROJECTED INCOME STATEMENT (1 of 2) These numbers are financial projections for the strategic plan and not budgeted commitments Note: Underlying these financials is an assumed inflation rate of 4.5%; Footnotes are on subsequent slides; While projections are shown for 10 years, underlying assumptions should be reviewed every year for economic feasibility and should undergo a major strategic review and reassessment after 5 years Source: Naropa Finance; Naropa Financial model v36; Wellspring analysis

Summary financials PROJECTED INCOME STATEMENT (2 of 2) These numbers are financial projections for the strategic plan and not budgeted commitments Note: Underlying these financials is an assumed inflation rate of 4.5%; Footnotes are on subsequent slides; While projections are shown for 10 years, underlying assumptions should be reviewed every year for economic feasibility and should undergo a major strategic review and reassessment after 5 years Source: Naropa Finance; Naropa Financial model v36; Wellspring analysis

Summary financials BACKUP FOOTNOTES FOR SUMMARY OF REVENUE PROJECTIONS • Category includes all program-specific revenue is therefore not the same as “Tuition and Fees, net of Scholarships” line on Naropa’s audited financials • Includes summer and academic year; grows at the rate of undergraduate tuition increases and enrollment growth • Includes summer and academic year; does not include online low-residency grad programs; grows at the rate of graduate tuition increases and enrollment growth • Includes summer and academic year; grows at the rate of graduate tuition increases and online low residency enrollment growth • Includes non-degree tuition, which grows at the rate of tuition growth; includes other miscellaneous fees and revenues, which primarily grow with inflation • Includes interest earned on Naropa’s cash assets; grows at the rate of inflation • Includes Extended Studies tuition and miscellaneous other program-specific revenue; FY09 value models Academic Affairs estimates of overall profitability; revenues in FY10 equal to expenses to simulate a break-even situation, and revenues exceed expenses thereafter by $50K to simulate a small profit; Investments may need to be made to launch new programs within Extended Studies – such investments, should they exceed any surplus generated by existing programs, would need to be offset by focused fundraising (e.g. a grant to support such a launch) • Includes housing income from Snow Lion, as well as earned income from items such as laundry, parking and copying, and other miscellaneous revenues; primarily grows at the rate of inflation • Includes the cash contribution from the endowment, calculated each year by the Finance department as 5% of the endowment’s average value over the previous three years; assumes no annual contributions to the endowment are made over and above return on investment; • FY09 value reflects budgeted amount; Advancement provided a more detailed series of expenses and targets, these are included on the next page, as a result, the advancement revenue is not shown here for FY10 onward • Project revenue from previous years, assumed as part of Naropa Finance FY09 budget

Summary financials BACKUP FOOTNOTES FOR SUMMARY OF EXPENSE PROJECTIONS (1 of 2) • Growing at the rate of core compensation increases and enrollment growth; values reflect the net salary expense after accounting for additional faculty to accommodate growth and for efficiency gains due to increased class size and teaching load; All years use a 20.7% benefit rate based on FY09 budget • Growing at the rate of adjunct compensation increases and enrollment growth; values reflect the net salary expense after accounting for additional faculty expenses to accommodate growth and for efficiency gains due to increased class size and teaching load; benefits calculated at 10% of salary expenses; includes honorarium • Growing at the rate of staff compensation increases; All years use a 20.7% benefit rate based on FY09 budget; additional staff positions are included in the additional strategic plan net expenses line (line 14) • Includes personnel-related expenses such as travel, meals, and recruiting; grows at the rate of enrollment growth and inflation • Includes general overhead such as IT contracts, insurance, legal fees, etc.; grows at the rate of enrollment growth and inflation, with a portion growing at a decreased rate in order to realize cost benefits associated with growth (scale) • Includes debt service (cash), landscaping, maintenance, etc.; grows at the rate of enrollment growth and inflation, with a portion growing at a decreased rate in order to realize cost benefits associated with growth (scale) • Includes work study, field trips, counseling, and other non-personnel program-related expenses; primarily grows at the rate of enrollment growth and inflation; work study revenue and expenses held constant to reflect changes in the federal program

Summary financials BACKUP FOOTNOTES FOR SUMMARY OF EXPENSE PROJECTIONS (2 of 2) • Includes Extended Studies expenses; FY09 value models Academic Affairs estimates of overall profitability; revenues in FY10 equal to expenses to simulate a break-even situation, and revenues exceed expenses thereafter by $50K to simulate a small profit; • Also known as the “reserve”; FY09 uses actual value in Naropa’s budget; subsequent years grow proportional to overall budget (including strategic plan expenses) • The sum of additional strategic plan expenses; includes ongoing costs of debt service for new facilities but does not include upfront, one-time payments for facilities; also includes additional Advancement expenses tied to the Advancement revenue targets on line 16 (footnote 23) • Includes the net value of jumpstart funds used toward strategic initiatives; FY09 includes $60K already approved by Naropa’s Board for use against salary increase commitments • Targets provided by the Advancement Department; Assumes that an average of 50% of raised funds will be applicable to strategic plan expenses (either because they are unrestricted funds or if they are restricted funds, the restriction is applicable to strategic plan expenses) over the time period of the plan • Adjustment to remove budgeted Advancement revenue and incorporate Advancement Department estimates for total revenue • Funds built up to cover facilities upfront, one-time payments; assumes that any surplus shown here will be accumulated to cover upfront, one-time facilities payments as needed • Intended to show the amount (restricted and/or unrestricted) that Naropa will need to raise in order to cover the down payments of the facilities included in the plan; these amounts are needed in the year shown, but can be raised over any period of years prior

Summary financials DETAIL ON STRATEGIC PLAN INVESTMENTSCorresponding to Line 14 of Summary, Footnotes on Next Page These numbers are financial projections for the strategic plan and not budgeted commitments Source: Naropa senior staff; Naropa Financial model v36; Wellspring analysis

Summary financials FOOTNOTES FOR STRATEGIC PLAN INVESTMENTS • Dollars for additional staff support, some positions already identified, others unspecified; see backup slides for more detail • Investment to support additional admissions activity from the faculty to support growth • Investment in the PR budget for faculty/staff media training, national promotions and events • Additional investment in admissions to support growth • Investment to update and revamp curriculum (e.g. curricular planning, market/comparative school analysis, faculty stipends, short-term faculty hire or retraining) • Includes such costs as program director, course development costs, costs of accreditation, etc. • Additional funds (beyond what has traditionally been budgeted) to support training and development for faculty and staff including diversity training and development for faculty • Additional funds (beyond what has traditionally been budgeted) to provide student support including funds for diversity initiatives and staffing to help increase Naropa’s offerings and increase retention • Additional funds (beyond what has traditionally been budgeted for IT and facilities) to help support greater technology academically or administratively and / or to support “curb appeal” efforts, whichever is deemed more critical or more strategically valuable in a given year • One-time expense to establish Naropa’s marketing position and branding image • Additional funds to build a stronger bridge to Naropa’s alumni including events which connect alumni to current students • Funds required for outside consultant to formulate a high level facilities master plan; based on a rough estimate from Art Lidsky of $75-120K • Debt service costs (cash-based) of new facilities; assumes a 20 year loan at 4% (Source: Naropa Finance); building cost assumptions include 7.5% annual growth in construction costs over the original estimates which were provided in 2008 dollars • Additional investments in staff and materials to support advancement efforts; current profile assumes a build-up to a comprehensive campaign, to be adjusted depending on results from campaign feasibility study

Enrollment targets GROWTH RATES REPRESENTED BY THE PLAN Undergraduate Growth Graduate Growth Online Low Residency Growth • Planned annual enrollment growth: 5%(1) • Undergraduate applications have seen significant growth in the last several years (25% increase in the last year) • Specific actions to increase the attractiveness of Naropa’s educational experience are included in the strategic plan • New or improved facilities • Broadened curriculum • Specific efforts at improving retention building on work done by the ad hoc retention committee • Planned annual enrollment growth: 3%(1) • Other similar institutions have seen strong growth – CIIS at >14% • 3% growth returns grad enrollment in 2010 to 2007 levels • Specific actions to increase the attractiveness of the educational experience are included in the strategic plan • Build stronger community and new or improved facilities • Review and enhance curriculum over time • Planned annual enrollment growth: 10%(1) • Growth of overall online education is substantial • Specific actions and funds are included to add staff for online instructional development, perform targeted market research, and develop new courses and programs In the event that growth does not look feasible in the future for individual departments, an alternative pathway to achieving similar results could be taken through merging or eliminating departments, increasing departmental efficiency through average course size increases, or other means of increasing efficiency • Annual growth is ramped gradually to these rates to reflect the time necessary for the strategic plan actions to gain traction

Enrollment targets ENROLLMENT TARGET DETAIL These numbers are financial projections for the strategic plan and not budgeted commitments Source: Naropa senior staff; Naropa Financial model v36; Wellspring analysis

Enrollment targets DETAIL ON LOW RESIDENCY PROGRAM INVESTMENTSIncluded in Strategic Plan Investments • These numbers are financial projections for the strategic plan and not budgeted commitments • Needs assessment for all three programs is assumed to occur at one time to save costs by aggregating • Instructional developer is assumed to begin in FY09 to help revamp current online curricula • The program director for program one is budgeted to be hired sometime in FY09 after the completion of the needs assessment • Programs two and three assume that their “Year 1” in which the needs assessment occurs happens in FY09; therefore only three additional years are necessary for full program development • Note: While these numbers indicate development of a full program, growth in online enrollment could potentially be gained earlier than at the end of each program development cycle through various means: including offering individual classes or offering multiple classes as a certificate; additionally, if undergraduate online course development were pursued, it would most likely progress down a path of individual course development (vs. full program development); also, the length of this cycle of development is driven in large part by the current NCA restrictions which could potentially be lightened or lifted in 09-10 • Note: All costs are inflated from assumptions provided on backup slide; for detail on assumptions, see backup slide • Source: Naropa Academic Affairs and Distance Learning; Naropa Financial model v36; Wellspring analysis

Enrollment targets ASSUMED LOW RESIDENCY PROGRAM DEVELOPMENT One-time cost: ‘08 dollars ($K) Ongoing cost: ’08 dollars ($K) Year 1 Year 2 Year 3 Year 4 Expense / Description • Needs assessment • Assess need and market for new programs • Program director • 1/4 FTE for each program, oversees program development and ongoing implementation • Academic course devt. • 12 courses per program • Cost paid to faculty is $2.5K per course • Devpt. assumed to occur largely in year 2 – costs allocated as 75% in yr 2, 25% in yr 3 • Instructional development • 1/2 FTE to prepare content for web delivery • Marketing costs (one-time costs spread over 3 years)(1) • Acquisition of library/reference materials • Required for accreditation application • NCA site visits • Only necessary if program requires visit from NCA 10-15 -- 30 -- 29 5 5 -- 13 -- 25 -- -- -- (1) Marketing assumptions include $13K in year 4; $10K in year 5; and $5.5K in year 6 to continue supporting program through launch Source: Naropa Academic Affairs and Distance Learning; Wellspring analysis

Faculty / staff targets DETAIL ON NEW STAFF POSITIONS TO SUPPORT GROWTHIncluded in Strategic Plan Investments (Line 14 on Proj. Inc. Statement) • These numbers are financial projections for the strategic plan and not budgeted commitments • Indicates positions for new staff in future plan years to support ongoing growth; these positions are as yet unspecified • Uses the average salary for FY09 ($39.3K); annual increases match the increases of the overall staff salary pool • As the positions targeted for FY09 have not yet been hired, a partial year’s salary has been assumed for FY09 • Benefits are assumed at 20.7% based on FY09 budget • Note: New staff positions involved in online low residency program development and in advancement are included in the strategic plan investment lines for those categories • Source: Naropa finance; Naropa senior staff; Naropa Financial model v36; Wellspring analysis

Faculty / staff targets CORE FACULTY COMPENSATION INCREASES IN PLAN OCCUR CONCURRENTLY OR BEFORE INCREASED LOAD Ranked Faculty Compensation indexed to FY08 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Class size increases by ~10% Core teaching load increases These numbers are financial projections for the strategic plan and not budgeted commitments Note: This curve sets a plan of raising faculty salaries to meet the 50% of peer institutions by FY14. Ranked faculty compensation increases include an inflation assumption of 4.5% per year. Planned increases should be re-evaluated annually taking into account actual inflation and changes to the national average of faculty salaries at peer institutions. Actual increases will vary based on these re-evaluations.

Faculty / staff targets ADJUNCT FACULTY COMPENSATION AND STAFF COMPENSATION ALSO INCREASE IN THE STRATEGIC PLAN Adjunct Faculty Compensation indexed to FY08 (1) Total Staff Compensation indexed to FY08 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 These numbers are financial projections for the strategic plan and not budgeted commitments Note: This sets a plan of raising adjunct and staff salaries to meet or exceed the 50% of peer institutions by FY14; total staff compensation indicates the pool of funds available for all staff and does not reflect an equal increase for all staff positions as current staff salaries differ in terms of how they compare to the 50th percentile Adjunct faculty compensation increases and staff compensation increases include an inflation assumption of 4.5% per year. Planned increases should be re-evaluated annually taking into account actual inflation and changes to the national average of faculty salaries at peer institutions. Actual increases will vary based on these re-evaluations.

Faculty / staff targets FACULTY ASSUMPTIONS USED IN FINANCIAL PROJECTIONSCorresponding to Lines 8a. and 8b. of Summary • These numbers are financial projections for the strategic plan and not budgeted commitments • New faculty indicates total growth or the net of new faculty and faculty that have left or retired • Includes benefits • Direct savings are estimated as the adjunct salary associated with a reduction of 117 course credits due to consolidation of sections to realize a 10% increase in average class size; additional savings are implicit in the need for fewer core faculty going forward • Direct savings are estimated as the equivalent adjunct salary for the 2 credits per core faculty increase; Core faculty assumed at 60 plus the cumulative new core faculty shown here; additional savings are implicit in the need for fewer faculty going forward; a conservative 70% realization of these savings is modeled • Includes benefits; Adjunct benefits calculated as 10% of salary expenses • Source: Naropa Finance; Naropa Financial model v36; Wellspring analysis

Faculty / staff targets DETAIL ON TRAINING AND DEVELOPMENT FUNDS These numbers are financial projections for the strategic plan and not budgeted commitments Source: Naropa Finance; Naropa Financial model v36; Wellspring analysis

Facilities targets THREE MAJOR FACILITIES PROJECTS ARE INCLUDED AS PART OF THE STRATEGIC PLANSequenced Over Time (1 – 2 – 3) (1) 1. Build-out of unused space at Nalanda 2. Community and Learning Center at Arapahoe 3. New Academic Building at Arapahoe • Key benefits: • Completes the original vision of Nalanda • Facilitates community by providing dedicated space • Gives arts departments and other departments relocated to Nalanda(2) room to grow • Sequencing rationale: • Funds exist and are earmarked to cover most of the cost • It provides swing space for future construction projects • It lightens the facilities burden at Arapahoe, the most heavily utilized campus • It can be completed relatively quickly to generate impact • Key benefits: • Is a powerful sign of Naropa’s progress and direction • Facilitates community • Aids recruitment and retention • Provides space for support services and faculty/staff offices(3) • Sequencing rationale: • Later timing allows for several years to raise dedicated funds • Meets a felt need – was often cited during internal interviews • May take Naropa some time to plan and prepare for this new building • Key benefits: • Increases and improves academic space and offices • Will aid recruitment and retention efforts • Sequencing rationale: • New classroom space is not immediately necessary • Later timing allows several years to raise dedicated funds • Designing the building after sustained growth allows better understanding of future demand • Not including a possible merger of Paramita and Nalanda campuses, which is discussed later in these materials • Recent provisional thinking suggests that Music BA and Traditional Eastern Arts would be likely candidates to move to Nalanda and gain space through the Nalanda build-out • High level design recommendations currently include cafeteria and gathering space, offices, a new bookstore, etc.

Facilities targets PROJECTED ENROLLMENT GROWTH CAN BE ACCOMMODATED WITHIN THIS FACILITIES PLAN Projected Residential Enrollment and Facilities Capacity Number of students Complete new Academic Building(2) Complete build- out of Nalanda(1) Capacity of facilities(3) Residential student enrollment projected in the strategic plan • Assuming the addition of 6 usable classrooms with the Nalanda build-out • Assuming the net addition of 3 usable classrooms (some are replaced, for a net of 3 new classrooms) with the Academic Building • Capacity utilization calculations assume a 63% maximum utilization • Note: Capacity values only include the portion of hard-to-schedule rooms that were utilized in Fall 2007; no additional capacity was assumed for those rooms • Note: All capacity figures use Fall 2007 classroom usage figures to calculate a classroom hours per student value, and are altered to incorporate a 10% increase in Naropa’s class size; therefore the ~1,400 student capacity shown in Fall 2007 includes the 980 students that semester, the ~290 additional students that could be accommodated in unused space, and ~125 due to the 10% increase in class size (assuming all existing classrooms can hold an additional 10% of students) • Source: Naropa Operations department; Wellspring assumptions and analysis

Facilities targets IN ADDITION, NAROPA WILL ANALYZE THE POSSIBILITYOF CONSOLIDATING TO TWO CAMPUSESThere Appears to Be Solid Interest in Such a Move(1) • Merging the Paramita and Nalanda campuses is attractive for a number of reasons • A merged campus will increase community and reduce the burden of supporting multiple campuses • The merged campus also creates value by strengthening the graduate community and allows for some sharing of resources between departments that would now be co-located • Selling Paramita frees up immediate cash and, potentially, some debt capacity, to use toward other buildings • Nalanda is well positioned to expand • The planned Nalanda build-out will add 12.7K square feet within the existing building • About 40K - 50K additional square feet could be built on Nalanda property(2) • Naropa should seek to finalize this decision by February of 2009 • The Paramita community should be engaged to determine what their physical resource needs would be in moving to Nalanda and what would be required to execute the move successfully • The financial feasibility and implications will need to be examined • A final decision to merge Paramita and Nalanda would require that the facilities sequencing be re-evaluated with this additional piece • Based on indications by people on the meta-team and on senior staff • Rough estimate by Operations department; Naropa would need to pursue its plans with the City to ensure this possibility

Facilities targets INVESTMENTS IN NEW FACILITIES WILL BE SEQUENCED(1) • A merger of Paramita and Nalanda campuses is not shown, as the decision has yet to be made • Overall cost estimate from Operations department, includes architectural, design and contracting fees; Assuming a 12.7K sqft building, the total cost is $1.6M • Assuming a 17K sqft. building, at $230/sqft, plus 30% for architectural, design and contracting fees • Assuming a 9.5K sqft building, at $230/sqft, plus 30% for architectural, design and contracting fees • Represents 20% cash downpayment for the community and learning center; 30% for the academic building; Excess value or equity in existing property: based upon current assessment ~$1.5M excess value is estimated - of which $820K (55%) is assumed to meet the 30% requirement as indicated by the bank for the Nalanda build-out and the community and learning center • Cash-based; represents principal, interest and fees (not depreciation) Indicates timeframe of planning and construction Note:All facilities costs are calculated to include a 7.5% annual inflation in construction costs; cost estimates and timing based on Operations department estimates; Cost estimates reflect Naropa’s commitment to sustainable building and LEEDS silver standards Source: Naropa Operations; Interview with Chuck Lief; Wellspring analysis

Facilities targets FINANCING STRUCTURE ASSUMED FOR FACILITIES INVESTMENTSUsed to Make Financial Projections Community and Learning Center Nalanda build-out Academic Building • Cost of building estimated in FY08 • Planned construction yr.(1) • Cost when built(2) • Proceeds from Nalanda bond • Subtotal • Down-payment(4) • Amount financed • Resulting annual debt service (cash-based)(5) • $1,400K • FY2011 • $1,620K • $980K(3) • $640K • -- • $640K • $47K • $5,100K • FY2012 • $6,300K • -- • $6,300K • $1,260K • $5040K • $367K • $2,800 • FY2014 • $4,100K • -- • $4,100K • $1,230K • $2,870 • $210K • Indicates beginning of a roughly 2 year planning, design and building phase; Nalanda build-out assumed to occur in 1 year • Assumes annual construction cost inflation of 7.5% on the base cost of the building at the end of FY08 • To approximate modest returns on this money accrued before its use in FY10 an interest rate of 4.5% was used • Equity requirements of bank are 30%; Nalanda build-out and Community & Learning Center leverage excess value in existing property as a portion of the equity requirements; Community and Learning Center numbers assume a 20% down payment and the Academic Building assumes a 30% down payment • Assuming a 20 year repayment period and a 4% interest rate; principal payments, interests and fees (not depreciation) included in these figures • Note: Naropa will need to perform a more thorough analysis of its debt capacity (in dialogue with the bank) in order determine its eligibility for these loans • Source: Naropa Finance and Facilities, discussions with Chuck Lief; Wellspring analysis

NAROPA UNIVERSITY Strategic Plan “Deliver Distinction With Excellence” September 19, 2008