Colleges in Dire Financial Straits

[paddington_bear]

Is there a way to find out if a school is in GOOD financial shape?

[merope]

Here ya go: https://www.arkansasonline.com/news/2019/jun/26/henderson-state-freezes-hiring-in-face-/.

The school holds $10 million in unpaid student debt? What the hell? Are they letting students attend without paying tuition?

I could see that happening (maybe not the $10 million, but some) if they admitted students on partial financial aid who then dropped out midway through a semester -- and I could see admitting those students if the ultimate bottom line was focused on increasing enrolment by lowering admission standards.

[polly_mer]

Is there a way to find out if a school is in GOOD financial shape?

The short version:

• examine the 990 (https://www.guidestar.org) or similar public budget document for trends
  
  
• examine the IPEDS enrollment and other numbers for trends (https://nces.ed.gov/datatools/) and for comparisons with institutions in the same sector (https://collegescorecard.ed.gov)
  
  
• check the Department of Education composite score (https://studentaid.ed.gov/sa/about/data-center/school/composite-scores) and heightened cash monitoring lists (https://studentaid.ed.gov/sa/about/data-center/school/hcm)
  

The longer version of what you're checking for (from https://www.chronicle.com/forums/index.php/topic,211761.msg3524825.html#msg3524825)

Another unfortunate corollary is the numbers of students in this particular category of first-time/full-time may not be reflective of the college population.  One really interesting recent year, we had exactly 25 students in that category for our new freshman class.  The other 100+ new students didn't count as part of the new IPEDS cohort, but we were just pleased as punch that  our articulation efforts with regional community colleges were paying off as well as our new adult completion efforts and the flexibility of part-time enrollment (very new to us). 

Those 25 students had a rough time and we had to report dreadful graduation rates for that cohort.  However, the graduation rates for the new transfers in were well above 80% at the four-years-from-start-anywhere rates.  In short, we were getting students who were ready to succeed and knew why they were in college, which was better overall for us if we used that information to shape future decisions, as Benedictine University in Springfield did when they closed their traditional undergrad programs and focused on adult completion.

Using IPEDS to look at enrollment trends for the past few years may be more illuminating than graduation rates alone.  Having a 10% or more overall enrollment decrease in just a couple of years is more worrying, based on some of my research in IR, for long-term institutional stability than having low official graduation rates alone.

Were I looking at institutions as a potential employer, like San_Joaquin, I would look very closely at the strategic plan and the endowment, not necessarily graduation rates.  I would also use GuideStar to look at the last couple 990s or similar report from public institutions for the financials as well as the finance tab in IPEDS to ask questions like:

1) Are their heads currently enough above water that they are in an actual boat?  Are they on a raft and building a boat in a logical manner?  Are they in denial that the water is currently at their chin and they are hoping that a little bit of gravel added to the top of the rock on which they are standing will somehow allow them to keep at least one nostril above the water line in the next five years?

2) Does the institution have multiple viable income streams or is it nearly all tuition, fees, and auxiliary services (AKA dependent on enrollment)?  What percentage of those incomes streams are government-related and possibly shaky in the near term, especially in states that are looking to close projected budget shortfalls?

3) How does the debt load look compared to the income and endowment?  An enrollment-driven institution that has almost no debt will float along better in the near future than one that has fixed debt costs.

4) How does the distribution of core expenses look compared to expected from the claimed mission?  Again, do they look like they have a plan and are working from that plan or are they hoping a miracle occurs so they don't have to make decisions?

I would also check the Department of Education composite score reporting (https://studentaid.ed.gov/sa/about/data-center/school/composite-scores, scroll down to the bottom) as well as the Heightened Cash Monitoring List (one from 2015 is http://www.chronicle.com/article/Dept-Names-More-Than-550/228957/).  Problems show up here faster than some other places.  Having a composite score below 1.5 isn't necessarily terrible.  Having one below 1.5 for the past five years is worrying.  I would also check College Score Card (https://collegescorecard.ed.gov) for students paying down their debt.  It's a terrible sign to have a very low repayment rate since that tends to indicate a large population of students who didn't get jobs and thus the likelihood for a (gaining) a reputation among those students who have options and who will vote with their feet for other institutions in a competitive higher ed market.

I would also go to the relevant accreditation site to check current status and when the next review is.  A lot of smaller institutions have been having red and yellow flags raised on finances and planning during reviews in the past few years, particularly under HLC revised criteria that now have planning based on information along with resource allocation as an area that can be not met in and of itself instead of merely being one factor for some other criterion.

While you may not be able to find an exact numerical answer to faculty turnover, you can do a quick scan of the last several catalogs with faculty and staff listings to see whether the same names appear in the current catalog as from five years ago and from ten years ago.  Some places are even nice enough to list a year of arrival so that a little easy math in a spreadsheet can yield information like median time at the institution and distribution of resident times.  Having a bimodal distribution (20+ years and 3 years) could be a huge red flag unless the institution's website is full of recent celebrations of retirements of whole departments all hired together 30+ years ago.

You can also use IPEDS to look for numbers and distributions of types of employees under the Human Resources heading.  Plotting numbers in certain categories for a few years will help you see if the institution is growing or whether another round of cuts would be par for the course.  Looking at distributions of categories would also help one answer the  overall question whether an institution has a plan with proper allocation of resources or whether they are cutting madly in some areas hoping something would save them without actual actions towards goals that will change the institution.  Having practically no support staff is bad; while you do need faculty, you can't run a college only on faculty and executive administrators.  Having a huge fraction of part-time faculty is a red flag; having a large fraction of full-time instructional faculty who are on annual contracts or less-than-annual contracts (last table under HR when looking up one institution) is not a good sign in most cases.

I would also check the institution's website.  Does it look like every other college website or does it tell a story about this special institution so you can't just replace Our College with Pretty Much Any Other College of This Size in the Region if you also white out the one specific gen ed novelty?  Do you have to look really hard to find a strategic plan, let alone any details on implementation actions, or is it pretty clear what the plan's goals are and specific actions being taken this year and next even without finding a document/webpage marked Strategic Plan?  Are there enough staff and resources to have some webpages being updated nearly weekly with items of interest to parts of the campus community or do you have to look really hard to find the one campus calendar that has some things listed and perhaps a news release page somewhere else?  It's pretty telling if the institution has no extra resources to even maintain a vibrant website and instead opts for one that is updated once per year only in the areas required by federal or state regulation.

[apl68]

parking fines?

The parking situation in that part of town isn't THAT bad!

[dr_codex]

The State of Alaska: https://www.insidehighered.com/news/2019/07/01/imminent-massive-cuts-could-force-faculty-staff-layoffs-university-alaska-system?fbclid=IwAR0tU3F_zozJCK8oVUD8TiXwlrtSIPRxfG1WpHEOSXgwLwJYqdFpZf0zI5A

[onthefringe]

The State of Alaska: https://www.insidehighered.com/news/2019/07/01/imminent-massive-cuts-could-force-faculty-staff-layoffs-university-alaska-system?fbclid=IwAR0tU3F_zozJCK8oVUD8TiXwlrtSIPRxfG1WpHEOSXgwLwJYqdFpZf0zI5A

Truly terrifying. Line item veto cuts state support U of Alaska budget by 41% (apparently in order to maintain dividend payouts from the Alaska Permanent First und.  The university President announced immediate travel and hiring freezes, says furlough notices will be going out to staff, and predicts job losses for 1300 faculty and staff.

But don't worry, some helpful people remind us to stop whining because it's only a 17% cut of the total budget since only 40% of the budget comes from the state. Apparently this means Alaska is "over reliant" on the state, not that other states undersupport their university systems.

[octoprof]

State universities are not state universities if the state doesn't support them significantly, surely.

[tuxthepenguin]

State universities are not state universities if the state doesn't support them significantly, surely.

I think that ship has sailed. The public is okay with 'state in name only' universities.

Public universities messed up IMO when the trend of defunding universities started. Their leaders took steps to prevent anyone outside the institution from seeing the effects. They increased class sizes, replaced tenure track lines with adjuncts, cut research, travel, and instructional support, and reduced library budgets because they were afraid (or unable) to raise tuition. Instead they lowered quality until it was no longer an option. The lack of middle class pain established university funding as the first choice to be cut when tax revenues were low or someone wanted to cut taxes. It might well have been different if universities had responded by cutting admission of in-state students by 30% and blaming it on the funding cuts. The middle class would have felt it when Johnnie Sixpack couldn't get into a four year public university, but that never happened.

[spork]

Hampshire College gets an incoming fall class of fifteen students:

https://www.bostonglobe.com/metro/2019/06/30/amid-turmoil-hampshire-college-just-take-leap-join-freshman-class/u6nmOLrqqjtEkRIJLRV9gN/story.html.

[apl68]

State universities are not state universities if the state doesn't support them significantly, surely.

I think that ship has sailed. The public is okay with 'state in name only' universities.

Public universities messed up IMO when the trend of defunding universities started. Their leaders took steps to prevent anyone outside the institution from seeing the effects. They increased class sizes, replaced tenure track lines with adjuncts, cut research, travel, and instructional support, and reduced library budgets because they were afraid (or unable) to raise tuition. Instead they lowered quality until it was no longer an option. The lack of middle class pain established university funding as the first choice to be cut when tax revenues were low or someone wanted to cut taxes. It might well have been different if universities had responded by cutting admission of in-state students by 30% and blaming it on the funding cuts. The middle class would have felt it when Johnnie Sixpack couldn't get into a four year public university, but that never happened.

That would have been a dangerous game to play, but with hindsight maybe it would have worked.  I know that libraries facing budget cuts are advised to make sure the patrons feel the cuts quickly through reduced hours and programming, so that they'll have an incentive to let Those In Control of the Funds know about it.  If your periodical budget has to be cut, the advice is to put notices in the empty spaces to the effect that these periodicals have been cut due to budget cuts.  Don't just let the materials and services go away quietly and hope nobody notices.  As the guy who came up with that particular bit of advice put it, "The only reward for being a doormat is to be replaced eventually by cheaper doormats."

[magnemite]

State universities are not state universities if the state doesn't support them significantly, surely.

I think that ship has sailed. The public is okay with 'state in name only' universities.

Public universities messed up IMO when the trend of defunding universities started. Their leaders took steps to prevent anyone outside the institution from seeing the effects. They increased class sizes, replaced tenure track lines with adjuncts, cut research, travel, and instructional support, and reduced library budgets because they were afraid (or unable) to raise tuition. Instead they lowered quality until it was no longer an option. The lack of middle class pain established university funding as the first choice to be cut when tax revenues were low or someone wanted to cut taxes. It might well have been different if universities had responded by cutting admission of in-state students by 30% and blaming it on the funding cuts. The middle class would have felt it when Johnnie Sixpack couldn't get into a four year public university, but that never happened.

That would have been a dangerous game to play, but with hindsight maybe it would have worked.  I know that libraries facing budget cuts are advised to make sure the patrons feel the cuts quickly through reduced hours and programming, so that they'll have an incentive to let Those In Control of the Funds know about it.  If your periodical budget has to be cut, the advice is to put notices in the empty spaces to the effect that these periodicals have been cut due to budget cuts.  Don't just let the materials and services go away quietly and hope nobody notices.  As the guy who came up with that particular bit of advice put it, "The only reward for being a doormat is to be replaced eventually by cheaper doormats."

Yes, more push-back at times was needed and may have helped in some places. During the 2010 budget cuts, the Pokémon U president made a point of referring to us as a publically-purposed university- and some coordination of talking points among the compass-direction regionals here did help mitigate things, and we're drifted back up towards 50% state-funding. On a smaller scale, a few years ago our Comp Sci department told admissions that they would not accept a single transfer student one year- which was what it took to get the attention of the admin, so they would realize the same department cannot go from 50 to 400 majors without a lot more resources

[spork]

Keystone College?

https://www.poconorecord.com/news/20190523/keystone-college-to-cut-staff-refocus-programs

[polly_mer]

Alaska now has accreditation problems due to the large budget cuts: https://www.insidehighered.com/news/2019/07/10/u-alaskas-accreditor-warns-funding-cuts-could-threaten-systems-status

[OldHouseFan]

The school holds $10 million in unpaid student debt? What the hell? Are they letting students attend without paying tuition?

I think they must be directly lending money to students, who are unable to pay it back.

I doubt the University of Arkansas system allows Henderson State to operate as if it were a corrupt Third World dictatorship in need of an IMF bailout.

Henderson State is not (currently) affiliated with either the UA system or the ASU system. The governor has now given them access to a no-interest loan and suggested they consider affiliating with one of the systems. The Arkansas Democrat Gazette's reporting:

About nine out of 10 students receive financial aid, Jones said. He described the financial shortfall as resulting in part from efforts such as payment plans to help students afford college.

The school allowed students to carry unpaid balances of up to $4,800, Jones said, and ended up being owed about $4.5 million in debts students incurred in fiscal 2019.

"Clearly, the pendulum has swung too far in that direction," Jones said.

The limit for unpaid balances now is $2,500, Jones said, and may be lowered again in the fall of 2020.

[Hibush]

A new report from a strategy consultant, Parthenon, classifies institutions by the number of risk factors for failing. The risk factors are chosen from a list of 10 developed at Vanderbilt a few years ago.

The number of institutions in the four groups gives a helpful perspective. They are classed by size and number of risk factors. (Small size is a risk factor as well.)

Large and thriving	538
Large and languishing	70
Strong niche	932
Small and at risk	735   (122 of which have four or more risk factors)

It strikes me that there are a lot of "Strong niche" colleges that are making the small size work. That is an optimistic sign that small schools can stay out of dire financial straits. 
Furthermore, of the 735 small and at risk colleges, we are only seeing about 5 fail each year. That failure rate is a lot lower than for small-and-at-risk retailers and manufacturers.