MBB: Michigan Intercollegiate Athletic Association

[sac]

This is probably not what HopeConvert is directly speaking about but interesting anyway.  Only tells part of the story with regards to present and future financial health. 

Net assets to liabilities:

Hillsdale  8.00

Alma  5.76
Kalamazoo 5.17
Hope  5.09

Albion 3.94   
Olivet  3.80
Madonna  3.23
Cornerstone  3.14
Aquinas   3.09

Siena Heights  2.79
Adrian 2.70
Davenport 2.60
Calvin 2.60   
Spring Arbor  2.06

Marygrove 1.59
Concordia  1.5

The only MIAA that lost money during the last available report was Albion, that's been going on for awhile I'm told.  Calvin through grants, tuition, fund raising and cost cutting increased its asset position by $30 million on last report.

[realist]

Reality, and markets, will sort this out. There's a storm a'comin, and it will blow away colleges tenuous in their missions and finances. Bad investing and declining demographics will change the composition of these conferences. Look at some 990s and you'll get an idea of which MIAA and NAIA schools are not going to survive. The results may surprise you. The trick is to survive the first wave (to mix my metaphors).

990 is a Federal filing required of tax exempt organizations.
Google "Calvin College 990" or "Hope College 990" etc. to get the information.  It helps to have some experience reading/reviewing financial filings.   Key to look at is the balance sheet.  Does the organization have adequate cash flow to cover operating expenses?
Obviously if enrollment takes a deep drop it is going to cut revenue, and that is just the start of potential problems.

HC is right that you need to survive the first wave.  However, some colleges may survive the first wave, but will lack the liquidity necessary to ramp back up for a full or long term recovery.

But do you guys even talk to the accountants regularly?

I can not speak for HC.  Calvin has been quite open about some of the recent financial moves they have taken to shore up it's financial position.  I have spoken with the people the accountants answer to (at Calvin) in the last few months.
I have looked at the 990's a number of times over the years.  Just like any financial filing you really need to know what the assets are, and how there value is determined.  What, for example, is the value of the Calvin Campus? 
Changing how you calculate the asset value can quickly impact the ratio Sac mentions.  With out further study you should not assume that all of the above schools use the same procedure when calculating assets.

[sac]

Reality, and markets, will sort this out. There's a storm a'comin, and it will blow away colleges tenuous in their missions and finances. Bad investing and declining demographics will change the composition of these conferences. Look at some 990s and you'll get an idea of which MIAA and NAIA schools are not going to survive. The results may surprise you. The trick is to survive the first wave (to mix my metaphors).

990 is a Federal filing required of tax exempt organizations.
Google "Calvin College 990" or "Hope College 990" etc. to get the information.  It helps to have some experience reading/reviewing financial filings.   Key to look at is the balance sheet.  Does the organization have adequate cash flow to cover operating expenses?
Obviously if enrollment takes a deep drop it is going to cut revenue, and that is just the start of potential problems.

HC is right that you need to survive the first wave.  However, some colleges may survive the first wave, but will lack the liquidity necessary to ramp back up for a full or long term recovery.

But do you guys even talk to the accountants regularly?

I can not speak for HC.  Calvin has been quite open about some of the recent financial moves they have taken to shore up it's financial position.  I have spoken with the people the accountants answer to (at Calvin) in the last few months.
I have looked at the 990's a number of times over the years.  Just like any financial filing you really need to know what the assets are, and how there value is determined.  What, for example, is the value of the Calvin Campus? 
Changing how you calculate the asset value can quickly impact the ratio Sac mentions.  With out further study you should not assume that all of the above schools use the same procedure when calculating assets.

I cocked an eyebrow at a lot of those asset numbers

[HopeConvert]

990 is a Federal filing required of tax exempt organizations.
Google "Calvin College 990" or "Hope College 990" etc. to get the information.  It helps to have some experience reading/reviewing financial filings.   Key to look at is the balance sheet.  Does the organization have adequate cash flow to cover operating expenses?
Obviously if enrollment takes a deep drop it is going to cut revenue, and that is just the start of potential problems.

HC is right that you need to survive the first wave.  However, some colleges may survive the first wave, but will lack the liquidity necessary to ramp back up for a full or long term recovery.

Yep. Read the 990s carefully and you'll see some schools are drawing down their endowment, which will increase their tuition dependency. They will also discount their tuitions at higher rates (some of the schools are already doing this at unsustainably high rates in order to attract students, but it doesn't help their cash flow).

See, for example: http://www.nytimes.com/2016/04/30/us/small-colleges-losing-market-share-struggle-to-keep-doors-open.html?_r=0

[HopeConvert]

Reality, and markets, will sort this out. There's a storm a'comin, and it will blow away colleges tenuous in their missions and finances. Bad investing and declining demographics will change the composition of these conferences. Look at some 990s and you'll get an idea of which MIAA and NAIA schools are not going to survive. The results may surprise you. The trick is to survive the first wave (to mix my metaphors).

990 is a Federal filing required of tax exempt organizations.
Google "Calvin College 990" or "Hope College 990" etc. to get the information.  It helps to have some experience reading/reviewing financial filings.   Key to look at is the balance sheet.  Does the organization have adequate cash flow to cover operating expenses?
Obviously if enrollment takes a deep drop it is going to cut revenue, and that is just the start of potential problems.

HC is right that you need to survive the first wave.  However, some colleges may survive the first wave, but will lack the liquidity necessary to ramp back up for a full or long term recovery.

But do you guys even talk to the accountants regularly?

Yes.

[iwumichigander]

Good points and discussion.  I always look beyond the calculation of assets value to try to make a determination as to how long the assets has been on the books.  This is often, for example, why you see a takeover attempt in business as the real value of the assets much more than the book value.  The challenge with colleges and universities is the limited use of the property.

As to endowment spend down, you see this all over the spectrum.  There are many institutions that have not recovered from the last two market crashes.  And guess what, they better have a plan to survive the next one because it is coming - soon.
Another guideline, if the administration and board are talking about financials the odds are they are doing something about the problem.  The greater question(s) are 1) did they wait too long and 2) are they doing the right things to correct the problem.  If they have trouble and not talking about it, bail out quickly.

[oldknight]

990 is a Federal filing required of tax exempt organizations.
Google "Calvin College 990" or "Hope College 990" etc. to get the information.  It helps to have some experience reading/reviewing financial filings.   Key to look at is the balance sheet.  Does the organization have adequate cash flow to cover operating expenses?
Obviously if enrollment takes a deep drop it is going to cut revenue, and that is just the start of potential problems.

HC is right that you need to survive the first wave.  However, some colleges may survive the first wave, but will lack the liquidity necessary to ramp back up for a full or long term recovery.

Yep. Read the 990s carefully and you'll see some schools are drawing down their endowment, which will increase their tuition dependency. They will also discount their tuitions at higher rates (some of the schools are already doing this at unsustainably high rates in order to attract students, but it doesn't help their cash flow).

See, for example: http://www.nytimes.com/2016/04/30/us/small-colleges-losing-market-share-struggle-to-keep-doors-open.html?_r=0

Any word on how the 990 for Grundy College looks?

[HopeConvert]

990 is a Federal filing required of tax exempt organizations.
Google "Calvin College 990" or "Hope College 990" etc. to get the information.  It helps to have some experience reading/reviewing financial filings.   Key to look at is the balance sheet.  Does the organization have adequate cash flow to cover operating expenses?
Obviously if enrollment takes a deep drop it is going to cut revenue, and that is just the start of potential problems.

HC is right that you need to survive the first wave.  However, some colleges may survive the first wave, but will lack the liquidity necessary to ramp back up for a full or long term recovery.

Yep. Read the 990s carefully and you'll see some schools are drawing down their endowment, which will increase their tuition dependency. They will also discount their tuitions at higher rates (some of the schools are already doing this at unsustainably high rates in order to attract students, but it doesn't help their cash flow).

See, for example: http://www.nytimes.com/2016/04/30/us/small-colleges-losing-market-share-struggle-to-keep-doors-open.html?_r=0

Any word on how the 990 for Grundy College looks?

That may be the most arcane reference in the history of this board.

[HOPEful]

Net assets to liabilities:

Trump University - "I don't know. But it's HUGE. I mean, we've had tremendous success."

Hillsdale College - 8.00

Alma College - 5.76
Kalamazoo College - 5.17
Hope College - 5.09...

[oldknight]

990 is a Federal filing required of tax exempt organizations.
Google "Calvin College 990" or "Hope College 990" etc. to get the information.  It helps to have some experience reading/reviewing financial filings.   Key to look at is the balance sheet.  Does the organization have adequate cash flow to cover operating expenses?
Obviously if enrollment takes a deep drop it is going to cut revenue, and that is just the start of potential problems.

HC is right that you need to survive the first wave.  However, some colleges may survive the first wave, but will lack the liquidity necessary to ramp back up for a full or long term recovery.

Yep. Read the 990s carefully and you'll see some schools are drawing down their endowment, which will increase their tuition dependency. They will also discount their tuitions at higher rates (some of the schools are already doing this at unsustainably high rates in order to attract students, but it doesn't help their cash flow).

See, for example: http://www.nytimes.com/2016/04/30/us/small-colleges-losing-market-share-struggle-to-keep-doors-open.html?_r=0

Any word on how the 990 for Grundy College looks?

That may be the most arcane reference in the history of this board.

Ostfriesian immigrants and their progeny would beg to differ.

[WUPHF]

I knew there was a conversation going on somewhere about small colleges and finances...

Very interesting points...I used to work in financial aid at an NAIA school.  It was a great office, but I did not like a lot about how athletic scholarships were handled.

I thought Division III would see more schools close after the last recession.  Tuition discounting was mentioned as an issue, but a lot of schools I am familiar with experienced declines in their cash cow programs too, mostly part-time evening programs. 

Fewer institutions closed than expected, but some of the solutions are not all that sustainable.  Endowment spending is one.  The growth of international student recruitment is an example.

I love that US higher education has so much in the way of institutional diversity.  Every closure is a tragedy in my mind.  This is especially true for rural higher ed which is far more devastating to the community.

[HopeConvert]

I knew there was a conversation going on somewhere about small colleges and finances...

Very interesting points...I used to work in financial aid at an NAIA school.  It was a great office, but I did not like a lot about how athletic scholarships were handled.

I thought Division III would see more schools close after the last recession.  Tuition discounting was mentioned as an issue, but a lot of schools I am familiar with experienced declines in their cash cow programs too, mostly part-time evening programs. 

Fewer institutions closed than expected, but some of the solutions are not all that sustainable.  Endowment spending is one.  The growth of international student recruitment is an example.

I love that US higher education has so much in the way of institutional diversity.  Every closure is a tragedy in my mind.  This is especially true for rural higher ed which is far more devastating to the community.

I once taught at a school that had an adult degree completion program, and I think the best analogy to it is that it was crack cocaine. A sudden influx of money, but it caused immediate problems and was unsustainable in the long term. By that time, the damage is done.

I agree that the strength of American higher ed is its inter-institutional (not intra-institutional) pluralism. The biggest mistake schools are making is to take the Chronicle of Higher Ed as a universal blueprint and then obsess about distinctives that aren't distinctive at all. This is why I said that schools that have a serious tradition and operate in good faith out of that tradition have an opportunity not just to survive but thrive. Schools that abandon their traditions will be in trouble because they'll be stuck playing a prestige game they can't win.

For this reason, I don't regard every closure as a tragedy. Some of these schools have ceased to exist as interesting places, and they probably deserve to die -- Daniel Webster's great speech in Dartmouth v Woodward notwithstanding. But I think that actually helps make my point.

[Flying Dutch Fan]

Thank heavens there is basketball tonight - no offense guys   

[HopeKnight]

Amen for some hoops!

[oldknight]

I knew there was a conversation going on somewhere about small colleges and finances...

Very interesting points...I used to work in financial aid at an NAIA school.  It was a great office, but I did not like a lot about how athletic scholarships were handled.

I thought Division III would see more schools close after the last recession.  Tuition discounting was mentioned as an issue, but a lot of schools I am familiar with experienced declines in their cash cow programs too, mostly part-time evening programs. 

Fewer institutions closed than expected, but some of the solutions are not all that sustainable.  Endowment spending is one.  The growth of international student recruitment is an example.

I love that US higher education has so much in the way of institutional diversity.  Every closure is a tragedy in my mind.  This is especially true for rural higher ed which is far more devastating to the community.

I once taught at a school that had an adult degree completion program, and I think the best analogy to it is that it was crack cocaine. A sudden influx of money, but it caused immediate problems and was unsustainable in the long term. By that time, the damage is done.

I agree that the strength of American higher ed is its inter-institutional (not intra-institutional) pluralism. The biggest mistake schools are making is to take the Chronicle of Higher Ed as a universal blueprint and then obsess about distinctives that aren't distinctive at all. This is why I said that schools that have a serious tradition and operate in good faith out of that tradition have an opportunity not just to survive but thrive. Schools that abandon their traditions will be in trouble because they'll be stuck playing a prestige game they can't win.

For this reason, I don't regard every closure as a tragedy. Some of these schools have ceased to exist as interesting places, and they probably deserve to die -- Daniel Webster's great speech in Dartmouth v Woodward notwithstanding. But I think that actually helps make my point.

Talk about an arcane reference! Holy smokes. Your comment drove me to my ConLaw treatise to remind myself of the facts, issues, holding and rationale of that little known but exceptionally important case involving the application of the Contracts Clause of the Constitution to private corporations. If you're a lover of free enterprise, be thankful Daniel Webster was convincing. Well done per'fesser.