A Financial Health and Viability Review for Saint Xavier University (IL) on May 20, 2025

It is May 20, 2025. Welcome back again to another show, the College Financial Health Show with Matt Hendricks and Gary Stocker. Matt Hendricks, what college are we looking at first today?

I have St. Xavier University in Illinois, and I'll start with the usual. I'm going to do a little bit on the strategic compass today. I've made, I made a strategic compass for them a long, long time ago, and I just updated it yesterday. So I'll, I'll show you some of the key points that I saw years ago and wrote about and, and see what you guys think. Happy to hear other opinions on this school as well, but here's St. Xavier. Okay, so this is net income margin.

Very nice.

So the interesting thing about St. Xavier is they have some of the biggest net income margins I've ever seen consistently year after year. And a curious thing about this school is they were acting like they were in financial crisis the entire time throughout these years, it seemed. And in fact, they canceled their negotiations with the faculty union, I believe, right around here. The timeline is not exactly precise in my mind anymore, but there's a lot of fact. I'll show you the data on the faculty turnover, I guess, or I'm not sure how they got rid of all the faculty, but I have some inside information on it. It wasn't pretty, but I became interested in the school because the narrative from the administration didn't seem to match what you see here. These are big profits basically for the school, net income, and it happens for what, 8 years in a row. They did have a financial crisis though in 2016, but in my general high-level opinion on this, it seems to be a massive overreaction that just never really was corrected. And so you might ask, this is a— it's a good thing to have big net income, right? Well, yeah, but you need to remember too that you have a mission, right? You're not a for-profit entity. You have a mission, and it's not normal for a nonprofit to have big net incomes like this. And that's what I was basically trying to point out. It indicates underinvestment in the mission. And the thing that was a bit— not a bit, a lot concerning to me was that it seemed that they had lost sight of the fact that they had a mission, to me, in my opinion, and were focused instead on maximizing profit. Right. Which is not what a nonprofit is supposed to do. So let me just back all that up with some facts for you to disagree with me on any point. But even today, even with a new administration, they still have these massive surpluses. So what were they doing with the money? Here's where the money went. There you go. It all went into their unrestricted endowment fund. Most of it, right?

That's a lot of cash.

Huge amount of money. Their endowment's up 441%. So again, it's good that they're not financially struggling, right? But at the same time, if you're a student or a donor, I mean, you want the money to go to you in the classroom, right? Right? You want to make sure that you're getting the resources, your faculty is being supported, the classes are— faculty are happy, that kind of stuff. And they weren't. They weren't happy. That was something that was very clear to me when I was talking to them. Classes are getting bigger. People are leaving. People are getting rifted. And so it wasn't a healthy environment in my opinion. So I wrote a paper about it. But let me show you some more. So how did this endowment grow so much? Well, there's a couple of ways. They weren't using their endowment for one, which is another thing. If I'm donating money to a school, I would like them to use the money. right, to support my scholarship or whatever. But this doesn't look to me like a school that was using their endowment at all under the previous administration. Right. This is a 1.3% draw. Those are, those are tiny.

Yeah.

The new administration did a normal draw, slightly below normal draw in '23, and then a big draw in '24. But, you know, they have years to make up for here. They basically weren't drawing on their endowment at all. And then they had some big contributions. Right, so there's a big contribution here. This is 4.5% of the endowment value being contributed. Uh, but the biggest contribution to their endowments is, um, in this other changes group. Um, so I harmonize all of these endowments. Let me show you what this is. Other endowment changes as a percent of the beginning endowment value. So this is a 20% contribution to the endowments. I could show you in the audit, and maybe I'll take a minute to do that, but basically they're taking the the surplus, the surplus profit essentially from the school year and allocating that to their endowment. And that was a 20% boost to their endowment value, then a 16% boost, then a 28, then a 20, then 11, then 21, and so on. So you see these massive contributions basically coming out of the profit margin from the school. And if you're curious about this, I will show you exactly where this comes from. It's in the endowment notes section. And you saw how uncommon that is. Endowment net usually can do a search for endowment net and find these right away. But this amount designated for endowments, I mean, it really is a contribution, but there is contributions here. It's just not normal. So I didn't categorize it as a contribution. It's categorized as other changes to the endowment. But they do this every year. Amount designated. Here's $8 million coming from just surplus cash, right? $2.8 million coming from surplus cash going into the endowment. So their endowment has grown a ton. And again, this is all great. I'd rather see a school doing this than closing its doors. But at the same time, I worry that the school kind of lost sight of what it's supposed to be doing. It was focused mainly on, you know, financial health and, and, and sort of losing sight of, of what its primary mission is, which is to educate the students. And this is a religious institution and they, they were cutting all sorts of things that like, uh, religious studies major I think is gone still. Um, it just kind of inexplicable things to do. I mean, that's part of their mission statement. It's really hard to justify that as being a mission-aligned cut, especially when you have these big surpluses. But anyway, here's the biggest thing that I was concerned about with this school. By the way, this is a strategic compass. I just updated it yesterday. So basically what I started writing about was this. It's right here. This is the number of faculty per students. All right. They used to have a bit high, which I agree with them. They needed to cut a little bit of faculty probably, but they just went crazy with it. Like this. I'm sorry to be like using strong language, but in my opinion, this was a bit off the rails, right?

And the blue line is the peer group median, right?

Yeah, peer group median. And they didn't change their faculty per student ratios at all. By the way, this is a lot of faculty to lose in just a few years. They had 169 faculty in 2016. 124 faculty in 2024. And by the way, the school grew, right, a lot. This is their undergraduate, um, and they're expected to grow even more. But let me just show you their FTE enrollment. Uh, looks like they lost some graduate students though. So this is overall FTE enrollment. It was growing a lot, a lot, like while they were making most of the cuts, which is really bizarre. Has since kind of dropped down to where it was, say, 2018, '19. But I think undergraduate enrollment, yeah, was at an all-time high during the peak of all these faculty cuts. So just didn't make sense. I was writing about that and talking with faculty there and, and, you know, trying to get a sense of what the heck was going on. But I'll just show you at the end of the day, what happened was they just are really low on faculty today. And my advice would be to take some of that surplus and instead of putting it into your endowment and maybe getting, you know, the stock market's probably not going to do all that well this year, then maybe the next couple of years, probably better to invest that money into your mission rather than investing in the stock market. You're going to get a much better return in my opinion. Again, so again, they're low overall. They're low by about 5 faculty overall here, but their ranked faculty is incredibly low. They have a lot of contract faculty and some part-time faculty. But if you compare just their Illinois peers, it's extremely low. That's 34 faculty they're missing. By the way, these are their closest peers, probably Dominican, Elmhurst, Lewis, Millikan. These are all schools right near them in Chicago, except for one. I think Millikan maybe is—

Millikan, yeah.

But yeah, according to their size and revenue, they should have about 160 faculty and they have 124. Full-time faculty. And yeah, they're just short-staffed, it looks like there. But if I were in charge, I would be investing in faculty. It's really clear that that's the place to put the money to me, especially too when you see this simulator, given their current enrollment or their funnel and retention parameters, they're expected to continue to grow, right, for the next several years, right, in enrollment, undergrad enrollment. So no concern there, to be honest, unless you think you're going to be one of the schools that does really poorly during the demographic cliff, which I don't think this school will be one of them if they keep doing what they're doing. But I do wonder that maybe the students, families, donors will get a sense that, hey, like, this— these class sizes are big, right? Our faculty aren't happy. What's going on, right? And then maybe things will not be so happy here for their enrollment. That was one of the things I was worried about as well. Yeah, it's a little different. Whoops, I didn't mean to stop sharing, but it's a little different from what we normally see on the show, right, Gary? This is a rare case where I think school actually needs to spend more money on tuition. But that's again the power of the data here to see where you look weird and what are the implications of it. Another thing, so they're, they're really low on instructional spending, and part of that could be travel. So one thing I wonder is they don't report any travel spending. So I'm, I'm not sure what that's all about, if they really don't have travel spending for faculty departments, that kind of stuff. But I'll check that for sure. Maintenance, marketing, IT, all those spends look really low.

The marketing spend is low, huh?

Yeah, marketing.

I mean, there's just, it must be, that's gotta be a reporting error, I would think.

Yeah, it could be advertising. Actually, wait, maybe it's high. Let me see. Yeah, that's actually good. That's high, actually. So, yeah. Anyway, the, it looks to me that the, again, investing in faculty would be the way to go here to try to match what your competitors and peers are doing and try to fix what was, what seemed to me at the time, a massive morale problem among the faculty, sort of self-inflicted. All right, I'll pass this one back to you, Gary.

So before I bring my stuff up, Matt, looking at all that cash available, I can make a Microsoft analogy or a Google analogy. They have all that cash laying around. New administration. You got to wonder if the thought of growing organically through mergers or even acquisitions is something that a college with this much cash and doing this well would be thinking about.

Yeah, you think, I mean, they're in a position to actually acquire, but the whole time that they're doing that, they're telling the faculty and the staff that they need to tighten the belt, right? And that they're going to cut more things. Like it's a really odd case. You get happy to go, you should just Google it, right? That, and look at this line and then the news stories that are coming out. It just doesn't make sense. But yeah, I, I wrote about that. I talked to the faculty, I gave presentations about that and they weren't very happy about it, of course. But yeah, my point was look at your data, look at your net income. It's not normal. And yeah, I think they still are abnormal.

Huh. Let me go ahead and take a look at a couple things for Saint Xavier before we move on to the next college. And so I've got the 2025 College Viability App up and going. We're looking at a couple different colleges today. That's why I've got more than one on the screen, Matt. So Saint Xavier University, and we're looking at tuition and fee revenue. And interestingly, it's down a little bit, down $3.6 million over the last 8 reported years, 2016 to 2023. You can see the tuition and fee revenue, but yeah, even with that, you showed in those years they had revenue available to contribute to the endowment. And you know what I always start with is graduation rates. And interesting, not a strong suit.

No.

And you got to wonder if part of that isn't linked back, Matt, to the fact they don't have enough faculty to help students get through some of those courses.

Well, yeah, I will say some of my discussions with faculty is that, yeah, they were, they were losing some of their best faculty to early retirements or just tired of the whole mess and just leaving, which was affecting, of course, student morale and retention. But I don't— I only have anecdotal evidence about that. I will say that this is a really— traditionally, it's a lower-income student that attends this school, so I wouldn't expect their retention to be on par with a high-income-serving school. But Yeah, that could explain some of it, just the demographic.

Just looking at the data, you know, I will see the point that it might be a student population that's not academically top of the line, but still only graduating 4 out of 10 in 4 years. Not, not, not something to write home about. Let's take a look then at what they're— how selective are they? Let me take a look at percent admitted.

They're not selective.

Yeah, no. Yeah, they, they admit a high percentage of students. All right, and to their credit, let's take a look, quick, quick look then at the internal market share at Saint Louis University. This is the 2025 college majors completion app. I've got the internal market share for Saint Xavier. And again, we always take a look at the high-end stuff. Interesting popular major at Saint Xavier, psychology. It's the top major for the last 4 reported years. And again, the percentage doesn't concern me as much. It was interesting that psychology was such a high number. And as we always do, we have to ask, even for somebody doing as financially well as Xavier, Saint Xavier is doing, They still have more than their fair share of low enrollment majors, and you talked about the cutbacks they did. I got to wonder why they weren't even more aggressive with some of these other ones that are obviously low enrollment majors as well. Matt?

Yeah, I think they actually cut some of them, maybe a bit delayed still.

It says it does from 2020 through 2023.

Yeah. I think, yeah, if you were, may take several years for you to see those go to zero.

Okay, that could be.

'Cause you got like freshmen coming through and they'll still teach 'em out maybe.

And then let's quickly look at the external market share. I've just got Illinois, I believe. I have Illinois privates and I've got accounting. And again, this is just a show and tell. This is external market share. So if you're looking at this for your college, you can see what market share each of these private colleges in Illinois has. I've got accounting set up. We can even zoom in on it and see what percent of the market share each college has. And again, you know, I can highlight Millikin and Monmouth and the small market share colleges. You know, you've heard me say this before, Matt, what are they doing in this business? They have such a small market share as a place, as opposed to places like DePaul and Loyola that have strong market shares. Bradley as well. Again, in no other industry that I'm aware of do small market share companies stay in a market when they have such a low percentage of that market share. And we can even see— I'll just leave it on accounting and related services— and just a sample set of 4 colleges. You can see what the trends are. This is just kind of a dog and pony match to show the functionality behind Majors. If you're going to cut majors, if you're going to add majors, this is the kind of tool that you want so you're not just looking at internal data you're looking at external data as well. And so Dr. Hendricks, again, this is the Moneyball era for higher education. You use data, I use data. It's the comparisons, Matt, that matter. If you're a college faculty, staff, community member, student, family, board member looking at this, don't be mesmerized by just your internal data. It is the comparisons that matter with your competitors. You may or may not look at them as competitors, but they are. And if you're not using this data to compare yourself to them, they are. They're using this data to compare their college to your college, and you run the risk of falling tactically behind, and you run the risk of falling strategically behind if you're not using these comparisons. One of the things we always offer, and I'll have this contact information in the show notes, reach out, we'll do a private demo. We'll do a private demo of what we just showed today on all the apps, and we'll do a private demo for you on the Strategic Compass. Reach out, we'll set that up for you, your leadership team, whatever groups that you want. So for Matt Hendricks, I'm Gary Stocker. Thanks for all watching on the May 20th, 2025 College Financial Health Show. We'll be back again soon.