In this episode of the College Financial Health Show, hosts Gary Stocker and Matt Hendricks examine Wayland Baptist University’s (WBU) financial and operational condition. They highlight seven consecutive years of operating losses, a 52% drop in full‑time‑equivalent (FTE) enrollment, and an endowment that is being heavily drawn to cover cash shortfalls. Despite low tuition ($11k average), WBU is losing students to higher‑priced competitors like Baylor. The hosts discuss pricing elasticity, suggesting modest tuition increases as a low‑risk experiment. They identify staffing and payroll ratios that exceed peer benchmarks, high insurance premiums, and occupancy costs that are unsustainable given the enrollment decline. Vendor contracts for online programs are scrutinized, with a warning to cut services where marginal revenue is below marginal cost. Academic concerns include a 4‑year graduation rate among the lowest they’ve seen and an over‑reliance on business administration majors (30%+ of offerings). Governance issues are raised, emphasizing board fiduciary duties, shared‑governance responsibilities of faculty, and the need for transparent data. The episode concludes with actionable recommendations: price experiments, right‑sizing staff and facilities, reviewing vendor contracts, benchmarking key financial ratios, and improving board/faculty oversight.
Chapters
It is Tuesday, May 6th, 2025. Welcome back, everybody, to the College Financial Health Show with Matt Hendricks and Gary Stock. Matt, let's go to Texas. The next college we're looking at is Wayland Baptist University. Take us there, sir.
Yeah, another, another one where it's actually quite similar to the Spring Hill case. Schools in Texas should be doing well overall, right? Most are. Texas is growing like crazy. Do not have a demographics problem at all. Surging students, actually. So it's a concern to see that Wayland is not enjoying the fruits of that. I'll show you the Wayland Baptist financials here. And so this is pretty concerning. Uh, what do we have? 1, 2, 3, 4, 5, 6, 7 consecutive years of losses. Um, and they're below that red line.
They're below that red line of closed, recently closed private colleges. Not good.
Severe loss here, slight rebound. Um, the endowment appears to be growing almost normally though, which is interesting. Let me see the appropriations. Appropriation as percents. Yeah, it's interesting. It actually— they had normal draws for a bit. Yeah, as soon as things— well, since 2020, they've been high, right? So their endowment would have grown much more had they had normal draws. So again, they're trying to fill these, you know, the cash deficit probably here with the bigger draws on the endowment.
We've seen a few colleges with that post-pandemic depression, I guess, for lack of a better word, where they haven't really recovered as well as many other colleges from the pandemic era.
Right. And yeah, like I said, most schools in Texas are doing amazing in terms of enrollment. From what I remember from my prep a second ago, I don't think this was the case here. So here's their FTE enrollment, and it's shocking how low it is. It's down 52%. While other schools in Texas are just thriving. I mean, Texas Christian, um, again, you can put peers in here. TCU's up 24%. Baylor, um, just kind of curious what Baylor looks like. I know it's good. 26%. It's really shocking that they're struggling so much. So again, it's Students just don't like something about this school, it appears. Yeah, clearly what it is is not clear initially here. Let's take a look at their pricing. Yeah, that tuition. Again, the Strategic Compass is really where you can figure out what's going wrong or get clues as to what the problem could be.
And if you're from Wayland Baptist University and you want to take us up, drop me a note. I'll have the connection information on the show notes, and I'll be happy to set up a private demo of the Advanced Compass that you're looking at now and the Strategic Compass that Matt is talking about to show you what it could do for you.
Yeah, it's just shocking, right? Like the average student is paying $11,000 at Wayland, which is extremely low, and they're still losing students to Baylor who they're paying $29,000 per student. Right. So again, I think this is a candidate school where, again, you experiment with a higher price. I don't think the price is what the problem is, is here. You probably have some slack here where you can increase your price without losing students, right? Easy for me to say, right? There's some risk involved with that, but I think you can do some experiments and sort of tease out that impact. Generally, when you're already way below the price that sort of students are expecting, increasing your price a little bit to get closer to that expectation isn't going to affect your elasticity, we call it, much, if, if at all.
Wayland's not the only one with that low price issue.
We've had that sort of stuck in, um, you're stuck in like a death spiral here where they've got a low price and crushing enrollment losses. You might as well fix the price, right? I doubt it's going to impact your enrollment. Um, and then you got to figure out why the enrollment's falling. It's not— it doesn't appear to be related to price. But again, easy for me to say. Do some experiments with it, check it out, try to figure out what your elasticity is. You do have some natural experiments here. It looks like you did increase it sharply from '23 to '24 on average. Double-check what that did to your enrollment, if anything, or the trend. Check your freshman class. Again, we can do all this in the Strategic Compass. I'd be happy to help them do that. But it looks like there's a low risk if you bring your price up. Just based on experience and what I know about how markets work, I would be shocked if that would have a big impact on your enrollment. But I could be wrong, right? That's why we need to do experiments and use data. Net tuition's down a ton. Okay, so expense side. Again, this, this is another school that's probably going to need to come to terms with the fact that they're, uh, you're shrinking and figure out what to do about it. But in the meantime, they're going to have to survive. Um, so you're going to have to right-size the staff. Let's check the payroll salary and wages. I wonder if I have this. Yeah, that looks okay in terms of raw values, but relative to their revenues, that payroll is a bit high. And relative to the size—
scroll up on that a little bit.
Oh, sorry about that. Yeah. For relative to their revenue, this, this is a bit high on the payroll side. And interesting, I think— let me show you employees. They may have a staffing issue here. Yeah, the number of staff relative to their revenues. So I've got per million in revenue is above the 75th percentile. So again, staffing looks high. I wonder what it looks like per FTE, especially closed colleges, just to have their really incredibly low revenue for how big they are. And again, that goes back to that really low net tuition price. Again, I would experiment with a higher price. You might, you may lose more students, but your revenue can still go up if your price goes up at a higher rate, right? Um, that may be the savior of the school is to experiment. It's, it's counterintuitive, right? I know it is. Yeah, you should try it. It's worked many times with clients I've worked with. It worked at the school that I worked at. Um, it just needs a little bit of courage to try it. Here's a, here's another thing. This may be some low-hanging fruit here. Insurance policy. That insurance policy is very high for their revenue and surged recently. And thinking raw values, yeah, it went up from, yeah, like $250,000. Not going to probably save the school, but, you know, everything is going to add up here. That may be something to look at. You know, if the insurance policy is high because they have a lot of buildings, they may look into closing some of the buildings down again, like mothballing some of them or selling them. Again, you're Enrollment's down 52%. So chances are you have a lot of extra space, right? Same with occupancy costs. This is related to like mothballing. Like I mentioned, it's always been high per student and it's incredibly high per student right now. Again, might have just overbuilt campus for how big it is right now. And it appears to me that the school is making a push to do like online And I'll show you why I think that. They've got a lot of vendors that appear to me to be sort of providing online stuff. This is Wayland Baptist, right? So we have— these are their top vendors' contracts. The food service contract looks fine, but again, they might be a lot of online students. So I'd double-check this versus not just FTE, but the kids that are living on campus. So you may actually find that that's high. But we've got a wide— this is IT, this is IT, this is IT, this is digital books, could be for online programming as well. All of these contracts are for online programs.
Yeah.
And I'll share you a little bit inside baseball. Even one of the very, very strong schools I just showed you from Texas messed this up. They spent a ton of money on an online program that didn't have any students in it. Right. And so they fixed it. Of course, the school is really well run, but double-check this. It could be that these costs are not being covered by tuition revenue from the online students. And if that's the case, really easy decision rule in economics. If the revenue is smaller than the cost, the marginal revenue is smaller than the cost, stop doing that. Right.
Should I write that down somewhere?
That's the one thing you can learn any econ class. If there's one thing you remember, that's that golden rule of econ. Marginal benefit versus marginal cost. It's in everyday decisions. Don't do it, right? Really simple rule to follow for everything. But yeah, I'd cross-check your revenue for, for these kinds of things. This, these contracts are supporting versus all the costs, including the costs that are sort of hidden here. If you're paying your faculty to create these courses and stuff like that, that needs to be included as well. Yeah, lots of stuff to check here. There's travel, marketing spend. I'm not going to go through all of them, but they should start digging on all of those. And cross-check marginal benefits versus marginal costs and check other competing contracts, other vendors, all of that. I'll pass it back to you, Gary.
Let's take a look then at the College Viability app for Wayland Baptist in Texas. Look at the 4-year graduation rates. I've seen low ones before, but these are among the lowest that I have seen. If you can't graduate students, why, why are you even having a college? It's just, that's not good. I'm looking at admissions yield just because we looked at that for Spring Hill. All right, interesting. This is a religious Baptist university, and it appears that their admission yield is higher, maybe because of that. But yet we still saw that precipitous drop in enrollment. That would be an interesting question to ask and to research as well for this, for this college. Let's take a look at Wayland Baptist in terms of offerings. And unlike Chapman, who had nice strong numbers everywhere— we did that one earlier today on a different show— is look at the number of— this is the college trying to be everything to everybody, and they can't afford it. Just based on this internal market share data. Again, this is internal market share. Look at the number of majors with such really, really low enrollment. They only have 3, and these are from a list of— from a set, Matt, of 64 majors that I have here in this app. They only have double digits on 3. And look at how heavily Wayland Baptist is reliant on business. That, in addition to all their financial troubles, all the financial trauma, that's way— look at how high those percentages are. 30% is my own personal threshold sold. Look how much higher they are than that. So much of their business is relied on business administration. That's a risky proposition as well. And with that math picture, items I want to talk about today, and, and that we've talked about, um, as we wrap up the show, is we talked— you talked earlier about boards really needing to monitor the costs, the financial statements, and I get that, that fiduciary responsibility is part of a board's responsibility. I will grant you that. What about faculty? Because we saw with Limestone University, they didn't let their president and board attend the graduation because they said they didn't tell them what was going on. But the data shows they could have found out. Is it fair to hold faculty responsible for that?
Fair criticism. Yeah, the faculty— clearly the board has a legal responsibility to do this stuff. The faculty is not necessarily legal, but they do have a shared governance responsibility that they need to take seriously. They need to at least ask the right questions. It's really hard to ask those questions if you don't have the data, right? If you're just going to— and the same for the board, right? Again, I brought up that example of Averitt. I think you— yeah, yeah. And then basically the board is suing the former CFO for something they should have known just based on standard best practices of boards when you— they have a responsibility to sign off on the audit, right? Study the audit and use it to set the new budget, right? And so they should be benchmarking all these things over time, including the endowment draw. And so it's just pretty shocking that they didn't realize— it appears, right? I don't want to mischaracterize it, but it appears the board didn't know that their endowment had basically shrunk to zero, which is like, I have no idea how that's possible. But It was all clearly laid out in their audits. So really easy to catch this stuff if you just follow best practices.
Yeah. And essentially, the business— this business that you and I have is all the data we use is publicly available. We have added our value by making it easy to compare. That's a gross generalization, but that's what it is. And so if you're faculty, if you're staff, if you're community leaders, if you're students and families, you know, the stuff that we have out there makes it easy to compare. And so if the leadership at your college, public or private, is not sharing this information, well, that's their decision. But just like there is a Blue Book for cars, there is Consumer Reports for everything God ever created. Matt and I have done the same thing for colleges. We don't kick the tires on cars, but we kick the tires on finances for you. We make it easy for you to compare both public and private colleges across— it's not countless, but really, really large numbers of reports. And then one other thing we've talked about before, that I want to use as we wrap up this show is that 4 years. You saw some bad data for 2 of the 3 colleges in today's show, although they'll be published as separate shows. It takes at least 4 years to recover from a single bad year, Matt. Expand on that for me.
Yeah, I think a lot of folks, you know, on the boards don't understand the dynamics necessarily of how the business works in higher ed. It's not like you can just turn your revenues around, you know, in 1 year. The reason is that really each year you're only influencing about a quarter of your enrollment or less with your new freshman class coming in. So realistically, it will take a minimum of 4 years to rebuild enrollment unless you somehow can enroll a freshman class that's 4 times bigger than the normal freshman class. Right. Which is, is really unrealistic. So you need to plan for that. And what it means is there's momentum, right? When you're losing students, it's probably going to continue for 4 years, and then turning it around is going to take another 4 years, right? So you should plan on fitting your expenses in that new budget for at least the next 4 years. Otherwise, you're, you're making more problems for yourself.
So the 3 colleges we looked at today, um, even though they'll be published as separate shows on the edited enhanced version of the show, If you have questions, if you have comments, whether it's for the 3 shows we've done today or any other college we've already done shows on or you want us to do shows on, drop me a note. I'll make sure to add the contact information in the show notes. We can get your college on the show. It'll be a couple weeks out because the list is long, but we can also make some time to set some private time aside to show you what these apps look like for your college. So as always, for Matt Hendricks, I'm Gary Stocker. Thanks for making time to watch the show. We'll be back next week with 3 more colleges. We'll talk then.
