A Financial Health and Viability Review for Queens University (NC) on May 13, 2025

It's Tuesday, May 13th, 2025. Time again, everybody, for another episode of the College Financial Health Show with Matt Hendricks and Gary Stocker. Thanks for making time to watch either the live version or the recorded version. This college we're going to look at, we're going to go to North Carolina. Dr. Hendricks, and you're going to talk about Queens University in North Carolina.

All right, let's share my screen back to the Advanced Compass. All right. Queens University of Charlotte.

Charlotte, right? All right.

Queens University of Charlotte. All right. So here we got again a bit wild with the net income margins, super high net income margin, and then a sharp decline to negative. Again, first thing I should check here is double check that that's operating revenue and expenses. Or change in net assets from operations. I'm going to double-check that really quick. Yeah. Yeah. And so this is what it usually looks like. There's another section here that's non-operating, right? And usually it will say change in net assets from operations here or other before other things. Right. That's what they're saying here. So they had a loss in 2024 from operating activities, change in net assets from operations of negative $6 million. Which is what we're picking up, up here with this net income margin. Um, so that's not good, of course, not sustainable. They'll run out of money if they keep doing that year after year. Um, so question is, what happened? Um, again, let's take a look at what happened with, uh, examining the revenue and the costs, uh, separately. And again, this is operating revenue, so we got a better gauge here. Um, and I'll do percent change. Looks like revenues fell off sharply. Wow, about 13% in one year, pretty much. That's pretty shocking. Uh, $71 million to $63 million, that's a massive drop in revenue. Yeah, in just one year. Um, I would check into that, of course. So that would be— that's concerning. Um, let's see on the expense side. I'll put it on the second graph. Expenses, total operating expenses. Yeah, so at the same time that they lost like $8 million or so in revenue, their expenses went up by looks like $3 million or so, $2 to $3 million. Yeah, so yeah, the math is not working in their favor there. It looks like they have both a sharp decline in, in revenue and a, I think, a fairly large increase in expenses, right? 31 to 30, about 5% increase in expenses or so. Um, yeah, that's not great. And over, over this long period, their expenses are up 36%, which is quite high. It's near the 75th percentile.

Check on the revenue. What's the revenue gone over there?

Yeah, percent change, and their revenue is only up 5% since 2016. So yeah, that, that math isn't working out. It looks like to me just Based on these graphs, like, there's probably things to do both on the revenue side and the cost side. Let's take a look at, like we usually do, their most important revenue source probably is net tuition revenue. All right. And yeah, we have a sharp drop in net tuition revenue here, and it continues to fall. Let's see, percent change. It's down 32% since 2016. Well, this is very bizarre. This really, this could be an accounting change though. Hard to believe that that would be. And to get that kind of change in that tuition revenue, you'd have to lose like probably 2 of your classes in just 1 year.

And that's a post-pandemic era change. I wonder if—

Oh, it's possible. Yeah.

Didn't manage that change well.

Unless they have in their net tuition revenue, it's possible they have combined with their auxiliary enterprise revenue. Is this— oh, that's the old one. Student tuition and fees. No, they've got it separated.

That's Elizabethtown.

Oh, sorry, that's Elizabeth. Here's Queens. Tuition and fees, net of aid. And then they have auxiliary somewhere. So yeah, here's their room and board. Yeah, it's really shocking to see their net tuition revenue fall that quickly and that much in one year.

Yeah.

You know, it's possible that something's up with my data, but that is a bit shocking there.

And it stays down there after 2021.

I know. Let's take a look at enrollment. So I guess my first piece of advice would be to look closely at that. I don't know that I'll be able to get it here in the next 5 minutes, but it's probably something that you would need to understand if you're going to work with this school. And I would definitely do that if I was going to work with this school. So here's the enrollment. Very interesting. They were growing and then sharp decline down 16%, but down like almost 30% since 2019.

That's, that's in the year before the pandemic too.

Yeah. So, right. That's not good. And, and then on top of it, I think the, was it net price is also lower. So their net tuition revenue combined there is, is getting hit by both enrollment and a lower price. All right. So I guess the piece of advice would be to look at that pricing strategy. Can they bring the price back up? Again, I'll show that graph, that tuition revenue per student. They used to, so this was too high probably. All right. $27,000 per student.

But is this a reset also?

Yeah, it could be. So this is net tuition revenue per, this is net.

So it didn't work.

Yeah, I don't know what's happening here. I'd have to double check if there's some kind of change in accounting or if they per student. I don't, I don't know what, what could cause this just offhand.

That's a 1-year change.

What was it?

Goodness. So I, I guess I'll look at the 2021 audit and see what happens here to see this. Yeah, like that. They might explain it actually in the notes. But the price is still a bit high, so that's, that's, that's promising. Maybe, maybe the price is okay, but Stuff to look in there on the pricing strategy for sure.

And while you're going to the next field, you know, the Advanced Compass— sorry, the Strategic Compass— that is also available through Prospective Data Science and College Viability would allow Queens to drill down specifically to their peer group and not just the universe of private colleges across the country.

Yeah, let's— so on the expense side, I'm going to go to the 990 data right away and just get a sense of what's happening here with staffing and contractors, because those are— if you're going to bet on what's causing financial problems on the cost side, those are the two things to bet on. They tend to be the most expensive items on the cost side, so it makes a lot of sense. But honestly, staffing looks low here, right? Total employee per FTE looks normal relative to their revenue. It's actually a bit low. Let's take a look at— oh, that's not an issue. Okay, so we could have something here. Contractor spend is not the spend. The number of contractors is up sharply again, just like the last school that we looked at. At Elizabethtown, and that's high per FTE, quite high. Yeah, and also high relative to their revenue. So again, this is a case where, number one, I'd say look at your contractors, go through each contract, um, double-check, double-check each contract. Um, you know, just throw out the ones you don't need, right? That's really the simplest thing to do. If you can continue your mission without it and probably throw it into a pile that's going to be canceled. Here's another one. I just happened to pull this up. This is compensation for officers, and this is relative to their revenue. This is very, very high, right? So this could be happening either because you have too many upper-level administrators or their pay is just too high.

What's the raw value? Are they normal?

So it's high relative to their FTE, very high relative to FTE. And very high for the revenue as well. I mean, really need to pull this in like half. Okay. So probably if I were to bet on this, this is probably going to be just a lot of employees over $100K. Yeah, same story here. So you probably just have too many administrators, honestly.

Yeah.

Sorry to say, you might not want to hire me for this reason, but Yeah. So contractors and then look at the, the upper admin slots, right? You probably just have too many administrative positions.

And it's important to note, even though you and I do this all the time, we have done this diagnosis on a, on Queens University really from scratch in 10 minutes.

Yeah.

Now we know, again, we know what we're doing, but if, if a college is looking at this kind of data, this app lets you do the comparisons. If you want, we'll step you through it for sure.

Yeah. And so we had a show about my story. My story was really like this, right? Like my administration, wanted to do some things. It cut up almost all of our academic— half of our academic programs. And then I looked at the data and I was like, wow, we don't— it's not really academic program issue. It is we've got a ton of staff, right? We've got a ton of staff. In this case, it's pretty clear as well. They have a lot of contracts to look at, and they also have a lot of management-level positions, right? And they don't have a lot of other staff. This is other employees. This other than—

that's a good point—

the directors and upper-level admin. This is the amount they're spending on other employees, and it's normal. It's actually a bit low. So this is really useful if you're a faculty member or a board member at these schools. Don't let your administration just start cutting all the other people's jobs, right? What's their incentive, right? They're probably going to want to cut other people's jobs first, not their own. Staff, right? So don't let them do it. It's probably the wrong move. And that's really the story of how I ended up here, to be honest. Here's another thing to look at: occupancy costs, right? I'm just kind of like randomly going through this stuff and there's a lot of very high expensive expenses here. Remember, occupancy costs could be related to insurance, utilities, could just be overbuilt campus, right? Too many buildings. Could be, yeah. Change the thermostats, right? Is one thing to do. Here's another one, food service. All right, I'm going to go down to that. Uh, let's take a look at the actual— so remember, one thing is the number of contracts that needs to be looked at, and then the next is some of the contracts themselves appear high, and that food service contract is the one that's getting flagged here. This is very interesting. So remember, they're in 2022, they had almost 2,000 students '23, they had far fewer students, yet the price of their food service contract went up by $400,000.

Ouch.

That's not normal, I'll tell you that right now. And that's not something you would expect to see with inflation. They need to renegotiate this contract, I would say, like, immediately. Uh, that's not right. Um, and so where was their last food service? Yeah, in 2021 it was $1.6 million. And they were far larger than that, right? It's, it's more than doubled in 2 years. That's not inflation. That is, um, either getting gouged by your, your vendor, or you added a bunch of stuff to your food service that probably shouldn't have been added, right? It's probably not going to be giving you a return on your investment. So double-check this food service contract, renegotiate it. Reduce whatever was changed here, go back to whatever was going on in 2017.

It's almost 2.5 times higher over the last 4 years.

Yeah, that's crazy. Yeah, just remember, like, yeah, students care about food, but they're not, they're not going to your school for food, right? That's not your mission. Okay. And if you're going broke trying to give them better food, this doesn't, this doesn't make sense. Okay.

So yeah, right.

Look at this. Most people, reasonable people would agree with me on that. All right. So lots of advice here. I think, look at your number of contracts, throw out the ones you don't need, renegotiate that food service contract, go through all of your staffing. And again, this is where Strategic Compass can come in. I can point to exactly where the, the staff is high and get a good sense of like what departments, what occupation codes those folks are in and right-size that. And you're probably back to a balanced budget. All right, all right, I'll pass it back to you, Gary.

Take a quick look then at a couple things from the College Viability App. And again, let's go ahead and go to clear filters. Let's go to the great state of North Carolina. And we're—

again, I could do both public and private sectors. I'm just going to grab the private sector for Queens University. So give us a chance to compare I'll go all the way down to the bottom where Q is, and we're looking at start with graduation rates just to see where they are in terms of the quality of the organization. And all right, so the, the Gary Stocker and College Viability minimum threshold for 4-year graduation rates is 50%, and they have been consistently around that, a couple years below, a couple years above. So we've seen a lot worse, but we've seen a lot better as well. Let's take a look at the full-time retention rate. Again, not bad, not quite as high as some, but not, not as— there are many with lower retention rates than that. Let's take a look at something that's kind of an inside baseball, Matt, and this is for Queens University. And again, this app compares dozens of North Carolina private colleges. We could have added public colleges. Matt, how many times have we said on this show and elsewhere, it's the comparisons that matter. And your app does it one way, my app does another, but we can— when you compare, you can see how you stand. You know, it's kind of like the Consumer Reports, kind of like the Kelley Blue Book for colleges. We don't kick tires on cars, we kick tires on finances. It's the comparisons that matter. We say that time and time again. Creighton University back in 2016 used $16 million in unfunded institutional grants. That has gone up about $6 million over the last 8 reported years. Again, I've seen worse. I've seen colleges give a lot more, give away a lot more of the store than that. But like we saw in, like we've seen in previous shows, there are some colleges that have lowered this number. They recognize they can't continue to give away the store mat and be profitable. And like we see here for Queens University, they have issues with, with the type of employees they've hired and with their contractors as well, and food service is one of them. You can't be giving away the store and not manage your cost at the same time. And I'm going to look, I want to look at, we're North Carolina, this is a 2025 college majors completion app. And you're going to be seeing a lot more information on this as we push this out into the market. This is the only app that's available, I think, that does market share analysis. And we're going to look at initially, this is for North Carolina. I've got accounting set up for right now. It's just for private, she's looking for private colleges. In North Carolina. And this is the internal market share. This is the internal market share.

Let's pick one college, and we'll pick our Queens University.

We'll look at the bachelor's programs for Queens University of Charlotte. And a couple things we look at— we look at the percent market share. Again, this is internal market share of the 64-some-odd programs, majors we have across associate, bachelor's, and master's in the app. And we can see programs that are relatively strong. You can see what these are: finance, biology, psychology, business admin, math that we see many times. And we're looking at the market share inside, and none of these raise my alarm, which is anything over 30% is kind of risky for lots of reasons. But we also see here something that regularly shows up. Colleges are trying to be, Dr. Hendricks, everything to everybody. And I beg the question, why is Queen's University in whatever general studies is— philosophy, religion, arts and entertainment, chemistry— they have no share of the market.

Internally.

And we take a look at that externally. Let's go back and look at the external market share. Let's look at a single major. Let's look at accounting because it's not on top. And this is all the private colleges in North Carolina. And the cute little chart here shows the market share. We can hold over the top— Wake Forest has 14% of the market share, um, Elon University has 12%. We can make that a bigger picture if you want. This is external market share for all the private colleges in North Carolina. You can see where college is doing well. Queens University is right here. They've got 3% of the market. All right, now I understand 3% of the market, 8 students in the— who graduated with that bachelor's degree in, in what I have, accounting and related services. That's a significant number. But Matt, you've heard me say many times, if one college has— there's 34 graduating from Wake Forest and 8 at Queens, Which is a stronger program? Which program would you send your children to? The one with the larger number who could offer more faculty, more expertise, more guidance, more diversity, or the ones with smaller numbers? So we use the College Viability series of apps to track data in a different approach that Matt uses with his Advanced Compass. The comparison of college majors is something that is increasingly being used by colleges and families. I showed you the industrial version, the corporate version, but Matt, I've got one for students and families. And again, the example that I use, if you want to send your child to a college for journalism. One college has 2 journalism graduates, graduates per year, Matt, and one has 200. Which is a better program? I think that has to be a consideration. So as we wrap up our review of Queen's University: sustainable, sustainable with concerns, unsustainable long runway, unsustainable short runway. Dr. Hendricks?

Yeah, I think it's another case where you have unsustainable again because they have deficits by definition, that's unsustainable, right? Right. They're losing unrestricted net assets every year as that happens, pretty much. But unsustainable. But they have a long runway. They do have $119 million in unrestricted net assets, $120 million endowment. So they have a long— it would take many, many years of deficits at their current levels Tequila is cool, so I'm not worried about them closing anytime soon.

So as we wrap up this show, like we do in most shows, this is the Moneyball era of higher education. Matt Hendricks uses data, Gary Stalker uses data to compare colleges. Use the comparisons, don't use comparisons, but think about it in the context of competition. Trust me, your competitors are using this data. They're using this data to see how they compare to you And if you make that business decision not to use these kind of tools, whether for the financial side, the enrollment side, the major side, you run a more significant risk of falling behind. Yes, there are many unsustainable colleges with less than 5 years of runway, unlike the ones we looked at recently, and there— but there are some that with some decent runways, and I think Queens falls into that category. But when we look at the overall market, it's, it's the comparisons that matter. So, Dr. Hendricks, I suggest we do this again next week. And for Matt Hendricks, always a pleasure. Gary Stocker, thanks for making time to watch. We'll be back with next, next week's episode of the College Financial Health Show.