College Budgets Are a Guessing Game—Their Financial Statements Tell the Real Story.

So, but I do want to go back. I want to go back and talk about the budgets for a bit because that's come up regularly on the show. If you had a soapbox, you'd regularly get on top of that soapbox and talk about the budgets. Really, budgets aren't much more than dartboards— educated guests, informed guesses about what we think it should be. It's really, Matt, the audited financial statements that are the true report card on college finance. Is that a fair assessment?

Yeah, yeah. I mean, you'll see a lot of schools, um, referring to their budget as if it's like something sacred or something. It's not. The, the sacred document is the audit, right? And those are the results that you want to move, right? If your budget is not reflecting what's on the audit, that's a problem, right? And in fact, I've seen schools say that, right, to sort of, uh, respond to criticism. They say, well, our budget doesn't include this, that, and the other thing. Well, that's a big problem in itself. It should include those things, right? The whole point of the budget is to try to predict those values that are on your audit, right? Ideally, they would predict perfectly, and it should be easy, or at least should be able to reconcile the two documents, right? That's the purpose of the budget is to try to hit your targets on the actual audit, the true values, right? And if it's not helping you get those numbers that you need, then there's probably something wrong with your your budget.

And we've had a college here in St. Louis who claimed, based on their budget, that they had turned around their awful finances. And that's really making a strong statement on future values that may or may not come true.

Yeah, at this point, I don't, I don't care what they say about their budget. I just want to see it on their audit. Unless their budget has been accurate in the past at predicting what happens on their audit, I'm not going to listen to what anybody says, what their budget says, because this, in my experience, they've never really been accurate. Although I have seen good, good examples, right? Most really well-run schools, their audits and budgets do normally align almost perfectly.

Okay. Wait, let me share my screen. Let's take a look at the 2025 College Viability App for executive analysis. And I've got our 3 colleges there. And Matt, you're going to be stunned to see that I start with graduation rates because we always start with graduation rates. And I make the case, and you see this on the College Viability App, And it has some 2,700 public 2- and 4-year colleges and private 4-year colleges. And colleges are paid, Matt, to graduate people. And interesting, I'm going to start with Rider because we just spent quite a bit of time talking about Rider finances, but yet they do a better job than most in graduating over half their students. And you've heard my threshold before. If you can't graduate more than 50% of your students, you're not much more than a coin toss college. Well, Rider consistently does that. And the concerning part about that is they're doing something really, really well graduating students that more than half of colleges don't graduate them in 4 years or less. And yet they continue to have what I would characterize as chronic financial problems. We look at Everett, Everett, and you know, they haven't really even touched 40% once in the last 8 years. They're not, you know, they're borderline 30% kind of graduation rate. I make the case that colleges that can't even graduate 40% of their students aren't much more than tuition collection agencies because they're not graduating students. And Jessup is in the ballpark, we'll give them credit for that. They're in the ballpark for graduating students. Let's take a look at undergrad enrollment because again, that's a leading indicator. Although all the media stories focus on enrollment numbers, that's really just a secondary indicator. It's the tuition and fee revenue that comes from that. And we can see that Everett has been able to grow their enrollment, interestingly, over the last 8 reported years. And yet their finances, as we'll talk about here and when we wrap things up in a minute, their Not good. We can see Ryder has dropped about 20% enrollment over the last 8 years, and Jessup, you know, a handful, a couple handfuls per student. And again, when we look at them, most colleges have had a decreasing undergrad enrollment over the last 8 reported years. A quick look at the graduate enrollment, and Everett has started some graduate programs, probably late to the game. And you can see the numbers on the right-hand side. The down arrow, of course, indicates a negative trend. And these are for the years 2016 to 2023, the last reported data. And then one of the things that, man, is kind of an inside baseball story that we talk about almost every week is something called institutional grants or unfunded institutional grants. And these are what most folks recognize as merit aid, most scholarships, and they are unfunded. So it's different, you know, the Matt Hendricks Accounting Scholarship where Matt donates $1 million to Tulsa University. That's funded, and they use, you know, that university uses the earnings from that to pay for scholarships. The unfunded is simply a discount, and we talk about that regularly. We're going to continue to talk about that regularly because this is revenue that colleges forego. There's nothing wrong with that. They're welcome to do that. It's certainly is a reflection of the market, that colleges have to discount tuition to get students to enroll. But we can see in each of our 3 colleges today that over the last 8 reported years, each has had substantial increases in unfunded institutional grants, merit aid, scholarships, whatever you want to call them. They're welcome to do that. That's good for the students. I had a student reporter on yesterday looking at the college she was going to. It was in great financial shape, and I was explaining this to her, and she was unaware that that's what colleges do. I say you shared the same story with her. They're welcome to do that. It's great for the students for sure, but it's not always great for the colleges themselves. And then I'm going to go down, I want to look at tuition fees because this is kind of a secondary reflection of what Matt just talked about. And look at Rider, they were at $98 million in 2016 in collected tuition fee revenue. They're down $27 million to $71 million in 2023. Clearly, one can make the diagnosis, financial diagnosis: they're facing intense pressure on tuition prices, and they're having to, and they're having to discount those prices, so the revenue is down lots. Interesting, average is up, not quite a million, about $800,000 per year, give or take.