Lawrence U. (WI) & Univ. of Health Science & Pharmacy (MO) : Financial Health & Viability Review

It is the College Financial Health Show with Matt Hendricks and Gary Stocker for the last day of September, September 30th, 2025, where each week we look at the financial health and even viability of private colleges across the country. And to our knowledge, we're the only show with more than 20,000 views that looks at that financial health. We actually look at individual colleges to say, hey, these colleges are doing well, and there are many, and these colleges not doing so well, and there are way, way, way too many of those. Dr. Matt Hendricks, always a pleasure to have you on the show and to do the show with you. Who are we talking about today?

Yeah, first up is Lawrence University in, I believe, Appleton, Wisconsin. I grew up in northern Minnesota, so I don't think it's too far from where I, my stomping grounds, but I'll share. I'm going to do a little bit different today. I'm going to just focus on them. Just to show the capabilities of the benchmarking in the Advanced Compass. So here's what I did. So I have Lawrence here as the target school. And there's this functionality where you can add a whole set of peer schools and that the average of that set will show up on the graphs in green. Sort of like I've done in the past with just adding one school, but I put their whole peer set here. And this peer set is a particular one. And this is available for almost every school. If you go to the IPEDS data, look up an institution, you'll get, you'll get the opportunity to click on data feedback reports. And then I just click their 2024 data feedback report. A really useful thing that's in here is that most schools have selected their own peer set. So I use this quite a bit in my strategic compass as like another peer set. It's like self, self-chosen peer set. There's a lot of flaws with self-chosen peer sets. In many cases, you'll see some of the flaws coming up, but it's still useful, I think. So they have how many here? 20, 20 institutions. Interestingly, there's only one in Wisconsin, which is not ideal. And you'll see you'll see Lawrence compared to the average of these peers today.

Okay.

So that will be in another sort of interesting trend line here.

Anybody who uses the Advanced Compass can do the same thing.

Yeah. Yeah. So I just took the— so I think when I just did this exercise, I realized I need to have like a one-button click, right, where you can do the self-chosen peer set because it took me a little bit of time to put all these tools in here. But I think that's what I'll add. It'd be really easy to add. I can just program it. You click a button and the speech—

interesting.

Will, uh, the self, self-chosen peer set will, will populate. Okay, so what I'm going to do is everything's going to be focused on Lawrence relative to the median and the national, the national median, 25th percentile closed set, and also their self-selected set. All right, I'm going to start with unrestricted net assets because just like a higher level, really overall indicator of, um, how they're doing relative to these different groups. And so here's one of the problems with the self-selected peer set. Almost always this is the case where schools pick peers that are really like 3 or 4 times larger than they are in terms of both enrollment and assets. And that's the case here with Lawrence. Lawrence's unrestricted net assets are $95 million. The average of their peer set is $380 million. So not ideal to make comparisons, but we can still make comparisons based on per FTE changes over time and per operating revenue. Is going to look at changes over time first in unrestricted net assets. So here's one of the red flags that if they were doing benchmarking against this peer set, they should have known this a long time ago, that their unrestricted net assets are not doing well compared to that peer set. In fact, not even relative to the national median, the national median unrestricted net assets. And by the way, I have some 2025 data populated now. It's really small. Only 15 schools so far, but it's really early in the reporting season. But if we look here, the average school's up about 40% on unrestricted net assets since 2016. Lawrence is down almost a percentage point on unrestricted net assets.

And you're tracking percent change with this view, correct?

Yeah. And so that's about the— about 75% of schools in the country are better than that, and their peer set is nearly at the median. About 36% up on unrestricted net assets. So they're severely underperforming in terms of unrestricted net assets, which probably will, will tell you there's going to be some deficits we're going to see in a minute. Um, but before I do that, I'll look at net assets overall. Total net assets include unrestricted and, uh, restricted. So again, there's this big gap. Their peer Settle has nearly $900 million in net assets. And they're about half that size. But looking at the growth, interestingly, the growth— so the Lawrence must have— I mean, just looking at just from what I see in this data, they don't have a lot of unrestricted net assets. Their unrestricted net assets are shrinking, but their restricted net assets must be growing quite a bit to sort of offset that, which is interesting. So they must be getting a lot of donations that are just restricted for the endowments. Which itself is an interesting policy question. Why? Why is that? Can we get more of our donors to donate unrestricted gifts? Right. Like, that would be better for the school generally. So that's a policy question that comes right out of this data already. But interesting that their net assets overall are growing about normal, but unrestricted net assets are far, far more useful than total net assets. So Yeah, not ideal on the net unrestricted net assets. So let's take a look at why that's happening. Net income margin. This is our go-to after that. And so as suspected, net income margin looks at the change in unrestricted net assets from operating operations, right? Relative to the overall revenue. And so they have big deficits here compared to their peer set in '17, '18, '19. 20, they're about the same in '21, and then it flips.

Huh.

They do well in '22 and '23, but then a big deficit here. But I suspect that's actually a bit fake because let's take a look at their endowment appropriations, because I was just checking this a bit ago and I was wondering how do they, how do they pull that off. But you can kind of see here, it looks like the way they pulled off I'm not entirely sure about this, but certainly these are not sustainable endowment draws here. That's a 7% draw in 2023, 8.5% draw in 2024. I mean, actually could be sustainable, but not ideal. You're going to fall behind your peers quite a bit.

Somebody's breaking into the endowment piggybank there.

Yeah. So what's happening is this will inflate the unrestricted revenue because this will usually show up in net assets released. On the unrestricted and operating column. And these are, you know, that's like double a normal draw there. So with a normal draw, it'd be interesting to see this. So there is actually a metric I could add here, which is adjusted net income margin, which adjusts— it sort of forces every school to have a normal endowment draw and then looks at what the net income would be under a normal draw.

Huh.

I haven't added that here. I do have a banking version of this that will have that— that does have that, actually. But that's a big metric used by like Moody's and other credit agencies. I just don't want to confuse people too much because there's a lot of non-finance people using this. So my overall impression here is they have deficit— budget deficits. They've had many years of budget deficits, probably had deficits here and maybe here as well with a normal endowment draw. So really not good. They've probably only had a couple of years of a normal budget in terms of having a positive net income with a normal endowment draw in the last decade. So not ideal. And that's why their unrestricted net assets is declining relative to the peer set. Let's take a look at some other financial metrics. Oh, wait, I check— let's double-check the endowment growth, end-of-the-year endowment value. Once again, their peer set has these bigger endowments, almost double the size of theirs, but let's take a look at percent change. Yeah, interesting. So their endowment has grown. Remember, they're getting a lot of contributions that are probably restricted for the endowments. But even despite that, look at their endowment has shrunk relative to 2021. I can go back to raw values. So in 2021, they had $487 million, and now it's down $20 million or so, $26 million since 2021. And that's not normal. Their peer set is up or actually about even. Yeah, pretty much even, but they're down. Again, that's probably because of those big draws, which is they're pulling probably the unrestricted part of the endowment and shrinking that part, which is pulling down their unrestricted net assets. Again, not ideal operations here. So there's lots, plenty of evidence here of financial stress relative to their peer set and just national norms. Let's take a look at their spending on their physical plant. Um, okay, so remember here what we're looking for is ideally you would have a CapEx to depreciation ratio that stays above 1 pretty much every year, and certainly above 1 in a long aggregation. Um, it seems to be the case— so they had many years of below 1 here, but now all of a sudden a surge. So there must be some building going on now or replacing some worn out stuff. Um, so that actually looks decent, but, um, it's concerning when you go 1, 2, 3, 4, 5 consecutive years below 1. It means your physical plant is basically declining. Were you going to say something, Gary?

Well, yeah, you got to wonder if there's— they've kind of engaged in a build it and hope they will come kind of mentality with, with their history.

Yeah, so We'll see. We'll see what they're— but here's the period. This is their property, plant, equipment. Yeah, just declining for several years in a row and then now all of a sudden picking up again. So serious investment here. Again, that could be part of why they— we looked at the total net assets. There could be donations for buildings, building projects going on here. Those would be restricted donations. Okay. So there is a building boom going on here, sort of catch up with their peers, which is a good thing. But yeah, plenty of Plenty of things to worry about on the budget side. So let's take a look at, at that. Let's get an overall view first of the revenues and expenses. So operating— yeah, remember, I can't type when I'm on the show.

I think it's your— I don't think it's you. I think it's your keyboard doesn't work.

Okay, so total operating revenues, this looks really good actually. They're up 21%, but remember, this is fake. Right? They have those big endowment draws, potentially, potentially fake. It's possible that those draws— I'd have to look at the endowment— it's possible those draws didn't go into operations but went to build these buildings, which would be different, in which case maybe this is real. So they're up 21% on operating revenue reported. Again, there's a question of whether that is inflated by the big draws that we saw here the last few years, but I suspect that it's not. Maybe it's going straight to those building projects. All right, but I'd have to do a little bit more work on this. And they can tell you if you work, if you work at this school, just ask them, right? So, but that's good. That revenue looks good, which is a good thing, right? Because certainly costs are easy to mess with, right? So both of these, the Pearsett and Lawrence, up about 20% on operating revenue. Let's take a look at expenses. Operating expenses. And yeah, so here's a potential issue. They probably, you know, if they're doing benchmarking, they would have already known this, but since 2021 in particular, their expenses have sort of exploded relative to their peers. They're up 32% on expenses since 2021, and their peers are up 20%, right at the normal normal amount. So if you're working at Lawrence and you're wondering why you have deficits, a big part of it is just spending is, is, uh, spinning up very fast on operating expenses. These wouldn't be part of the building projects, right? This is, uh, it could be part if you're like paying more to heat the buildings now, uh, you got more buildings, you got depreciation, other stuff. Um, so this isn't ideal, uh, So remember we said they were up 20% on revenue and they're up 32% on costs. So that math doesn't work.

That's over 8 years. That's over 9 years.

Yeah, actually, really just since 2020.

Yeah. Yeah. Good point. Yeah.

I mean, they had this explosion here in expenses. So if you were at Lawrence, ask, ask about this or start studying this. Understand why your expenses are going up so much faster than are your peers' expenses. Again, these are your self-reported peers. It should be about the same, right? Both of your expenses, your revenues are rising about the same pace. Alright, let's take a look at, let's dive into the revenue components, look at net tuition revenue.

I bet it's down.

Did you already check this? Raw values, let's look at percentage change. Oh, that's good.

Nice.

Yeah, we don't see this a lot. Um, so this is excellent. Yeah, their net tuition revenue is up 33% since 2016. There's this sharp change here. Let me check one thing just to make sure that this isn't fake. Sometimes they change the accounting. Yes. Uh-oh. Okay, not so good. Let's take a look at this. It looks like in 2020 they might have changed the way they do the accounting.

Yep. Interesting.

Or I have an error. Let's double-check. Take a moment here. I'm not claiming that this data is 100% accurate, right? But it's close, like 99% accurate. But you do need to double-check. It's on you to check these things. So they got $40 million in net tuition revenue, only $1 million Okay, yeah, so here's what they probably did, and I'll— you can verify this, but you shouldn't have this. This shouldn't be this way. You shouldn't have tuition fees, room and board in here. It's not common to do that. Room and board is usually part of auxiliary enterprises. So these got combined or split off and disaggregated in a weird way. And it probably happened in 2019. So we can't really judge. Let's just verify that really quick. 2020, I think, was when they—

would that meet a generally accepted accounting principle, or is that kind of—

I think so, yeah, but it's not ideal. It's just gonna— so they still have it here split out in 2020 like that, room and board here, because some schools do that and they report it as like student revenues.

Yeah, yeah.

Um, usually this would be called student revenues if they do that. Uh, but let's take a look. I think it was the year before that they split it off. So just be aware of this if you're doing some benchmarking. This is more just for my own. Yeah, here we go.

And for those watching this, all of the audited financial statements are attached in the Advanced Compass to—

Okay, so yeah, you can see what happened here is they basically combined these two later and later years. And what my AI was doing, which is the correct way in my opinion, was taking this plus this. And making it AUX, and that's the way it's supposed to do it. And let's double-check that. It should be about like $15 million in 2019 for auxiliary enterprise. Kind of curious if the AI got that right.

Yep.

So $15 million here in 2019, and then all of a sudden they switched the accounting. My AI can't fix it because it doesn't see the room and board split out anymore. So you've got this quirky thing going on.

So you were correct. You were 99% correct on that.

Yeah. So it is. So even when— even sometimes when I think the AI is wrong, like I go and check and like, yeah, that Actually correct. This reporting is weird. So what can we say about this? Let's take a look at the raw values. Okay, so what we can say is I'm going to just look from 2020 on. That's all we can do here. Net tuition revenue. And let's take a look. Yeah, it's still good. $36 million in 2020, $40 million. So that's up. A decent amount.

What's the per student on that?

Per student? Yeah, they're excellent. $25,000 up to $27,000. It's probably down in real terms, but right, right, hanging in there with their peer set.

Actually, that's really good because they combined auxiliary with tuition.

Yeah. Oh, right. Okay, this is a really interesting thing now. This is masks, right? Good, good point, Gary. They have their room and board combined here and their peer set does not. I'm sure. Yeah, it's not common to do that. Maybe a few of them do, but still the mean would be mostly without room and board. So that means that if you were to fix this up and do an analysis, their price is probably quite low compared to their peer set, which is again another reason self-reported peer sets are not the greatest. They usually pick schools that are just in higher, much higher demand. Um, which is just a human thing, right? You want to be like these schools, but yeah, might not necessarily be like them today. Um, that's why when I do the Strategic Compass, I have this objective K&N peer set that does compare you to a set of schools that you are like today. Uh, but we have several other cuts, right? Okay, so I think my general impression here though is that they're doing pretty good on student revenues, at least since 2020, and hanging in there with their peers in terms of growth, but probably quite a bit lower overall because they have aggregated the room and board in here. All right. So it's good. But I think like, like we saw earlier, their issues are mostly on the expense side. They're just growing too fast, even despite having growth on the revenue side, just can't keep up with their expenses growing the way they are. So let's take a look at that. Starting with employees, we're going to hit the big items first. So let's take a look. Yeah. Okay. Per student, they're about— they're higher than their peers. Employees per student. Interesting.

That whole peer group is higher.

The whole peer group has a lot, right? And remember, this is— usually doesn't work out very well unless you have big endowments. And almost all these schools have really big endowments. So you can afford to have a lot of employees. But even, um, but remember, Lawrence has a smaller endowment compared to almost all these peers, so quite a bit smaller. Remember, on average is like half, right? So they can't be paying more employees than these schools and expect the budget to be in similar shape. So this suggests a serious staffing issue. Ideally, Lawrence would be lower per students than this peer set just because they don't have the same amount of resources per student. And let's take a look at— yeah, if you look at it relative to operating revenue, which is just what I was just saying basically in the back of my mind, is that their staffing is just high, higher than it should be for how much revenue they have. And again, even with potentially inflated revenues, with the big endowment draws. So it looks like they might have too many people, which is almost always the case when you have—

right, right.

It's virtually always, virtually 90-some percent of the time that's the case. So let's take a look at a few other— there could also be an issue with paying too much, but usually it's just a number of people. That's the issue. Yeah. Let's take a look at non-officer. Let's go. Top end. Wow.

Oh, I— well, that makes sense too, though.

So the interesting— so the, their peers have a lot of high-paid folks. Well, these are elite schools, so you would sort of expect that. Um, whereas Lawrence has a lot of staff and there's not a lot of them making above $100K. So this could be pretty problematic in that you've got low pay and a lot of people, which is like the worst possible combination. Let's take a look at officer spends. Yeah, they're low on the top end. So I think they just have a lot of people and they're not necessarily high-paid folks. Take a look at— yep, again, here's the non-officer salaries and wages aggregation. Just too high, higher than normal, much higher than their peers, median, um, per student also higher than their peers and higher than the median. So they have a clear staffing issue just based on the aggregate numbers here. So to figure out exactly where the staffing is high, they would need to do a deeper dive, which we can provide, right, through Strategic Compass and the work that we do with institutional data. But this motivates it, right? This clearly there's something off with the staffing. Again, payroll taxes is high. It's high because they have too many people. Okay, so employees are high. Look at that. If you're at Lawrence, you probably can balance your budget just by right-sizing the staff. Right. And again, it's not going to be folks making $150,000 that you need to cut. It's probably a lot of people making pretty low salaries, actually.

And the strategic compass would help them identify which of those employee categories are too high compared to whatever period.

They show up in weird places. Like sometimes it's security, sometimes it's food service, sometimes it's all of those things. It's office assistants, it's marketing people, it's coaches, right? Like it's all over the place. There's people, there's grounds crew. These things add up really fast. If you're high in all these areas, you eventually just can't balance your budget, which may be happening here at Lawrence. Far easier to hire folks in higher ed than it is to fire, right? So that's sort of what happens. Another pain point is contractors. And see, per FTE. Let me see what the raw value is here. Just wonder if this is right. Even they watched the show, Gary, and they're like, hey, we need to cut all these contractors, which was good. They appeared to be high. Right. Really high on contractors. But remember, they were building a bunch here. I just wonder if maybe the building projects ended.

And that 2024 value is similar to the 2017 value.

Yeah, it could be. In which case their contractor spend would be low, right? In a normal year, which makes sense. They have too many staff, not enough contractors potentially, and they could have some missing contracts like not having food service is a big one, not having outsourced like maintenance and cleaning and stuff like that. That can seriously be inefficient and cause you to have a lot of staff in-house and not have the ideal mix. Let's check a few other expense items. I know I've already spent a lot of time on this school, but hey, I'm rooting for them, right? Advertising spend looks low. That's fine.

Interesting.

IT spend looks low. Yeah, you want to match your peers. You might look at IT spend. You're quite a bit lower than your peers on IT spend here. That would be worth investigating, especially if IT is just not functioning well on campus. Take a look at your insurance policies. Looks like you're quite a bit higher than your peers on a per-student basis and revenue. So shop the insurance policies. Yeah, you're— it's a much smaller school than your peers, and you're paying more on insurance than they are.

Is Lawrence a rural area? Do you know, Matt? I don't know off the top.

Yeah, Appleton's kind of rural. Okay, I think— I don't remember exactly where it is in the state, but, uh, I've been there once. There's like a river to float. I did that. Uh, let's see, occupancy— that makes sense. Okay, good. Um, Travel, food service. Food service looks interesting. No food service contract in 2024. We'll have to look at that. It could be just pushed out by the construction, right? It's possible. They probably still have it. It just got pushed out of the top 5. Alright. So I think the number 1 pain point for Lawrence and the thing they need to address is the staffing issue. and they may not have known that until they watch this show. Hopefully Lawrence University, it's not obvious unless you do it, right? That's why we do this show.

Well, and again, most colleges we know from experience look only at their internal data. They don't do the comparisons like, like's available with the Advanced Compass where you, we're using this.

Yeah. And there's some other low-hanging fruit there. Like the insurance policies just do not look right. You shouldn't have be paying more for insurance than your peer set average when you're way smaller than that peer set. All right. Remember, they're like half the revenue, probably half the buildings even. So it's kind of interesting that that would be the case. Let's take a look at some of these. These look actually okay. Bon Appétit. Yeah, don't do Bon Appétit.

I just—

I'll just say it, just don't do it. And what are they— where is their food service vendor for 2024? It's not in here. Interesting. Credo. Okay, I'm not going to say anything, but we would have— we could have worked, worked with them to identify problems for less than $110K, right, Gary?

I'm thinking about 20% of that value.

Yeah. Okay, so Bon Appétit, $5 mil. This is a really high contract, and hopefully Credo told them that, um, and they're getting a new one. Or just renegotiating this. It should be like half of that. Um, so go out and get some new estimates. But I don't even see a food service vendor anymore, so it's really curious. So wonder what they're even doing, um, with food service now.

Maybe they don't have—

I think it would be a mistake to switch to in-house, so hopefully they didn't do that.

Maybe they don't have any hungry students there. They just don't eat.

But it's really interesting, all of a sudden, like, some of these big contracts just fall off. All these construction contracts And no food service. It's interesting. I wonder what's going on if somebody filled this out incorrectly or if they really don't have Bon Appetit anymore. But definitely if you do have this, you appear not to, you're looking for like $1,500, $1,600 per student on the food service contract. So double check that, double check all your insurance policies and renegotiate those down as well, or just get different policies. All right, I'll pass it back to you, Gary, but the biggest thing for them is staffing for sure.

So, so before I jump into the other college that we're going to look at today, the peer set you started off talking about, Lawrence, the peer set was interesting. Do you see most colleges choosing an aspirational peer set, and is there value in that?

I mean, there is value, right? That's why I always use it. But it usually ends up being a mix of mostly aspirational universities or just universities that they may think they're like, but they're not. They're just way bigger and have more revenue and all of that, bigger endowments. And that's the case here. So it's almost always the case that I see that. That's why I have the K&N set. I will have that set there. They're self-reported, which is usually the one they submit to the Department of Ed. I also have the cross, cross apps set. We also have sometimes conference peers, other peer sets, like maybe the provost has their own peer set they want to use based on academic programs, you know, stuff like that. It's really flexible. And we do all the analysis with a big set and then different subsets. So you can see how robust the results are across different sets.

And then you talked about their total operating expenses. And it has skyrocketed since the pandemic. And 2021 is when that started. And you and I look at a lot of colleges now, over 140 colleges we've done reviews of, and most of the times post-pandemic, the spending is not going up, right?

Yeah, it's growing, but they just appear to be getting carried away. Again, it's on the board. I mean, a lot of administrations are— they're going to want to spend, spend, spend, right? Like, they got all these ideas that they want to, but it's up to the board to put the brakes on that stuff, right? We've got to Yeah, you can't have a, you can't have a budget that's not balanced, right? It certainly can't do it for many years in a row, which they seem to have a long history of running deficits, right? And this should stop that because they're falling further and further behind their peers in terms of unrestricted net assets, and they're actually getting further from that peer set than they are getting closer, right?

Like, interesting.

Yeah, not good.

Good. So Matt and I are doing things a little bit differently today. I'm going to take the second college in part because they're neighbors, the University of Health Sciences and Pharmacy here in St. Louis. I actually toured their facility about a year and a half ago. And Matt, as you and I discussed before we started recording the show today, it is a fabulous facility. Most of it is brand new. It is right on the campus of Barnes-Jewish Hospital, which is one of the top hospitals in the world. And I went through a typical spring semester day And as I got the tour mat, I swear less than a third of the classes were occupied. And this was the middle of the morning, as I recall. And, and I said to myself, you know, what's going on with that? Well, we're going to kind of see that. University of Health— the University of Health Sciences and Pharmacy used to be the St. Louis College of Pharmacy. And let's kind of take a look at some of the data points here. And I always like to start with net income because that gives us a look at where college is headed in terms of profitability. And again, Matt, we don't often say that colleges don't like to talk about profit, but yet at the end of the day, they need more cash coming in than cash going out. And you and I see that in most cases that's not the case, and that appears to be the case here at the— I'm going to call this College of Pharmacy because it's just shorter. Um, their net income margin is down really since the pandemic and has stayed down since then. Let's take a look then, and, and I want to look at net tuition. And I'm driving to a point here. Let's look at the percent change, because we've got 4 views that we can look at here, and Matt showed you those on his part of the presentation. Let's look at the percent change in net tuition revenue. Yeah, I mean, I do a lot of interviews with reporters, and one of the things I share with them is they don't need me, they probably don't even need you, to take a look at a chart like this and see that a college is in trouble. Because look at that blue line for the St. Louis College of Pharmacy. It has trended down. It is down some 46% since 2016. It is down some 40% since 2020. What do you think is going to happen when I show the student numbers?

Yeah, they're same pattern.

Yeah, same pattern. I'm going to go back to net tuition revenue. Because I want to look at the per— you see me asking you all the time, Matt, because I'm intrigued by this. How many times when you and I do the show that a college, their average tuition revenue per student has gone down? Time after time we see that over the 8 or 9 years reported. And let's take a look at the percent change, and it's down, of course. The per student though is trending upward generally. It's been down a little bit post-pandemic, but there was— it's 30— it was back in 2016, it was $24,000. $25,000 and change per student on average, and in 2024 it was $30,000. So this is a college that has been able to raise tuition considerably. That's about $6,000 over $25,000, so about 25%, something like that, over the last 9 reported years in the face of declining enrollment and all of those empty classrooms that I talked about. And then Matt always likes to balance the revenue, which I do too. My, my keyboard works better than his though. So operating revenue— I'm gonna do in the other chart because I can't remember the two. Oh, it's already up. Total operating expenses. All right, so the top total operating revenue is $50 million in 2024, and total operating expenses are a little over that, $51 million. So again, the pattern we see in most but not all private colleges, Matt, is that chronic— I think it's fair— that chronic inability to manage expenses in line with revenues. And we see that here at the St. Louis College of Pharmacy, also known as the University of Health Sciences and Pharmacy in St. Louis. All right, Dr. Hendricks, you're the guru on this. What else would you like to see?

So the— maybe look at the— let's look at the percent change.

And again, you don't want that going down, right? You see it going down as a percent change. Let's look at the raw value. And it's going down even as a raw value. And, and Matt, you do a good job of explaining this, but for the folks from the School of Pharmacy, what does this mean if you're a faculty, staff member, community member, alumni, when the unrestricted net assets are going down? That's effectively flat over the last 9 years, but down since the pandemic.

Yeah, I mean, I think the easiest way to think about it is like your net worth, right? If you, you know, Elon Musk is worth so many billion, right? Like, that's like, that's theoretically what he would be, how much money he would get if he sold everything, right? And that's basically this same number for a university. If they were to just liquidate everything, this number is supposed to give you the idea of how much that would be worth. And you see it's going down, so less than ideal, right? Yeah, right. And this is really your runway, right? When you're in emergency, you rely on these unrestricted net assets to cover payroll and everything else in down years. That's how they're able to have negative years, right? Like they're just using their assets and, and that's why it's depleting.

And then I told you the story again before we started recording, uh, about the history of the University of Allied Health, whatever it is. And it used to be just the School of Pharmacy and the College Board many years ago, 10, 15 years ago, made a change from the School of Pharmacy to the Allied Health, whatever I just said it was, long name. And we saw the consequences in terms of enrollment, maybe or maybe not associated with the name change. But look at the gifts. So the gifts from 2016— I think the name change was before that, if I recall correctly— the gifts were from $390,000 and they're down to $300,000. Matt, for a college of pharmacy where the entry level is a 6-year degree that seems to be an awfully small number of gifts.

Yeah, that's not good. I mean, you generally have high-income alumni too, ideally, right?

So, yeah, and the point I'm trying to make is if indeed that the college made its alumni less intent on supporting the college because of the name change, I think we're seeing that reflected in these gifts here. And even, you know, we can look at it for a student. It's gone up a little bit because enrollment has gone down. And let's look at it in terms of operating revenue. And again, it reinforces what you and I are talking about in terms of for every $1 million, for every $1 million in operating revenue, the College of Pharmacy is now below the 25th percentile. 75+ percent of private colleges do better in terms of soliciting gifts than this college does.

It even makes it more vital for them to get their budget balanced because they can't rely on some big donor probably to bail them out, right? They just don't get a lot of donor support, it looks like. So, yeah.

Yeah. So we looked at two colleges today and, and both, neither would probably fit our bill of financially healthy. I doubt that any either of them are at risk of closing anytime soon, but we are looking at that consolidation era. And again, Matt, you know, I've talked before about mergers. And acquisitions. And, and, and I, I'm pondering this a little bit more these days. There are some of these colleges, and I think maybe all these two— and I was telling you about Bradley University up in Peoria— these are colleges that while their cash trends, I guess, correct me if I'm wrong, are not in a good direction, they still have enough assets to be a value— a valuable merger partner. And maybe in the coming weeks and months, you and I can kind of add that to part of our discussion portfolio, whether a college would be has enough assets to be a good merger partner or not?

Yeah, I mean, both of them would be great assets for any school to merge with, but I think both of them can stay independent as well. So, you know, the case of Lawrence, it just looks like the spending has spun out of control. The board needs to get a handle on that. And but limits don't pass budgets that are not balanced. And if they think they're passing a balanced budget right now, they just aren't. They need to figure out why the budget isn't matching. So ideally, your budget would predict what's going to be on the audit, right? Yeah, that's the ideal budget. And clearly, there, there's is not, or they're just passing budgets that are not balanced, which is also a big no-no. So yeah, just fix that. School's growing. They should just ride that. Don't overspend. And just, you know, try to catch up with that peer set that you've self-identified, which is more of an aspirational set. You're falling further behind at the moment. Um, so just, uh, revise the strategy.

And Dr. Hendricks, let's call that a wrap for today's show. So for Dr. Matt Hendricks, I'm Gary Stocker. Thanks for making time to watch the show. We'll be back next week with two more private colleges on the College Financial Health Show.