Millikin University (IL) layoffs - We compare the financial health of 5 central IL private colleges

Welcome back to another episode of This Week in College Viability. My name is Gary Stocker. Today's headline is for a private college in central Illinois called Millikin University. It's located in Decatur, Illinois, and the headline reads like one one we are seeing increasingly. And Milliken University is being forced, because of financial circumstances, to lay off employees. The details I'll include on a link down below to the story. But there's a bigger picture, and the pattern continues, and that's what I want to focus on, on this episode of This Week in College Viability. So let's go ahead and go to the data. And I've gone ahead and I selected 5 colleges. In that Central Illinois region that are peer competitors—my determination, not theirs—of Millikin University. And we're going to look at about 8 or 10 comparison reports from, from the National Center for Education Statistics and its IPEDS database, all data that the universities themselves have submitted. And let's just take a quick look at the 8-year changes. This data is from 2014 through 2021, and in each of the 5 colleges' cases the enrollment, the FTE enrollment, a standard comparison that we use, is down from a notable amount to a significant amount. And Millikan kind of falls in the middle of that whole group. But think about that in the terms of context. Over the last 8 reported years, each of these 5 regional private colleges in Central Illinois have all lost enrollment. We can also see some trends in percent admitted. We'll look at admission yields, graduation rates here in a couple minutes. So let's go ahead— that's kind of the quick analysis of the last 8 years. Let's take a look then at FTEs. And so we— these are the 30 reports that are available. We're not going to look at all of them. Let's look at FTE enrollment itself. And what this shows us is that each of these colleges is about the same size. They're all in the vicinity of about 1,000 to not quite 2,000 students. These are the numbers we saw a minute ago in the 8-year change, and this is a percent change. So again, imagine running a business, any business, where your customer base was down 15 to 35% over a period of 8 years. Something's happening and you're not addressing it. That's enrollment. Let's take a look at the next field. Let's take a look at 4 to 6-year graduation rates. And as I go there, I will share with you what I'm about to show you for these— for most of these 5 colleges. Is way, way, way too prominent. The thresholds I use, and I think others use, for 4-year graduation rates is 50%, so that as a minimum, 50% of a college's students who start in one year graduate 4 years later. And there's also a 6-year graduation rate that I'll show you, and I use, I use a threshold, and I think others do as well, of 60%. So let's go back to the data, and we can see that of these 5 colleges in 2021, that really only one is anything more than a coin toss college. Give Illinois Wesleyan University credit because they stand out not just among these 5 colleges but many others in having a really, really strong 4-year graduation rate. But the others are not even coin tosses. You can't even expect to toss a coin and get heads half the time and tails half the time here. These colleges can't even graduate undergraduate students in 4 years even half the time. They are not even coin toss colleges. And to reinforce that, let's go back and we'll look at the 6-year version of that. So here's the 6-year graduation rates. And think of that, you or your child or relative, neighbor, loved one has gone to a college for 6 years. Well, you would hope that almost all of them graduate. But look at the numbers here. Again, outside of Illinois Wesleyan, which is a little bit over 8 in 10, The others are abysmally below that 70% threshold. So look at Quincy University. After 6 years, 42 out of every 100 have graduated with an undergraduate degree. Not cool. Not cool at all. Next one we're gonna look at is something called Admission Yield. Now I'm gonna go a little bit inside baseball on this one. Admission Yield, I call it, you can see me reference it here, a popularity indicator. Essentially reflects the percentage of students that a college has actually accepted that eventually, or show up for that college in that fall. That's a gross generalization, but that's what it's about. So we'll use McKendree since it's on top here. And in 2021, for every 100 students they accepted, 20 showed up when classes started. And you can see the numbers are all pretty similar. There are many colleges that do worse than this, not good. There are many colleges that also have higher numbers. These aren't awful, but they're not that good. And you can see the pattern. You gotta wonder what's going on at McKendree. Their admissions rate, their popularity indicator is down 15 points over 8 years. And in my mind, the market is speaking, and students accepted to McKendree and some of these others are saying, you know what, I've got better options. I'm going somewhere else. The next one we wanna look at is the endowment. And when we bring up the end-of-year endowment for these 5 colleges, and by the way, I'm using the Executive Analysis version of the College Viability App. I'll give a link to how you can acquire that in the discussion down below. The endowment, of course, is the assets, mostly cash, but the assets an organization has that they have collected from donors from whatever source. And the minimum threshold I use, and there are those may use a similar kind of a number, is a bare minimum of $50 million. And again, we see some consistencies here in that only two— Illinois Wesleyan again continues to do a good job in this case with endowments, and Millikin, not bad, about twice what the minimum threshold is. But again, we look at Greenville, we look at McKendree, we look at Quincy, and the first thing I want to say is if you don't have $50 million, I can make a reasonable argument that you don't have the systems and processes in place to solicit gifts from alumni, friends, community, and other donors. Plain and simple. But here is where the real catch is for these 5 colleges. Notice, it should be an 8-year change. The 8-year change, 4 of the 5 colleges have actually lowered their endowment. Now, the IPEDS data that we use here doesn't tell us what they use those funds for, but reasonable speculation is that these colleges are using their endowment and in my words, to keep the lights on, to make payroll. And that's not what endowments are typically for. They're for you to grow programs, to grow the organization, to make it better, not to just keep the lights on. So again, we see a pattern, and I'll draw a conclusion on that pattern as we wrap this up in a minute. We looked at endowment. Let's go ahead and look at another indicator that really doesn't get much attention, and we're gonna look at institutional grants. And these are unfunded. And you typically hear them expressed as merit aid or scholarships. And a preponderance of merit aid and scholarships are unfunded grants. The colleges, both public and private, are forgoing revenue, giving you a discount, just like you get on cars and houses and clothes and shoes and those kind of things, to go to their college. So we look at the data for these 5 colleges, and over the 8-year change, each has significantly chosen to forego a good amount of money to be able to get students to enroll. Greenville, not quite as much, but the others, you know, look at Illinois Wesleyan, look at Millikin, they've essentially— I'm going to use the term written off, that's not completely proper— $15 million and $12 million in revenue just to get students to attend. The next one we want to look at is the funded, and this is kind of the opposite of that, but these are the funded grants. And what we're going to see on this for these 5 colleges— now, for Illinois Wesleyan, I have to assume this is just a data entry error. Certainly they have some kind of funded grants. But the others, look how small these numbers are by comparison. You know, not even a half million at Greenville. Milliken, you know, a couple bucks more. But these are actual grants or scholarships, if you will. They have funds behind them. They're not discounts without any funds behind them. Those are really small numbers and suggest these colleges have either used them up or haven't made the effort to grow that funded set of grants over the last many years. And then we want to look at tuition and fee revenue because again there's a pattern here. So the tuition and fee revenue And we're gonna see the 8-year change for each of these 5 colleges. And 4 of the 5 over an 8-year period have a lower tuition and fee revenue in 2021 than they had in 2014. And even Milliken, the one in trouble, the one announcing layoffs today, yes, their tuition and fee revenue is up, but that's over 8 years. Let's round that up to $800,000. That's an average of $100,000 per year. That doesn't even cover wage increases, cost of living increases, inflation coverage. While it's a positive number, it's not a strong positive number. And you can see that pattern for all in the comparison, um, the conditional formatting that I, you, that I use. You can see that 4 of the 5 have red indicators, and of course that's not good. And then let's look at core expenses. And it's reasonable in the story that I will post down below about Millikan's layoffs coming is an attempt to lower expenses. Nothing wrong with that. But in the face of what we saw in that first report on FTE enrollment, each, each one of these 5 colleges had a decreasing enrollment over the 2014 to 2021 time period, and 3 of them knew what was going on and made some effort to lower their cost base. Details are not shown here, but look at our focal point. Milliken University, in the face of significant enrollment declines, has had an increase in 8-year core expenses in that university. It is no wonder that at this point, whatever their leadership consists of is saying, you know what, we probably should have done this a long time ago. But to be able to, to maintain maintain ourselves as a going concern, we need to cut our costs. Arguably, this should have been done a long time ago. And then lastly, percent admitted. And those of us that follow college admissions on a regular basis, the percent admitted is really how colleges manage their selectivity. They say we're unique because we only admit a small percentage of students. Washington University, Harvard University, Yale, the biggies, they admit 5%, 10% is their percent admitted. And we can see across the board— that's not true, but 3 of the 5 essentially admit everybody. That's a gross generalization, I understand. And you have to wonder what Illinois Wesleyan and Quincy are thinking about, because they've really lowered— you can see how much they've lowered their percent admitted over the years. This is, this is in the face of obvious decreasing enrollment, obvious decreasing revenue. I have no idea what their thought process is, but if you're considering Illinois Wesleyan, if you're considering Quincy University, ask them, "Why has your selectivity gone down in the face of decreasing enrollment and decreasing tuition and fee revenue?" So what does this all mean? And it's not just about the 5 private colleges in Central Illinois. I selected those 5 because I follow those, but I see the pattern in college after college, almost state after state. The pattern is scary, in large part because so many private colleges have a very similar, if not almost identical, pattern of financial challenges, and in some cases even long-term viability concerns, just by looking at the data. What does that mean to those watching this video and looking at colleges for themselves, their family, their children, their neighbors, whatever the case may be? I would offer, I would argue that the first thing you want to look at, particularly in the context of private colleges, not quite so much publics, is to look at these financial health and viability comparisons. I can't imagine that anybody watching this wants to choose a college who either is so financially unhealthy they can't survive in close, or is so financially weak they can't really provide the type of college education every student should hope for. And so down below, I'll share with you links to this version of the College Viability App. I'll provide a link also to the parents' simplified version of the College Viability App for you to consider as you're making that college list for your consideration. My name is Gary Stocker. This has been another episode of This Week in College Viability.