One NY private college could be in financial trouble. An Indiana one might be spending too much.

It is the College Financial Health Show with Matt Hendricks and Gary Stocker. Hi everybody, thanks for making time to watch the show either live or via our YouTube channel. And of course, this is a show that doesn't engage in industry generalizations. We look at individual data for colleges doing well And in too many cases, colleges not doing so well. And we look at trends. We look at 8, now going on 9 years worth of trends of data for colleges. Nobody else does that. And we use data that the colleges themselves have created and submitted— their audited financial statements, their IRS data, and data they have submitted to the National Center for Education Statistics. And Matt Hendricks, we're going to two great states today. We're going to the great state of Indiana in the great state of New York. What colleges, sir, are we looking at?

Yes, we have Wabash College, which we reviewed back in, um, July, so I'll be fairly quick on that one, mostly showing new functionality on the app. And then Paul Smith's College in New York is the second one, and I'll spend most of my time discussing that one. But I'll get right in and show you guys some of the new functionality, show you the main— I went back through my notes from July, show you the main items that I was focused on back then. It's still the same story for Wabash, but let me show you a little bit of new functionality here. If you click on a school, Wabash, a new thing happens. You get a peer set populating immediately. So we get up to 10 schools. How does this peer set get populated? Really simply, it's the set of schools where Wabash said that. So for example, Wabash said Ohio Wesleyan. Was a peer. I think that's true. I'd have to go back, but they report a peer set to the NCES, and so every— almost every school does. And so I'm looking for confirmation from both schools that they're both saying, yeah, we're both— we're a peer. So that means Wabash says Ohio Wesleyan's a peer, and Ohio Wesleyan says Wabash is a peer. All right, so if I don't get to 10 doing that cross-double confirmation, the next set is the following. If Wabash— say Wabash and Ohio Wesleyan both say they're peers, and then Ohio Wesleyan says, say, Worcester is a peer, and Worcester also says Ohio Wesleyan is a peer. We call this the property of transitivity. If Wabash and Ohio Wesleyan are peers, and Ohio Wesleyan and Worcester are peers, then that should mean that Wabash—

you paid attention in math class, didn't you?

It's called Transitivity in economics. Yes. So I want that law of transitivity to be satisfied. So that's the second tier, sort of peers of peers. So double confirmation again, making that connection. If a school doesn't have any of that, which happens usually when they just don't submit their peer list, I populate. So one school where that was the case is— there's lots, but Texas Christian is one. They didn't submit a peer list. So what I did was look for schools that said TCU was a peer of theirs. So that's all of these schools here, actually. Drake, SMU, Denver, and so on. And then just ranked those by how similar they were in terms of size, I think, after that. So that's how I get to 10 for most schools. It's not always possible because, you know, some schools are just not listed. One of the schools today that we're going to talk about is Paul Smith College in New York. No peers get populated here. The reason is they didn't submit their own peer list and nobody lists Paul Smith College as a peer, or at least not at least 3. So that's where I cut that.

But users can customize that list as well, right?

Yeah, you can change whatever you want. You don't have to even go with the list that I picked for you. I didn't pick it, but this populated list, you can change it, modify it, whatever. You can get rid of all of them. Whatever you want to do. All right, so that's cool functionality. So take, take advantage of that. The advantage is you get a peer set comparison like right away, one click. Wabash. So I'm going to go back into Wabash and regurgitate some old analysis here. What I said before with these, with Wabash still stands. I didn't like before that they have a loss, a loss a loss, and one gain out of the last 4 years. Um, and let's take a look at just the bigger picture and zoom out a little bit. Take a look at their total net assets, um, and percent change. I mean, it's not terrible, and they have a lot of net assets, but, um, they're below the median in terms of net asset growth since 2016. Um, adjusting for inflation, they're just barely above inflation, which is good. You definitely want to be above inflation, but, you know, falling behind.

And what's the yellow dashed line, Matt?

This yellow dashed line is new. This is that peer set up here. It's the mean of this peer set. Um, and I can also toggle on to see each of those schools individually. The graph gets really cumbersome if you do that, but, um, you can do it. And you can— this is a good way to check if your peer set has got some outliers, uh, which it does. College is closed, right? Yes, don't want to look like that school, probably don't want to benchmark relative to them anymore. So we can take Northland out and then recheck it, right? I can take the comparison schools off again, and then you can see once Northland's taken off, they're actually doing worse than the peer set now in terms of net asset growth. All right, and the reason obviously is, at least probably, is because they're running these deficits and their peers are not for the most part. Let's check that. Net income margin.

Yeah. Yeah.

Peer set schools are positive net income margins for the most part. Only one negative year for the mean, actually two, two in the last 10 years.

One was a pandemic year. Yeah.

And but big positives since the pandemic. That's good. So they're really falling behind this peer set and in terms of net asset growth. And the reason is probably because they're running deficits. One of the big things that I mentioned last time was that their endowment was not growing very fast. And I'll just show you that again. So once again, their, their endowment growth— this is percent change since 2016. I'll even adjust for inflation here. Their endowment is shrinking when you adjust for inflation, which is really not ideal. Yeah, that's worse than— that's in the bottom 25% of all schools in terms of endowment growth. Their peer set, notice their peer set is growing above inflation rate. So they're up 11% in real terms in 2016 dollars. And Wabash is down 2%. The median, but even their peer set's lagging behind. So their peers actually, their peer set has some schools that are struggling that I've actually know a bit about and have worked with some of these actually. So, yeah, ideally you compare yourself to strong financial peers, which is what we do in the Strategic Compass mostly. All right. So why is the endowment not growing? It has a lot to do with their appropriations, I believe. And even their peers are doing a lot. Yeah, they're drawing a lot from their endowments. All right. So first of all, all of these are high, right? So this average endowment draws 5.3% relative to the beginning of year value, which is usually— that means they're not using the normal 5% draw. A 5% draw of the last 3-year average is the standard policy of most schools, and that would mean typically about 4.5% drawn on the beginning of year endowment value. If you didn't follow me there, that's fine. They're just drawing more than normal.

Normally, look at the peer group. That's, that's even more concerning.

Well, it's that— yeah, let's take a look at what's driving that. So we've got Bard College taking a massive draw here, pulling up the mean. I wonder if I should switch these to median. I might do that just to deal with outliers a little bit better. But we also have Earlham, we talked about them before, also massive draws. Millsaps, I don't know if we've covered that school. Kalamazoo, um, that's a big draw in 2024. I'm not sure why because I think their financials are actually quite strong. Ohio Wesleyan, like I said, I know about that school, and Worcester also having a bit of financial issues. But, um, Yeah, you, you have this capability now. I can take Bard out and see if that's— that taking that outlier would change the overall mean. Still high, right? But still high. Yeah, I might switch this to median. Maybe let me know in the comments if you think that— I think that'd probably be more appropriate given that we only have a 10-school mean. You can have some outliers that are going to really drive that all over the place. So I might switch over to mean— median.

Yeah, to median.

Yeah, don't always want to be like your peers, right? Certainly don't want to go up. Uh, ideally you go back towards the median here and get your endowment to have a normal growth rate. Um, I'll flag one more thing with this school. Uh, last time the biggest item that I flagged was their vendor spend. It looked like they had a lot of contracts. Oops, I'm on the wrong thing here. Actually, I'm not. Contracts paid over $100K. Um, all right, so So reality check here again for them, we have this peer set. The peer is normal. Peer set's normal in terms of how many contracts, how many vendor contracts over $100K they have for their operating revenue. And here's Wabash, and I think that's a lot, has a lot to do with their financial stress. They have a lot of vendors that they're paying here. Let's see if we can find them down here in the vendor table. Wabash back in July. I'm not sure if I had this table, so we've got it now. Here's one right away. That food service contract is very high. Yeah, $3,500 per student is about double what is typically spent by schools. We just did Wesleyan last week, right? They're like $1,700 per student. That's sort of the norm. Let's see. So food service doesn't look right. They also have a massive campus facilities contract. Looks like I didn't harmonize it correctly. This should have been harmonized as maintenance, I would imagine. And that's a lot, right? So double-check that. That's $3.5 million.

But Sodexo, isn't that a food service company also?

Yeah, they also do maintenance and like facilities and stuff like that. So I suppose they've got Compass to do food service and So DEXA is doing campus services, they call it, but it's probably maintenance and cleaning. That's really, really high. Both of these are insanely high. So that's probably where all that extra money is going and why they're running deficits. Also spending a bunch on an architect. That wouldn't be operating expense, but wow, we've got another food service contract. Campus cooks. Yeah, lots of stuff to flag here. Campus Cooks on top of Campus Compass. I don't know if I've ever seen—

Eating well at Wabash College.

Yeah, I hope they're eating all that. That, yeah, I guess I've only seen like dual food service situations when the campus has— well, there's multiple campuses, right? And like we're looking at the sort of mothership. But yeah, they basically have 3 food service contracts. They're spending about 3 times the number of food service amount that would be spent on food service. So a lot to look at there and the maintenance contract. But I'll— and yeah, the cool thing about this new feature is you can see that's not normal. Let me just show you the food service. Oh, I don't have it in here anymore. Sorry, I'll put that back in so you can compare it to your other, your peers. But pretty easy to see you've got some issues here with the vendor spend. All right, I'm going to switch over to our second school for the day, which was Paul Smith, and I'm going to spend the most of the show doing this school. Like I said, they don't have a peer set that will populate here because they didn't submit a peer set. And then remember, I fall back on— we can't do any double verification. Then I fall back on finding schools that said Paul Smith was a peer, but Looks like there weren't any in the data set.

So that's not a good indicator.

That's probably not a good sign if nobody wants to say that you're like them. You know, it may be nothing as well, but let's take a look at their net assets and starting with total net assets and go from there. Yeah. So there's going to be a lot of stuff that we're not going to like here. And I just adjusted for inflation, percent change since 2016. In real terms, their net assets are down almost 20% since 2016. Again, really not normal. Even the, you know, they're among the worst 25% of schools, probably among the worst bottom 15 or so once you figure out the actual percentile there. Let's check unrestricted net assets, see if it's different. It's going to be worse, I think. Yep. They're down almost 50% on their unrestricted net assets in real terms. So this is a— this is— this is not good.

So to put that in layperson's terms, the value of Paul Smith's college is less than half that it was in 2024. The value is less than half that it was. Yeah. Of 2016.

Yeah. That's a good way to put it. Right. You know, there can be some accounting issues, but assuming the accounting is up on the up and up, Yeah, the school's lost about half of its value since 2016, um, in real terms, right? So we're adjusting for inflation there. They only have $25 million left in unrestricted net assets. Let's keep that in mind, $25 million, and compare that to how much they're actually hemorrhaging every year. Uh, so let's look at change in net assets from operations. This is the numerator for the net income margin. Um, so they lost $6 million 4 years. And so what does that— that means they've got, if they continue at this pace, just hold that, um, looking at like 4 years, right? Yep, 4 years, and that goes negative. Uh, but you know, things can go south a lot faster than that. Uh, I'd have to look at if they've got, uh, bond covenants and debt and stuff like that. Those things can get called in, uh, early, right? So things can shift really fast for this school. So I'll go back into net income margin. I'm sure it's going to look really bad.

Yeah.

So 27% negative, 27% net income margin in 2024. Pretty catastrophic. And I double-checked that is operating revenue. So they are doing the accounting the way we like it there. All right. So let's look at the revenues and then expenses and try to give them some ideas as to what might be happening here and what they might try. Although, you know, I'm just doing a really quick analysis for them. We can do much more detailed, but let's take a look at the just student revenues first. And again, not good, down 24% on net tuition revenue plus auxiliary enterprise revenue. That's really like tuition, room and board, all of that in there. Athletics as well, usually, not always. So they're down 24% since 2016. In real terms, they're down 41%, right? Let me adjust for inflation. So really terrible. Let's try to figure out what's happening here. So remember, student revenues can go down for 2 reasons. One is the price, and the other is the quantity of students. So what I'm checking right now is the price, right?

What—

by really Not exactly, but trying to get a sense of the price changes. You can get a good sense of that by looking at per student net tuition revenue plus auxiliary revenue. Clear out those old zeros. But basically what I'm checking here is like what the average student pays to be a full-time on-campus student, essentially. And that price is actually quite high. Which is a bit shocking given that their revenues are falling. So what can happen? I mean, it's just simple, simple market economics, right? If your price is too high in a competitive market and this is a very competitive market, what happens? Quantity goes— quantity demanded goes down, lower than your number of slots you have. They probably have a lot of excess supply here and you've got empty seats in a stadium. Really simple economics say, hey, should probably reduce the price. And the counterintuitive thing is when you reduce the price, you actually get more revenue usually. And that's usually the case in higher ed as well. So I would say they might experiment with a lower price here. And the reason is their, their student count is way down. Right? So you got to try to do something to attract these students. One is make the quality of the school better. That's a lot harder to credibly tell students that the quality of school is better. One thing, another thing you can do is reduce the price, right? And I suspect that may help a bit. But, you know, we've got this sort of never-ending loss here of students. I don't know if this was even real, right? All of a sudden they're gone again. So we're down, we're down 31% on FTE student count. All right. And who knows if this was even real. I've actually been working with schools where the FTE numbers were just not right.

Hey, Matt, just, just a quick test here. Go back and look at the net tuition revenue and auxiliary for 2021, '22, and '23. Did it go down?

Yeah. Per student?

Yeah.

Yeah. So they, looks like they brought the price down a bit and then they brought it back up.

On average.

But there can be some funky things here. It's not always the price that would make this change. It could be like a change in international enrollment and stuff like that, can change in low-income student relative to high-income, the sort of proportion of high-income students that are at the school. Uh, those are rare, but, um, I think there's something to look at here. It is bizarre that you would continue to keep your price relatively stable while the quantity is falling, right? Again, if you're managing, it's a lot like managing a stadium, right? Got concerts or whatever, your pro stadium, you got people coming to a sporting event, they're not coming. I mean, it makes no sense to keep the price where it is. You should reduce the price. Usually the optimal price would be to just the lowest possible or the highest price that you can have that would keep the stadium full. Usually is what the optimal pricing strategy is. But that may—

cruise lines do that all the time.

Yeah, right. Yeah. There's a— yeah, the deals coming through all the time, right, where a cruise is about ready to set sail, it's not full. They're going to basically, you know, beg people to get on board, get the drink package for free. No gratuities. Yeah. All right. So on the revenue side, all this is to say, I think they should experiment with their net price, at least look at it really closely. You might experiment with small groups of of admitted students, offering them a lower net price, and see what happens to the yield, and if that makes sense to do that for everybody going forward. But time is running out fast for the schools. I don't know how much time they have to do experiments. They just might have to try something drastic. All right, let's go to the expense side, starting with employees. And I'm guessing we're going to see a lot of bad stuff here. Usually you see that when we've got schools that are running deficits. And so here we go. First thing, a lot of staff. Alright, again, if I think it's easier for people to see if I do this, right? Yeah, you've got, this is the, they have, they're way out, way above normal, right? Normal would be here for a number of staff per $1 million in revenue to go from here to here is probably going to mean reducing the staff substantially. And I think they've already done that a bit. Yeah.

So they've gone down. Yeah.

919 employees to 600. But sadly, I think the revenue is still falling, right? So they're probably not even doing this fast enough. So it's really— this school is in a death spiral. But yeah, the way to cut it out is you got to balance the budget quick and get the revenue. Like I said, experiment with the lower price, but you got to stay ahead of it, right? You only have $25 million left in unrestricted net assets and you can burn through that in just a few years.

So And they've already fallen behind. Getting— staying ahead of it's probably not even reasonable.

Yeah, I, you know, I'm always optimistic, but, you know, you have to stay ahead of it. There's no choice. That's the number of employees. Let's take a look at compensation. So usually the biggest compensation group is this group, non-officer salaries and wages. See what that looks like. Yeah, again, this is too high. All right. It's probably just too many staff again. Let's take a look at the officer compensation per $1 million in revenue. That actually looks okay. So it's a bunch of other folks around here. I'm finding more and more that some of this has to do with student employment. So you need to look closely at even really low wage earners, part-time workers, student workers, right? This stuff adds up fast, right? Start paying 500, 600 students a couple thousand dollars a year. That adds up fast, right? Yeah. So make sure you're checking that out. Uh, let's see, employment, retirement looks fine. Other benefits, okay, that's really low. But, um, payroll taxes, low as well. Um, yeah, I think they have too many staff. Need to check that out. Oh, let's take a look at the other big pain point, which is typically fees for services, contractors. Um, this doesn't look good. Yeah. Again, just, just counting the number of contracts over $100K, just to give you a sense of how many they have. They have 12, but they don't have much in revenue. So that's way higher than normal for the revenue that they have. And it's probably, yeah, it's higher than normal for the number of students they have as well. So they need to look at the contracts. I'll help them a little bit by looking at the top 5 in a moment. But let's see what we have for some of the major spending categories. Advertising, that looks normal. IT, this is usually a problem spot. Yes, check for IT spends. They could have a contractor here that's causing a problem. Insurance, wow, I don't know what's going on with insurance, but that's way higher than normal. So double-check your insurance policies. Let's see, fundraising, travel, conference, let's see if these Total fees for services. This is going to be ridiculous, I think. Yeah, okay, huge problem with vendors. All right, again, this is the total amount spent on fees for services, which is another way of calling it vendor contracts, not even including any IT contracts they have or advertising contracts. So let's take a look, see if we can find some of these down in the vendor table. Well, I mean, not, not rocket science. Not the— we see this every week, right, Gary?

So, yeah, that's exactly what I was going to say, man. We see this pattern every week. And you heard me say, and you've gotten tired of me saying this, I'm sure, higher education has a chronic inability to manage expenses in conjunction with revenue, period.

Good Lord. All right. Remember, I just told you that contract for Wabash was bad. Oh, my food and facilities. But still, that is incredibly high. $4 million.

Now, Paul Smith's is our call. Is that— isn't that in the middle of Manhattan?

I don't know.

It's in New York.

Shouldn't be spending that much no matter where they are. That's probably not going to work. The math is not going to be good. All right. Security also is high. All right. All of these need to be looked at. EAB, $300K to EAB. That probably didn't help. It's been—

yeah.

So here's a, here's a good example. Again, we've got EAB on the books for years. All the while they're losing students like crazy, right? So, yeah, you got to ask questions about that. Maybe they cut it off now. They went down to $255K. They were at $400K before that. So maybe they're tapering off with them. But these— you got to look at these. That's $4 million. That's a large chunk of their revenue, I'm assuming. Let's double-check what the revenue was again. Operating revenue is $23 million, and $4 million of it is going to Sodexo. So it's probably not going to work. Okay. I don't care. You got to find a different way to do food service and facilities that costs way less than that, or it's just not going to— you're not going to make it. All right, same with security, same with EAB. All these things have probably got to go. But happy to help them out and do a much deeper dive with the strategic compass, meet with them, their board, the CFO, team members, go through these things in detail and build consensus around what kind of policy changes we can make and help the school dig out of this, this whole— I'll pass it back to you, Gary.

So, Matt, you're, you're a positive kind of guy. You're, you're always looking for the opportunities, and justifiably so, for these colleges. And as you and I have discussed on the show and we're not on the show, me, not so much, uh, in terms of positive. And, and here's why. Like you, I look at these data points all day long, and I make the case— and I was, I was in a Bloomberg article today— and I make the case, the economic case— you're an economist by training— that there are too many colleges and not enough students. And we see week in and week out, in, in light of that even obvious economic observation, colleges still can't manage— most colleges still can't manage their finances. And, and, and that concerns me.

Yeah, like I said, I've said a million times, I think it's all about the boards need to get more active, right? Like, uh, it's not a private company that where profits are going to be pushing the management to constantly be, you know, optimizing, checking contracts, checking The only incentive in higher ed that comes to check that comes from the board. And if they're not generating that incentive, then, uh, it's not, probably not going to happen.

You know, maybe boards need to take the course, the online course I've created, main navigating the numbers. And we use your app, we use your app to demonstrate what boards need to know. And for those colleges, Paul Smith and others, if you're a board member and you're uncomfortable with finance, but don't want to share that with anybody, we've got an online course, very affordable that you can do in the privacy of your own home. Be more conversant in the kind of things Matt and I talk about and maybe provide more value to you in your role as a—

Yeah, let me add one thing. You don't need to be an expert. You just need to know how to— what questions to ask, right? So this— that's what this tool is all about, right? You, you can see, you know, our fees for services are like way off in no man's land, right? Just ask why, right? And, and see what kind of response you get from your administration. And if they don't answer the question sufficiently, keep asking, right? Like, you're on to something, uh, with these things. It's really, uh, like I said, not rocket science.

And we've even included in the course questions you can ask based on each of those topics— enrollment and expenses and revenues and all those kind of things. Let's just take a minute, Matt. Let me share my screen, um, and just a couple things I want to show. And graduation rates, of course, And, you know, Paul Smith has issues. I won't talk about them, but I do want to focus on Wabash, not because they're bad, but because they're good. Now, as you shared in the show, Wabash is fine. They have some issues managing their endowment, probably breaking that piggy bank a little bit more than they should. But again, we see two colleges, both with financial troubles. Wabash, not nearly as bad, even in the same category as Paul Smith. But Wabash graduates students. Paul Smith, much less so. Not even half of their students graduate after 4 years. And I'll leave my soapbox alone for that because Lord knows, Matt, I've talked about that enough times and we'll continue to talk about that. And then we use the College Majors Completion app. We have 64 common majors. The 2026 version will be about 2 or 3 times that where we look at market share, both internal market share like I have up here and external market share where we compare the number of majors in courses, number of majors completed in colleges. And small Paul Smith for the 64 we track has a relatively small number, which is also indicative. And Wabash, interestingly, also a relatively small number. All colleges we look at have majors where you wonder why they're continuing to offer that—business admin, communications, entrepreneurial studies at Paul Smith, humanities, music, physics, maybe a couple others at Wabash College. And Matt, this goes back to the data piece. This probably goes back to the board of trustees as well. This is the kind of data you can look at and say, hey, to your college leadership, why at Paul Smith's are we offering communication and media studies when we've had 4 folks graduate in the last 4 years? And just so you know as well, coming in January, a college viability app at mycollegeviability.com for students and families, college leaders, faculty, board members. We're giving students and their families simplified access to this kind of information because they need to know, Matt, which colleges are financially healthy, which ones are not financially healthy, and even which ones we have concerns about viability. We're never ever going to say a college will close, but we're going to show you the data that compares, I think, 20-some-odd different measures in an easy-to-use format for students and their families to use. And, and, and Matt, I teased you before we started the show today that I had just posted something on social media and I said that Matt Hendricks is going to be the tipping point. His app is going to be the tipping point. And it may or may not turn out to be the case. I think it will be. But you've heard me talk about, and you've even said, this is a Moneyball era. Goes back to the early 2000s when that term was invented by the Oakland A's in baseball. You have the data, I have the data. It's just a matter of presenting that data like you've done today and like you and I do every Tuesday at 10:30 Central about college's financial health. It is inevitable. Those that are doing well will point out, but more importantly, those that are not doing well, Matt. It's reasonable, though not guaranteed, to assume that students and families, when they look at the Paul Smiths, when they look at the Webster Universities, when they look at the Albright Colleges, the Riders, the Drews, and countless others, they're going to say, guys, I could probably find a more financially stable college.

Do you agree with that? Yeah. Yeah, it's great for families and students. It's great for faculty. I used to be a faculty member. I wish I had this back in the day. Maybe would have avoided some painful days when I was working at the University of Tulsa. Part of the reason, like, places like Drew and Rider are able to go on for decades, over a decade, with the massive deficits is because they just, uh, nobody checks. It seems like they say everything's fine and people take the word for it. Uh, here's a really cheap app where you can check, right? Could have asked in 2016, uh, why do you say we're— everything's fine when we're running a massive deficit? And I can see it right here on this app. That question alone is enough to maybe change the trajectory at the place, right? Um, yeah. So, get the app. It's really cheap. Use it with AAUP groups. Use it in your finance committees. Start asking questions.

And we'll have a link in the show notes to that app. And Matt, next Tuesday, we're going to do our final show of the year, and it will conclude the first complete year that you and I have done the show. We started in August of 2024, and I think you and I both continue to be amazed at we never have to look for colleges to do on the show. And I think now we're into February or something like that with folks dropping us notes— you sometimes, me sometimes— saying, hey, take a look at these colleges. And both colleges today came from user requests, viewer requests. There's concern for sure, because most of those requests are for colleges you and I ultimately find out, eh, not so financially healthy. And what's been your observation for this calendar year?

Yeah, yeah, that's, uh, a lot of times, you know, there are I don't want to make it sound like people aren't asking questions at some of these schools. They are, but a lot of times they're getting responses that are just incorrect from the board and from the administration, right? And you can call them on it, right? Like a common response is that, oh, well, the audit is not the same as our budget. We don't include, you know, some of these expenses. Well, the response to that is your budget is wrong, not the audit, right? The budget needs to have all of these expenses in there, even if they're not paid today. It's still an expense accrued today, right? We have to cover that somehow or at least have a plan for it. Right. So ask them what's their plan to cover depreciation going forward. So you just have a lot more confidence in these, these discussions. If you can see the data, you can see what's normal and you can clearly see that the way that they're doing it is not normal. Right. So let's try to figure out and fix it.

So now we'll do it one more time next Tuesday. So for Dr. Matt Hendricks, I'm Gary Stocker. Thanks as always for making time to watch the College Financial Health Show. With Matt Hendricks and Gary Stocker. We'll be back one more time next week, and then we'll take the rest of December off.