The College Financial Health Show for January 7, 2025. A financial health and viability review.

It is the College Financial Health Show with Matt Hendricks and Gary Stocker. Hi, it's January 7th, 2025. Welcome to those of you joining us live, and for those who will look at the recorded version on our YouTube channel, we're back at it. We're back at it after reviewing 50 or more colleges in 2024 when we started the show, to adding new right now. And like I've said before, This is the only show that reviews the financial health and even the viability of private colleges throughout the country. We use data from audited financial statements, IRS Form 990s, and of course the IPEDS data. Hi, my name is Gary Stocker, founder of College Viability.

Hey, I'm Matt Hendricks, founder of Perspective Data Science. All right, so for today's show, we have Guilford, uh, let's see, College in North Carolina and University of St. Francis in Illinois. That's important to keep the Illinois straight. A lot of University of St. Francis out there. Yeah. So Guilford's a repeat and I have new information. Or maybe Darryl shared information that broke over the holiday vacation. I also have more information about their accreditation. So basically the situation they're in is they're on probation. This is their, their accreditor is SACSCOC and They're on probation since December of 2023. So this will be their second year on probation. I believe that SACS COC has a policy where a school cannot be on probation longer than 2 years. Either they— so this is the year either they get off of probation and that decision will happen December 2025. So about a year from now, either they get off probation or they lose their accreditation. Either or in December. So it's like a do or die year for them. They have to prove to SACS COC that they're worth full accreditation again, which sounds like it's not going very well. Gary, do you want to share the news that broke over the holiday?

Yeah. So one of the reasons we have Guilford on the show today is that over the weekend it broke that their president was resigning. And even though we have looked at Guilford previously on the show, it seemed timely to go back and look at Matt's work. And I've got my college viability and even some majors, majors completion stuff we want to show today. But that's why we have Guilford on today, Matt.

Yeah, so, uh, resignation, uh, a year before they have like a do-or-die meeting with their creditor doesn't sound great. Um, so I'll take you through their case again. And, um, I also created, given the urgency of the matter, I created a strategic, uh, compass for them just to see what they might do in this next year, or maybe they've already done, to try to prove to SAC CoC that they're worthy and they're on the right track and get back to sustainability. So I have some things to show you there. The other school I'm not as worried about is University of St. Francis in Illinois. They do have deficits, but I'll show you kind of an odd thing. Their draws from their endowment are quite low. Not sure what's going on there. They don't seem to even be following their own spending policy. So I'll show you that. So obviously they can just spend more money out of their endowments and close a good part of their deficit that way. It doesn't close all of it, but there's something they can think about. I mean, certainly if I were the president at that school, I'd be wondering why the board isn't giving me the full spending rate. But, you know, I'm sure there's a story behind that. So let's get into it. I'll show you Guilford first, go to the financials, and then I'll talk a little bit about the strategy. Okay, so Guilford, again, this is the Advanced Compass. We're going to— this is the Advanced Financial Compass, and it has all the private schools' data scraped from their audited financials. You'll see that they haven't turned in their 2024 audit yet. I double-checked again before the show. I suspect, given the timing of the president's resignation, that the board saw the 2024 financials and apparently didn't like it, or now I'm guessing. But, you know, the timing is interesting because it's about the time when the board would be checking up on the— or, you know, these financials will be coming out to everybody. So here's where they were placed on probation. This is fiscal year 2023, a net income loss of 11%. Again, that's really bad. The 25th percentile is minus 10% or so. So they're in the bottom 25% of schools in 2023. Again, unfortunately, I can't see where they would be in 2024. It should be better, but if it's worse, that's again not good. This red line, just for reference, this is the— there's a set of 9 schools that closed in 2023 and 2024, and I have them here for reference to get a sense of, you know, what you really want to avoid and Clearly they're not in the closed set in terms of net income, but this is not good. And I think that's interesting is their accreditor is SAC-COC. We've seen schools that have had other accreditors that went for 10 years with negative deficit, negative net income here, and were never placed on probation. So it's really interesting to me. And I think it's great that SAC-COC seems to be a lot more on the ball than some of the other accreditors. Maybe these other accreditors can learn from SAC-COC. This is excellent. I think it's great. That's their function. Put them on probation when they have a really terrible year like this, make them prove that they can get back to sustainability. And I'd like to see other creditors do that, to be honest. And this is the second show in a row now where we've seen SAC COC that was a lot more— it looked to be, to me, a lot more strict in terms of the financials. All right. So they have negative net cash from operating activities 2 years in a row. And I'm sure that's part of what triggered the probation decision here. All right. So the, they have on top of this, so this negative net income is happening despite the fact that they have big endowment draws, much larger than normal. Remember, a normal endowment draws about 4% of your end of the year endowment value. They are taking out 6.5%. So that's quite, that's too high, right? So, and the consequence of having draws that are too high like this, 7%. 5%, 6% is that your endowment's not going to grow normally. And you can see that happening, um, here. Their endowments since 2016, that's back here, zeroed out, everybody's at zero back in 2016. Their endowment has grown by 8%, which again, without context, you might say that's actually pretty good. It's actually really bad. Um, it's the same as what all the closed schools had a normal growth since 2016 to fiscal year 2023 would be 45%. And theirs grew by 8%. So again, it's a lot of that is because their draws are too big. But it could be other things too. The contributions could be low. The returns could be low. I don't have those in this. We could check them on the Strategic Compass though.

And Matt, for the new listeners, you want to quickly go over the lines on those chat, on those line charts?

Yeah, these line charts. So this is the median of all private schools. So this would be the median endowment percentage change since 2016, up 45%. 2024 is going to be an excellent year as well. So at the end of fiscal year, I have 300 schools already in the data. Actually, I have another 100 I just added. I just haven't updated the database, but it looks like the returns from, for the endowments are going to be excellent for 2024 as well. So you're looking at almost 60% growth since 2016. So that's the median. This is the top 75th percentile. So that line represents everybody below that line. 75% of schools are below that line, 25% above. And this one is the opposite. This is the 25th percentile. So 25% of schools are below that, 75% are above. So it's kind of like the way I think about it is this is a band, like the normal range. You could think of it that way is in between these two. Exactly average would be, or median school would be right at this median. Okay, so that the endowment draws are unsustainable. So they have a deficit and they're drawing too much. So their deficit is probably bigger than what their, it is bigger than what their audit is showing for net income. So the interesting thing that too, I did notice this on the strategic compass. So one thing we can check is they're spending on, on their physical plant and you can see that. I wonder if they might have just gotten carried away too with building buildings and things like that in the, you know, 2017, '18, '19, 2020. And what I'm looking at here is the amount of money that they spent on their physical property, plant, and equipment compared to the depreciation. And these are just massive numbers, right?

So I wonder if they had kind of a build it and they will come mindset.

Yeah. And so the problem is. You know, going forward, after you build those buildings, you have to power them, you have to maintain them. And that may have become a problem for them. I'll check in on the Strategic Compass, but it looks like their maintenance costs are a lot higher than normal. So that may have been something that wasn't thought out well because the school's shrinking, you know, while this is happening, which is really interesting as well. Yeah. Okay. So yeah, they— I wonder if they might have just built up too much. That's one of their issues, not all of their issue. So they— so just diving into their audit, I'll just show you kind of where we're at here for Guilford on cash flow. So in fiscal year 2023, their net cash from operating activities is negative $4 million. And again, that's probably— that's with an endowment draw that's too big. So they're probably more at like a $5 million loss or so, just kind of guessing based on what the numbers I saw for the size of their endowment. So the way that they covered this loss is pretty straightforward. They took a $2 million draw on a line of credit and then they drew down their cash reserves by $6 million. So the reason it's bigger than $5 million here, that number I just talked about is that they also had to spend money on computers and things like that. Um, so it's not exactly like they're covering one for one, but they, they had to bring in and they also have to cover their debt, which is not going to be included there as well. So there, that's the situation. They had $2 million draw on line of credit just to pay the bills and another $6 million drawdown on cash reserves in fiscal year 2023. So this is a while ago.

That really meets your definition of unsustainable, Matt. Is that? Yeah.

Yeah, you can't do that for very long, right? Uh, you can look at their reserves. Uh, what do they have left here? They have $5 million left after that. So maybe they could do this for one more year. Is a bank going to give them another $2 million in line of credit? Yeah, doubt it. Um, but it'd be interesting to see fiscal year '24 audit and see how they made ends meet there. Um, all right, so let me just, uh, see what I can Literally just made this right before the show. So, so this is the strategic compass. The, the benefit of this is not going to point you to all the magic bullets here to fix everything, but the benefit is that it makes you very efficient as administrator and board. You can focus in on the things that are obviously problems and, and then ask questions about those where every, basically the idea is look for where you look weird. Find all the places where your school looks weird compared to peers and start asking questions. Why do we look weird? Are we doing the accounting wrong? Do we have a problem with our policies? Are staffing too big? Did we build too many buildings? Those kinds of things, right? So I'll start on the expense side. So usual suspects here. Let me show you the expenditures and double check. Yes, so So double checking again, the operation and maintenance of plant, it is a little high. It doesn't look terribly high though here. But when you look at staffing, so there's the usual suspects here. Usually the problems with schools on their expense side are staffing and contractors, right? And so you see both here. So here I suspect these folks here in SOC 45, 47, 49, these are maintenance workers. They may have a maintenance staff that's too big. And if you wonder what's the overspend, so they have 14 staff members here, which doesn't sound like a lot, but a school of their size should have about 7. So it's like double. So this is about $500K about extra spend here, which doesn't sound like a lot, but I mean, everything adds up, right? They have another big overspend here. These folks are probably tutors or academic support staff. They have 46 of them, full-time staff here. They should have about 16 if they're going to be normal for their peer set. So that's 30 extra workers here. That's probably about $2 million or so. So you might have almost $3 million here just in staffing. Right-sizing maintenance staff and the tutors. I mean, they can be high on tutors. Just don't want to be $2 million too high, right? So there's some staffing issues potentially to look into. Again, this isn't. Silver bullet. They need to look at these in detail. Go to your HR office, get all of the folks that work at your school, all the SOC codes that you've assigned to them, make sure that they're assigned correctly, and then start asking questions. Do we need 46? If this is indeed the case, do we need 46 tutors?

So, Matt, I know I'm going to jump in here because I have a timely question that we're talking about peer groups, and we've talked about that before. There's both the the college-designated peer group and the K- and near-normal that you do here. And if I'm at Guilford or any of the colleges that we review, I may say, well, Dr. Hendricks, we're different. We're not going to be like our peer group. What's your response to that?

Well, I'll say, yeah, I mean, yeah, you are different in that you're on probation, right? And you're going broke. Um, so the, the key is, you know, everybody's a little bit different. That's why I said they could have more tutors. I did notice the student body is in general, a little bit poorer than their peer set. Um, which may need, mean that you need more tutors, more academic support, but it has to be within reason, right? And you have to fit it in your budget, right? You can't fulfill your mission. I don't care how different you are. You just have to fit it in the budget and it's not fitting in the budget at the moment. So you need to make decisions, right? Um, we can't just, you know, do whatever we feel like and be different. Uh, at the end of the day, you have to fit it in your budget. And so I'm just showing you ways that other schools fit that are very similar, fit their operations, maybe a slightly different mission, maybe not. They're fitting it into their budget on average. And this is how they do it. They don't have 46 tutors. They don't have 14 full-time maintenance staff, right? Potentially, again, you have to dig into this and see exactly what's going on there. Um, and this happened— so I've had experience with this on the ground, right? So the first time I'd ever made a chart like this was for my own school, as when I was an econ professor. And I found that this group right here was massive, right? This service group, very interesting, right? But there's a lot of different codes that go in here. It turned out that one of the main reasons this was really high is that we had a ton of security staff on full-time police officers basically on staff, a ton, uh, over 30, right? If I remember correctly. And our school is tiny, right? So, uh, that wasn't normal. And again, the, the benefit of this is that you see, okay, we don't look normal there. Let's try to figure out what's going on. We dug into it. We found out, whoa, we have a ton of dispatchers and full-time police officers and they fixed it, right? It took a year or two, but they finally did it. All right, so there's staffing. We also have contractors. And, you know, I hate to repeat the same things over and over again, but I mean, this is a school that has shrunk and their food service contract's quite high. So 2023, they paid $3.3 million for food service, and a normal food service contract for them would be about $2.4 million. Million or so right there. Um, I mean, if they get a contract like Geneva or Newberry, they're saving like $2 million. Okay. So again, I know, I know there are weird things with these contracts sometimes where they put in loans and stuff like that. Don't do that. Right. Just don't sign a contract like that. Get a loan from a bank, uh, with a good rate. Don't get locked in.

We had a, we had a viewer drop a note saying, yeah, colleges we did that said, hey, You know, they, they're, they're renting equipment or they purchase equipment on loan. Now I understand that, but still it's high compared to your peers.

Yeah. And just know that there's other competitors out there. I've never heard of this group, but for example, there are a lot of other food service companies that just go like, here's the thing. This may be totally leading nowhere, but you don't know that unless you go out and get a bid from these other competitors, right? Go get a bid from. Aramark, Sodexo, uh, all the others out there. There's, there's like dozens of them. Pioneer, uh, Aladdin. I mean, I can keep going on. Some of them are cheaper, right? Um, and I've seen cases where schools switch different to a different food service vendor and save millions, right? Uh, again, these are pretty easy things to do, potentially, in theory. Um, and again, if the school is going to die in a year if you don't get the budget balanced for SAC CoC, these are things that need to be done, right? Tell Meriwether Goodsey, hey, we need you guys to be at, you know, $2.4 million, whatever you can do to get to $2.4 million. That's what we need to have happen this year right now. Otherwise, we might close, and in which case you lose the contract anyway. All right, you got a lot of leverage in that.

Yeah, yeah, great point.

All right. Okay, here's one more thing on the faculty side. This is all expense side, by the way. I have some really interesting things for you guys on the revenue side, something I don't see as often. But here's, here's on the faculty side, and this is, this is not the ideal distribution of faculty. So you can see Guilford has 34 full-time or full professors. These are your senior faculty. They have 21 associates and 17 assistants. And you see the normal distribution here. It's normally the other way around where you have more assistants than you do associates than you do of full. So they have a really backloaded, or whatever you want to talk about, they have a very experienced, which is great, faculty, but it's also very expensive, right? These people make $90K, assistants make $66K. All right. So this is the prime case where even if the school wasn't having financial difficulty, I'd say this is not great because when all these folks start retiring, you're going to have potentially very few senior faculty, very inexperienced faculty, which is not ideal for the students either. So they might want to think about a faculty buyout if they haven't done it already. Buyout, they should get down to about 23 here. You know, this looks fine. And then hire a bunch of assistants. At the end of the day, when they do this rearrangement, they'll save a bunch of money. You know, in a year or two after the buyouts wear out, but it may be actually fairly easy to get people to retire without paying them a ton as well. It's just not efficient to operate like this, to have big spikes in senior faculty and then a dearth of senior faculty and then go like that. So that's something to look at. You can save another million bucks or so probably there. Okay, on the revenue side, let's go right to the simulator here. So this is what their actual undergrad enrolled enrollments look like. Undergraduate headcount since 2010 has fallen from 2,800 students down to 1,100. All right. It's pretty severe.

All right.

It's very severe.

Yeah.

And so the question is, what's the problem? Really interesting. You know, a lot of times I'll see that they have issues with applications. They'll have issues with their yield rate or their admit rate's not right. But take a look at the issue here. They have 43 transfer students that came in last year, 34 the year before, 70 the year before that or so. But they used to get about 300 transfers. And so I don't know if they're aware of this. And I read a president letter to the faculty, and it seems— and it says, hey, we've got this great freshman class. But, you know, the freshman class has never really been a problem. It doesn't appear to me. It's— yeah, it's decreased, but their big problem is the transfer-ins. And the president actually says we've got 40 transfers, everything looks great. But again, they used to get 300, all right, 370. So that, that's the big change here. Um, I don't want to oversimplify it, but take a look at what happens if they do get back to 370 on transfers. They get right back to where they used to be around 2015. It doesn't happen right away though, right, Gary?

Yeah. And man, I'm going to jump in. We had one, uh, one of the lists, one of the viewers— I'm gonna jump in. One of the viewers noted that they had an adult program that has declined in that time period for the transfer. So it's the adult program. Yeah, that decline has taken place, right?

Um, so one thing to check there is if that program's dead then make sure that all the costs also left. All right. Doesn't happen all the time. I'll give you an example. School I worked at, we had basically all of our international students left, but all the support for them stayed. All right. So we had this, like, language and tutoring set up, a bunch of staff. And we went through staffing, like, why are all these folks still on payroll? Right. We don't have any international students anymore. So double-check that. Um, but let's take a look at this. So they may, they may have had a, you know, adding context is definitely important. Um, so may it may not be that they have the ability to get back to you. Let's just take a look at transfers here. They may not be able to get back to you. They may not be able to get back to 300 as we mentioned, but they certainly should be able to stay hang with their peers here, right? At like 60. I mean, they used to be at 300. Their peers are 80. They're well below their peers now. This would help quite a bit. And so one easy thing to check here, do they have articulation agreements with all of the 2-year schools that might feed into the Guilford enrollment? I wonder if they do. Those are easy things to set up, right? Make it really easy for students to transfer. From their 2-year college to your college? Are you marketing to them? Are you in the Common App for transfer students? Here's another thing that I think may be an issue with them. Let's go to net price. Sorry, I got my camera kind of in the way. So I suspect this may be an issue. One of the issues too is their yield rate. I could go back to the simulator and show you their yield rate is very, very low. They tend to get most of their students in this low-income group. And take a look at their net price, Gary. For a student that's making between— let's look at this group. This is just way off-kilter here, appears. A student coming in with a family income between $30,000 and $48,000, they'll pay out of pocket about $23,000 to go to Guilford. What do they pay at their peer set, at the peer schools? That same student would pay at a different school that's quite similar to Guilford, $15,000. Um, where's that going to show up in the data? It's going to show up exactly what we see with Guilford's data. Their enrollment, their yield rate's going to crater because these kids are going to get deal offers from all these other schools, right? And see that, hey, I can pay like half that price, uh, going to a different one of these peer-set schools. And, um, just, just taking a look at this, uh, yeah, the— I mean, another thing the president talks a lot about, discount rate it, it appears that their discount rate is actually too low. Their net price is too high is probably the issue here. But again, this needs to be looked at in greater detail than I can do with this dataset. These prices don't look right, right? And this is coming right from their report to the Department of Ed, how much they've spent on, you know, what their sticker price is versus what the actual students in these different income brackets pay out of pocket to go to the school. Doesn't look right. The only one that looks right is actually the high-income group. But the problem is they don't get a lot of high-income students. So yeah, there's potential issues there with the net price. And that's— I see it a lot, right? If you have an issue with your yield, look at your net price right away. It could be that your net price is too high. Simple economics, right? Okay. So those are things to check out. Again, I made this right before the show. There's some other things too. It looks like they've lost a lot of out-of-state students. Like, what's up with that? Start asking questions about that. But there's a ton of stuff on those strategic dashboards, and we use them, and we find things that are surprising all the time that, you know, administrators hadn't really thought about before they saw the data. And they're like, wow, okay, let's take a look at that. And, you know, maybe there's—

and Matt, real quickly, the Strategic Compass, that is a product that Guilford could purchase from Perspective Data Science?

Exactly. Yeah. So the way it works is I'll make that for them. I go through it, write a whole report of all the stuff I've seen. I've made over 100 of these, including reports for them. So kind of built up over time. I not only can I see in the data what's normal, but I can see things that I may not have seen a year ago, 2 years ago when I started making these. Right.

Interesting.

Kind of have a sense of what to look for. And that's one I see a lot, right? The school's dying. The yield rate's terrible. I think their yield's like 11%, should be about 20%. Uh, and they don't really maybe know why. It could be that their price is too high. This is a really simple way. I think that's how markets work, right? Really simple.

Yeah, because you're comparing to peers.

I mean, that's Econ 101, right?

If you're so focused on the parochial aspects and just your college, you know, it's, you're losing that perspective of what your proximate peers and what your data peers are doing. And that's a, that's a big deal.

Yeah. And so one of the things that could be happening is there are folks that think that, oh, our discount rate is so high, but no, trust me, nobody cares about the discount rate. None of your students are coming because the discount rate is high or low. They're coming because what the price that they have to pay. Your discount rate can be incredibly high and your price can be high, right? How does that happen if your sticker price is high, right? Or if you're, yeah, sticker price is high compared to what normally, you know, peers, what the other competitors are doing. It's really easy to check this stuff. Not super easy. That's why they get it wrong. But, uh, you just have to take some time to sift through it. There's actually a really great dataset that takes in, um, actual offers, uh, from different students and yeah, Mark Salisbury has Mark Salisbury. Shout out to him. Like he's got a really great dataset. I've played with it a little bit. You can use that, um, quite useful I'm sure for, for strategy. Okay, uh, let's, let's move on to St. Francis. So again, you got to be careful, there's a bunch of St. Francis here. I think they actually do St. Francis.

It's the University of St. Francis, I think.

Yeah, University of St. Francis, there it is in Illinois. Um, let me go back to our net income margin. Cash flow. All right. So yeah, the school's got some issues. They have some deficits here, -5%, -5.6%. Again, that's not good. Their cash flow, though, is positive still. The reason that is, they— so cash flow is cash expense. The biggest difference between these two numbers is that this number does not include depreciation. So it's more like your EBITDA. And this one includes all expenses, including depreciation. So this one will typically be a little bit higher. And if you do the math here, it's working out about right. This loss is about $2.5 million and their depreciation expense is $4 million. So you get a positive cash flow after you take that out. That's basically the difference here. There's other things, but it's pretty close. So the cash flow is still positive. It's not like they're needing to borrow money like Guilford to just pay the bills.

Right.

Right. So they're in much better shape. Although things are not great here with the deficits, their net tuition revenue is, is, you know, down 18% since 2016. That's in the bottom 25% of schools in the country. Yeah, it's not good. So that's a big part of operating revenue for them. They don't have a big endowment. And One thing that was interesting, though, I do want to spend a little bit of time on this because this is the first time I think I've seen this and we talked about this on the show. I've seen this before, though, like making the strategic compass and writing up a report like, oh wow, the school's not using their endowment. And this is one of those schools. So I'll show you their endowment draws. See their endowment draws here, Gary. They're like 2%. Yeah. And a normal endowment draws 4%, like double that. Right. And just to be sure that everything was right, I double-checked this in their audit and it's right. And their endowment should be growing very fast then because they're just not pulling much money out of it. And you can see their endowment is growing very fast. It's grown 88%, which is nearly in the top 25%.

Yeah.

Since 2016. But, you know, the school has a deficit. The endowment's there. You know, they have a spending policy. And that's another thing I checked is like, is it that their spending policy is only 2%? 2.5%, which is not normal. A normal spending policy— the most, uh, the most common spending policy you'll see is 5% of the previous 3-year, um, um, values of the endowment. So you really—

the—

I have the calculation here. So for them, that's what their spending policy is. Their endowment value in '23 was $27.7 million, $26.6 the year before, $28 the year before that. So you'd add, you would take the average of this and then multiply that by 5%. And that's their spending policy. Their spending policy says that they should be taking about $1.4 million out of the endowment. The problem is though, or not necessarily a problem, but what they're actually taking out is only $680K. So it's like half, all right, of what their actual spending policy is and what is normal. And that we see that here. So. There may be an explanation for this. I'm sure they have something. Maybe it's also possible that they just didn't really think about it. Right. They've done this for this for years. Right. Maybe they've done it for 30 years and nobody's really said, hey, why are we only taking out this much of the endowment? But that's a significant amount of money. That's, you know, enough to pull their deficit down quite a bit. Another $600,000, $700,000 that could be used for operations that's currently not being used. So that's, that's there. But you know, also it could be a part of their strategy to grow their endowment as fast as possible. You know, that could be strategy, but maybe they should say then that their spending policy is only 2.5% of the previous 3 years, not 5%. So another thing is their CapEx spending is low. They kind of had this surge here and then it's been below 1 ever since. So the, the, take a look at their property, plant, and equipment value. Again, starting at zero, they had this surge here, but since then their physical plant has deteriorated, it appears, and actually is worth less today than it was in 2016. You just wonder about deferred maintenance issues, lack of technology, poor Wi-Fi connections, you know, deteriorating buildings, roads. Sidewalks, stuff like that. Obviously, I can't see— I have to go to the campus and look at these. But something you worry about for, you know, all these years, 2, 3, 4, 5, 6, 7 years, consecutive years of not covering depreciation with their CapEx spend. It's probably not replacing computers. They're using old computers and all of that probably at this point.

But, you know, and as, as we tease on occasion, when you're not spending that money to maintain your property, we're talking holes in the roofs, cracks in the sidewalk, mold on the walls, those kind things.

Yep. Yep. So, um, yeah, I just— it just seems logical to me that they would just bump up their endowment spending and take care of this. It should be a top priority. Uh, also, you know, shore up the budget. Um, you know, those are easy things. They can go on the top end of a, of a down spend, which is more like 5 or 6% of the current year value. Um, still be kind of in the normal range and, and, and get back to more of a sustainable model. Um, seems like an easy thing to do. It doesn't require cutting, like, fire anybody or doing anything like that, although they probably can do that as well. I didn't create a strategic compass for them, but it's important to point out too, like you just noted a minute ago, their endowment is not that big.

Not even now.

No. So, but yeah, it would help if they had a normal spending policy looking at like another $700K or so that could be used for operations and and their, their budget deficit is $2 million, $2.5 million or so. So that's a decent chunk that comes basically for free just by having a normal draw.

So, Matt, one of the things I go to regularly on the Advance Compass is that CapEx. And both during the show on colleges that we have reviewed and when I'm doing my own reviews as they come up during the course of a business day, I note with regularity that a lot of colleges, private colleges, have a CapEx below that 1.0 threshold that you have established as a minimum. And I just wonder if that's not another way that they're making their deficit not any bigger by not spending money on maintenance. And that's fine. That's a business decision that they make. But, you know, we tease about holes in the roof just to make a point. But I always worry there are safety issues. Yeah. Because of that lack of spending on, on maintenance. On infrastructure, uh, you know, leave computers, leave software versions alone, just that basic safety factor. I can make a case that that's a concern. And then if you're a parent, yeah, you look at this kind of stuff and a college shows a long history of not investing in its infrastructure, in its facilities, in its buildings, that may be a financial indicator, but that also could be, Matt, a safety, a safety indicator.

Yeah. And you know how it happens, right? I mean, most schools are using a budget that's only based on cash expenses, so they're, they're balancing the budget up, but at the end of the day, their budget's not including, you know, depreciation.

Yeah. Right.

So that's a problem. Your budget should include depreciation. You should be setting aside money to take care of the roof and all that when it, when it goes bad. Right. Otherwise you have to borrow to do it. And that's, I don't know if that's sustainable, maybe in some cases, but Probably not for small schools.

Well, hey, let's do the last part of our show, which is looking at the College Viability App. This is the 2024 version. I'll have the 2025 version out probably the next month or so. And I've got the two colleges that Matt reviewed from the, uh, College Financial Health Advanced Compass and from his, um, College Strategic Compass. And you can see, and this typically almost always reaffirms what Matt talks about, both the University of St. Francis in Illinois and Guilford College in North Carolina have had enrollment declines. Matt showed that reflected on the financial side. And even when we look at, you know, down 300 for Francis and almost 600 for Guilford, even looking at the total enrollment, you know, even down more so. And our total enrollment includes part-time numbers as well, and it's down for both of those. So it's not uncommon. There are more colleges that have decreasing enrollment than colleges that have increasing enrollment. And I'll go back to something Matt started, and we have kind of some fun with this. If you have a bad enrollment year, and Matt mentioned this a few minutes ago, it ain't just a bad year, it's a bad 4 or 5 years, and it takes at least that long to recover. And in 2024, Matt always teased me about the graduation rate. We may or may not do that in 2025. And these aren't very good. Guilford, and over the last 8 reported years that you see on the screen, their averages, and maybe a mid-40% kind of number, 45-ish percent kind of number. St. Francis, somewhere in that same area. And again, if you can't graduate half your students in 4 years, you know the phrase I've coined, Matt, you are a coin toss college if you can't graduate those students. And even, you know, I've noticed some colleges, Matt, go to a 6-year graduation rate because they're embarrassed by the 4-year. You don't even— that about Francis is much better, um, 65%. I, I make the case if you can't graduate 7 in 10, that's not very good. And in, in 6 years— 6 years, Dr. Hendricks. Yeah, Guilford can't even graduate half their students, although that might be on average probably a little bit more than that.

I wonder, um, I wonder if it could be— that's all undergrads, right? It's undergrads.

They're all undergrads only, right?

Yeah, it's not going to be that adult learner. Yeah.

And so from that, you know, we look at something Matt talked about, the admissions yield. He had that in his graphic. And again, these are, you know, they're averaging over for both colleges And the 8-year change has gone down about 6%, but you know, you want to be around 20%, and for St. Francis had that, but it has started to slowly decrease. And we see decreases in the admissions yield across the country, and in part because there are more applications for the lower number of students accepted. There's a natural progression of that. But if your admissions yield goes down, I will say double digits, Matt, that's just a guess, that's not a good thing. But most colleges have admissions yields going down. And from that, I always like to go to percent admitted. This is from the College Viability app, you know. And I've teased before, if a college gets above 90%, it is a heartbeat admissions policy, where have a heartbeat, we'll admit is our— might be the unofficial motto. And we see Guilford is aggressive, nothing wrong with that, but that really impacts— I can make the argument, Matt, that that impacts our graduation rate. If you're bringing in students who are not academically prepared just to try and meet your budget, they're not going to graduate in very large numbers. And I've said on my This Week in College Viability podcast and other media that I do, I'm convinced, Matt, that many colleges focus— overfocus on enrollment and really, really underfocus on graduating those students that they enroll. I think that's a tragedy. I think that's a travesty. And from that, let's take a quick look then at grants. And we talked about discounts, and I'm going to show, you know, the funded ones. You know, the Matt Hendricks Scholarship is a funded scholarship for IT students, something like that. And both of these colleges has modest numbers at best. But I want to focus on the unfunded, and this is called unfunded institutional grants. That's inside baseball talk. They're really merit aid. Most scholarships, it's just a discount, just like you get for a car or a house or shirt or tie or computer, whatever the case may be. And we can see that Guilford, to their credit, has tried to keep their unfunded scholarships down, down. It's only up not even a million dollars. But St. Francis, um, it says, really had to stay with the trend of increasing their unfunded grants from $17 million to over $21 million, up almost 25% over the 8 years. And that's fine, they're welcome to do that, but where is that reflected? In what you just saw from Matt Hendricks' charts, it's reflected in their, in their deficits, it's reflected in their cash, it's reflected in their net income. And we can't overemphasize, you know, enrollment is a big deal. And colleges will say, hey, we had a great enrollment year, but if they don't generate sufficient net tuition revenue from those enrollments, it doesn't do any good. And that leaves completely to the side not graduating. More than half of those students at way, way, way too many colleges. And then lastly, at MAT, before we look at completions, tuition and fees. And again, you saw this reflected in MAT stuff. This is just an actual example from 2015 to 2022. Both of these colleges had significant decreases. You can see the numbers on the far right-hand side in their tuition and fee revenue. It's because they had to compete and Matt made the case that Guilford probably had a net price that was too high. And makes sense because they're not collecting revenue from students that don't show up because they're choosing another college. Made them a lower tuition offer. So this is, again, we see this regularly on the, on private colleges. It's a, it's a fact of life, it's a business fact of life, and it's something that some address well. Matt, you and I've seen a few of those, but most colleges struggle with those with those decreases in tuition and fee enrollment. And then lastly, I'm going to bring up something that we haven't used before, Matt. And, and last year was the first year I had program completions, uh, from the IPEDS data. For those of you inside higher education, you know what that is. This is the working version, and I'm going to show what that is for both Guilford and for University of St. Francis. This is my working copy. I'll show you what the final version will look like here in a second. But it looks at all the majors, and we've got more than 60-some-odd common majors in the final version that will be out any day now. And you can see some of the majors that are listed here, and their whole depth and width of majors, common majors throughout. And there's 4 years worth of data, comes from IPEDS. And let's look at just this screen. And so we can quickly look at Guilford and the major. This is the— I think it's both bachelor's and master's. So we can see they had the numbers in accounting, in biology, in chemistry, and in education. And we can see what the trend is. Education has jumped up a little bit, although it's a small number. Economics has dropped by half. And what the total numbers were over those 4 years, you can compare that for not just these 2 but every public and private 2- and 4-year country— 2- and 4-year college in the country in the 2025 College Majors Completion App. And I'll have that out on the market any day now. So that's what we can look at. St. Francis, the same thing. They had 2,300 completions in the last 4 years. Guilford has 700. So Again, you can make the judgments. I've made the case, Matt, you've heard me say this, that if you only have a handful of students here at Guilford, handful of students in political science, and you're a student and you're looking, you know, looking at political science as a major, be careful about choosing a college with low numbers because that might be one of the first things they cut in the face of financial challenges. And then the final version, and then we'll wrap things up. This is what the final version is going to look like. It's just a different look and feel. I have tutorials out on this, but the same concept. All we're adding this year is user-selected market shares. So if you're a college president, maybe if you're a board member, if you're a provost, if you're a dean, this is what you're going to want to look at. And again, I have— this is a sample. I don't have our two colleges from today, but you can actually look at market share for the colleges that are part of this demo, part of this working model that we have, and get a feel for how your college compares in any of these 60+ majors at the associate degree level, the master's degree level, and the bachelor's degree level across every public and private 2- and 4-year college in the country. Dr. Hendricks, man, we got some good stuff out there.

Yeah, I like that. That's, that's nice. New, new, uh, new app for 2025. Yeah, I mean, I think, uh, I keep thinking about Guilford, uh, with the— so there's a lot of things that are adding up. To me, what the— that the issue is probably the net price is too high. When the net price is high in the data, as I showed you, their retention rate is really low, which is another symptom of a high net price. First-year retention particularly is really bad. One reason that could be is, you know, again, these are smart consumers. They're looking around. They're like, oh, I'm at Guilford paying $25K. And they talk to their friend and there's like, oh, I'm paying $15K. Over here at this other place, right? This is how this happens. And so, you know, they're going to transfer out probably. Yield rate is low and falling precisely when their net price spiked. So it's again, another data point, 3 data points right there that all line up. That could be explained by one thing. Right. And that's a nice explanation. Not necessarily true. They need to dig into it, but I'd be digging right now.

All right.

On the net price, it appears too high. Talk to Mark Salisbury, right? Is that his name? To get that data set? That would be really useful for them. Yeah, or talk to me. I can hook you up and, uh, analyze that data for you, or Mark can, and see what your offers look like compared to your peers.

Yeah, it's Mark Salisbury. Yeah, and, and I guess to wrap this up, you know, one of the things I've started posting just this week— my focus this year, overtly, even though it was strong last year, is going to be transparency. You know, both— we see in both colleges, private and public, And in accrediting agencies and even in state agencies, the level of transparency, Matt, is not what I like to see. And I think that's the same thing for you. And that's what we're doing with this show. That's what we're doing with the compass, with the College Financial Health Compass, with the College Financial Health Advanced Compass. That's a paid product. And with Matt's College Strategic Compass, less so because that's more for the colleges. It's time for consumers and college leaders and board members faculty, staff, students, community leaders to understand, to see the data. And if you can't figure it out yourself, that's why I'm here, that's why Matt's here. I've said it before and I'll continue to say it, this is the Moneyball era of higher education. And Matt Hendricks and Gary Stonker are two of the few who are taking the approach that the world needs to see this data in an unbiased perspective for historical trends to show that, hey, this isn't a snapshot, this is a pattern. And I've stolen Matt's word, unsustainable. We're never going to say, ever going to say, a college will close. Just not going to do it. But we have and will continue to say on a regular basis, this pattern that we're showing you is unsustainable. Hey, thanks to all of you who joined us live. Thanks for those that will watch on the YouTube channel version. We'll be back next week with 3 more colleges. And I'll have those posted on our LinkedIn and other social media channels. For Matt Hendricks, I'm Gary Stocker. Thanks for listening. We'll be back again next week.