This Pennsylvania private college increased its fund raising expenses but got a decrease in gifts.

It is the College Financial Health Show with Matt Hendricks and Gary Stocker, where each week we look at the financial health and even viability of private colleges across the country. And we're the only show that looks at audited financial statements, IRS 990s, and of course the National Center for Education Statistics and its IPEDS database. And each week we do 2 colleges, but Dr. Hendricks, let's just do 1 today.

Okay, so we're going to do Juniata College. I'll pull them up. The Advanced Compass looks a little bit different, so I'll fill the little bit extra time we have.

Yes, it does.

Introducing some new changes, some small changes. So a couple of new things on the Advanced Compass. I'm just calling it the Financial Compass now just to keep it shorter. And it's going to have lots of different sectors, not just higher education, not just private higher education. It's going to have K-12, it's going to have public. Colleges soon and all that, healthcare as well. But the biggest change is we made a change for pricing. There's no longer a free tier, but we made a very inexpensive full access tier. It's just the basic plan we're calling it, which is the one you're going to see right here, which has all the functionality that I've always had on here. So we have a new tier on top of that that will allow users to download data and subscribe to a new API that we're building that will allow you to make your own software and visualize this data and bring it into your own analytics quickly and easily. Okay, so a couple things on the interface. It looks a little different. I have the comparison set, set up a little bit different. So the school we're going to look at today is Juniata, so I'll pull them up in Pennsylvania. And I can bring up some other Pennsylvania peers to kind of demonstrate this. Well, here's Albright, and I'll just put a couple in here. Allegheny. Okay. So what's different? A couple things we changed. So one thing, if you don't want to have the national percentiles, you can take them off. That's the median and 75th percentile. You also can have individuals. I'll just show you. You can have a display of each individual graph. So here's just, or just the school you're looking at. So here's Juniata, and if I want to put in Albright and Allegheny, click that, which is on by default, and you can see the graph for each individual school. If you don't want to see each individual school, you just want to see the mean of the peer set, the comparison group that you picked, you can take that off and just do display comparison group mean, and it'll show up in yellow. So that's the comparison group mean, which is the mean of Albright and Allegheny. The blue is still, is still Juniata. And then we can add the percentiles here again. This is the sort of the default that I had in the previous version. So you have more options here and you can populate a peer set and just display the average or the individual graphs. It gets really messy really fast, so I've added this capability. Another thing we've added here is a quick metrics table. So we had used to have 2 graphs, now we just have 1 graph and then added this quick metrics sort of key metrics snapshot that you can take a look at for. It's by default going to be populating the previous 5 years of data and then giving you a mean of many key stats. So one is net income margin, operating revenues. So you can just get a quick sense of Juniata's operating revenues are going up and you're going to see that in a little bit. We have net student revenues, which Net tuition revenue plus auxiliary enterprise revenue. Made that switch because some audits report student revenues, and so we're just going to make them all report student revenues to keep them all consistent. And it's up a little bit, a couple million since 2020. CapEx and depreciation, all this stuff is in here. And just have a quick snapshot. The rest is pretty much the same. The functionality for the full data table is here. You can add any any metrics you want. With an upgraded account, which we're going to call a comprehensive account, you will be able to download, you know, big chunks of data on this interface, the graph data as well, or have— and have access to the API, which you can programmatically get all the data. And same with this table, the vendor payments table. So that's it. It's pretty much the same, just that those are the only differences. Cleaned up the look a little bit. But yeah, I dropped the biggest changes, the pricing, dropped the free tier and have a very cheap subscription to get this version you're going to see right here. So everything's here except for the data downloads and the sort of basic $219 to subscribe for the whole year, which is like a subscription to a newspaper, basically. Get more people using this, particularly folks that are, that don't have access to like a budget from the university or, or, you know, consulting budget or something like that. So we're going to try to bring more people in to use this.

Great idea.

Yeah. All right. So let's get into Juneyatta. And I'm going to use the default view here, which is to show the national percentiles. And let's start where we have been starting in the past, which with net assets, because again, I think this is probably the easiest way to understand how school's doing financially. And it's really important that you check this. All right. And it can be subtle, right? I just had a, had a client actually where the, their net assets were up like 25% and it wasn't really a sense of urgency that that was, you know, things are that bad. But really 25% growth in your net assets is pretty poor. Again, the median is 46% for total net asset growth since 2016. And you can see Juniata is in that poor category. They're in the bottom 25% of schools in terms of growth in total net assets. They're up 16%, which if you factor in inflation, then it becomes very obvious that there's a problem here. This— that's not sustainable. Eventually your real net assets will go to zero. So they need to fix that ASAP if it hasn't been fixed already. I did notice that they have been running some surpluses. You can see in the key metrics table here they have had positive net income for the last few years. But big— and a big but is their appropriations are way too big still, 6%, 6.5%. So they need to probably— if they took a normal draw from their endowment, they would still have negative net income, which is a big problem still. So they're certainly not resolving this quite yet. And you can see that when we look at unrestricted net assets, you're going to see, I think, uh, even more dramatic, yeah, evidence of financial stress. Unrestricted net assets are down 10%. All right, again, normal would be up 40%. So yeah, pretty poor performance here. Um, and how many— I have 72 schools reporting for 2025 so far. I'm not willing to say this quite yet, but it's starting to look like maybe '25 will be a good year financially. But again, there's a self-selected sample that reports early. They tend to also have stronger financials. Let's take a look. Why are the unrestricted net assets shrinking? And I'll go right into the net income margin, which I had up earlier. But you can see many years of deficits here. They're not massive, but they're big enough Cumulative, you know, 7, we got 2%, 3%, 5%, 2%. Those are all losses several years in a row. And then we have COVID relief money certainly helping here. And then negative again in the last read in 2024. I don't have their 2025 audit yet. So yeah, they are slightly negative in 2024. And I think that's despite drawing an abnormally high amount from their endowments. Let's check the endowments appropriation. Yeah, so endowment appropriations are just way too high. Again, 6.5% might not sound like much, but that's very, very high. Again, normal is about 4.5% draw relative to the beginning of the year endowment value. So again, not sustainable. I suspect their endowment's probably shrinking, and we'll double-check that. Endowment value end of the year. There we go. Hasn't been shrinking. No, it's not shrinking, but it's just not growing very fast. It's up 23% in real terms. It's shrinking, right? Because we've had much higher than 23% inflation since 2016. So yeah, in real terms, their endowment is shrinking. Uh, nominal terms, it's up 23%. Again, not ideal, and a lot of that's going to have to do with those big draws, but there could be some other things factoring in here. Let's take a look. The returns actually look decent, actually quite good. Returns look good. Uh, that's in millions. Sorry, I need to do it in percent. Okay, this is the return as a percent of the beginning of the year value. Um, it's not exactly the same as the sort of investment returns, rate of return they're getting, but it's pretty close overall. So that looks about normal. Uh, contributions could be another one. I just will check this really quick. They made a big contribution in 2023. Oh, okay. So the endowment's still down despite solid contributions, right? It's all about the draws and solid investment returns. So really all about the draws. The draws are too high. And I suspect if they right-size their draws, their, their budget deficit's even bigger than what's being shown on the audit.

And Matt, we see that so many times.

Yeah. Yeah. Let's see, they're just looking at the CapEx, the depreciation ratios here. It looks like it recovers, but it's only because the last couple of years here, it looks like they're investing in CapEx, investing in the physical plant at the university, which is good. But it certainly looks like the school is turning around just based on the deficits are getting better. Better. The CapEx spend is getting better. The draws from the endowment are getting smaller on a percentage basis. Uh, still have problems but certainly improving. So hands off. And, uh, I certainly wouldn't recognize the improvement that's happening here. Um, so CapEx surging in the last couple years. Let me see what the value of their property and equipment is overall. Uh, percent change. Yeah, we had a surge early and then not a lot of investment, then a surge again. So overall looks about normal on the CapEx. So hopefully there's not a lot of deferred maintenance if that CapEx is indeed dealing with those issues. So financial health, not great. I mean, you still have deficits. So I'll try to dig into that. We'll take a look on the revenue side first. Let's take a look at their student revenue. Again, this is going to be combined now, net tuition revenue and auxiliary enterprise revenue. And let's look at the change over time. Okay, not great. Down 8% on student revenues, which is not good. The median school's up 5.5%. Keep in mind, this is auxiliary enterprise plus net tuition revenue. So why do you suppose 2021 was so bad? It's all about room and board, right? Yeah. For auxiliary. Schools were online only that year, so net tuition revenue seemed to deal just fine with that, but auxiliary enterprise revenue got smoked during COVID But overall, student revenues are up 5% for the median school, but Juniata is down 8%. Okay, so why is that? Let's take a look at the price. Price looks like it's holding and holding high. Yeah, they're above the 75th percentile for the average per student net tuition revenue plus auxiliary enterprise revenue. So that looks about $32,000 to go to Juniata for tuition and fees and sort of typical room and board spend. I imagine most of those kids live on campus, so that would be that. All right, so that's good. That's actually a It's a pretty expensive school. So let's take a look at the enrollment. Must be what's driving this then, right? So students, percent change, you can already see it. Yeah, this is a big loss. Student—

oh yeah, look at that.

It's down 19%. All right.

Yeah.

Average, the typical school is down 4%. They're down 19%.

Okay.

So that's the problem. They're losing students. So I— there's not a lot I can say without going deep into like a strategic compass kind of analysis. But we'll say a couple of things. The price is high, so you might consider a lower price or at least experiment with it. That could actually be the issue. Right. And ironically, if you don't know a little bit about markets, how markets work, especially this market, when, when you reduce the price, you can get a big impact in enrollment, right? And actually in net bring up your revenues. Um, so it's a possibility that they're at that part of the demand curve, so they could reduce the price, bring up the number of students by proportionally larger impact, and overall increase their student revenues. Um, overall, so that can be one strategy to look at, but there could be other things, other issues in the funnel that I can't see with this that we do see in the strategic compass? You know, what is— what are the application requirements? Are they getting the number of applications that they need? I mean, you really have to have a big top of your funnel. If you don't have a big top of your funnel, you have to be like perfect the rest of the way down. So double check that, you know, that you're not low on applications. You know, simple things like make sure you're in the Common App, make sure your requirements are in line with other schools. Which a lot of schools are still no fees, no, no testing, no essays, no custom questions on the Common App. Check all that stuff. All right, are you in the Common App for transfers as well? Um, all these things are really important, so double-check all that. Uh, check your yield strategy. If yield's really low, it would just be another piece of evidence pointing to the price perhaps being too high, right? Um, that, that would drive a low yield rate typically. So yeah, lots to check there. I'm going to move into the cost side though. And let's take a look at where we always look, Gary, total employees.

Employees.

Yeah, let's take a look at employees per FTE. Okay, not ideal. Again, this is another case where a school nearly has the same number of employees, full-time employees, as they do full-time students. That's usually not going to work, right? I'll just put up a school. Let's just like put up Harvard. It works in schools like Harvard. Okay, so here's Harvard. They have more employees than they do students. Put up Yale. Let's play each individual graph. Oh, this new functionality. Okay, so we've got— I'm going to take out the comparison mean. So here's Harvard. Here's Yale. These are the types of schools that can do that, right? They can have a lot of employees. And why is that, Gary? It's super obvious, right?

I hope.

Princeton, because they have a large endowment, massive endowments, right? So all these employees are getting paid out of the endowment, not net tuition revenue. All right, so the big difference that we're going to have here when I switch this over to endowment, endowment, is it's just going to be not even close. Okay, and I, I know you probably don't need to see this, but, um, here's Princeton, here's Yale, here's Harvard's endowment, And Juniata is way down here at $132 million, which is a tiny endowment. You probably— it's not going to support more employees than students generally. Well, these will. All right. So one thing they can do on this, this tool with $200, right, just put in a peer set that is— I might actually add this where they can just do one click and populate a peer set for Juniata. But I'm nearly certain that if they did that, they would find that their staffing per student is way higher than their peer set.

Their peer group, yeah.

All right, so that just raises all the questions then from there. The policy questions you need to ask is, well, why are we so much higher? And what do we do? How do we fix it? Right? So I'm going to take these out of here. And that's what we do. That's really— that is a huge break, right? Just to understand that you have an issue with the number of staff per students. It opens up a whole new world for you where you can figure out, okay, Let's everybody agree that we have an issue there and then figure out how to solve it.

And you said that you said the price for this is $219. Oh, goodness gracious. That's couch money, sir.

Yeah. Yeah. I really just want people to start using this. Yeah. And, you know, that we'll get more— we'll get the institutional accounts and those will— those folks are going to want to have the download capability in the API so that they can build their own tools out from this data, which is great. But we all, I really do want to have this sort of great idea, a big group of just sort of normal folks using it every day and asking questions that come out of this. One thing that's interesting that I did see here is per $1 million in revenue. But again, remember, this is going to be messed up because the revenue is not what it should be right now. The revenue should be lower because they should be drawing less from their endowment. So if we've made that adjustment, I think this would still be a bit high. So we would need to do that if I was working with Juniata. I would fix this first and then double check that this is indeed probably too high still. But one thing they do have going for them, remember the price is quite high, so they could, they do have a high revenue for how big they are, which would support more employees, but probably not where they're at right now. Okay, so we can take a look at more, more types of employees, different types. These are employees that make over $100K, still high for their size, probably about right for their revenue. Compensation of directors and officers per FTE, again, way off the charts here. You, yeah, basically the way to think about this, you're asking each student to pay $1,500 toward the salary and wages of, of your administrative top administrators. That's higher than normal. The average student pays about $830. $830. And it's, it's high for their revenue as well. So this school may be top heavy. This is compensation for current officers and directors. You got to go through all of your SOC code 11 employees, SOC code 13 employees. And again, we benchmark those every day against other schools. You're probably going to find that those two occupational groups are far higher than normal. Here's non-officer salaries and wages, still high. So they're high at both top tier and just sort of normal employees. For their revenue, maybe okay, but they do have a really high staff count still. Contributions, yeah, the retirement plan may be off as well, but it could also just be that you have so many people that you're paying a lot for retirement. So double-check all that stuff. Really, I advise that we first right-size the number of people and then And then once we have the right number of people, then double-check these plans, right? They may find that this is way— this is, this is really high. $600 and $6,500 per student for non-officer benefits that don't include retirement. So these are like health insurance, life insurance. What else? Dental, eye, whatever. Yeah, there's something weird with this insurance. With this benefit package. Um, I'm not sure exactly what it is at the moment, but you can kind of see where you need to look, right? Uh, this is, I think, going to be really high for both revenue and size. Yeah. Uh, so really, really, if you're involved at all in Juniata, you need to look at your benefits package, not the retirement plan, the other benefits. Really high. All right, so either it's reported wrong or you have something odd with your benefits package, or it's too many people. So again, right-size the number of people and then go from there. Payroll taxes, yeah, everything's pointing to the same thing— overstaffing. All right, um, I'm going to go through some of the other big expense items and see if there's anything interesting here. I didn't have a chance to do this yet, but we'll take a look at advertising per FTE. That looks about right. Advertising's fine. IT spend, this may be problematic. Yeah, IT spend way out of the norm. All right. Now this isn't the staff. So be, I'm trying to be really clear here. This is vendors in IT and the equipment mostly. Okay. And it's way higher than normal. They better have just a vendor doing their IT then, no in-house staff on top of that. Or they probably have something, maybe both, right? So that would be a problem. All right. But even the vendor itself is probably too high. Insurance. Again, insurance looks weird, very weird. It hasn't been normal since 2017. That needs a quick look to at least verify what's going on here and double-check what this, what's included in here. And how it could be fixed. We may actually see some of these pop up. Occupancy looks fine. Office expenses looks fine. I think I'm— yeah, that looks fine. Fundraising. Oh, there's another one, Gary. We see this a lot, right? Fundraising expenses exploded in 2019 and have been really exploding ever since relative to their student count and relative to their revenue.

And what do the gifts look like in that time period?

Yeah. So what they'll need to do, or, and I can help them with this, is cross-check this. So there is this— pay attention to this huge surge here in 2019. There should be also a big surge in gifts. That could be problematic, right? So let's look at gift. Why can't I type gift? Unrestricted private gift. Oh no. All right. That's exactly the opposite of what I thought.

Oh my.

So you have this, so if I could overlay this, you have this surge in fundraising expenses here and it goes like this. And at the same time you have the opposite trend for unrestricted private gifts. Far less than ideal, obviously. They need to figure out why. That this is a pretty clear natural experiment here and either there's something else that happened at the same time to sort of mute the impact of the fundraising expense or that money is just being wasted either. Yeah, I mean, there's really only two conclusions here. So they need to tease that out. I'm happy to help them do that. All right, so that's unrestricted gifts. I could add total private gifts, and that it could be that the new money is getting a lot of restricted gifts. But again, that's not great. You want folks to donate unrestricted. Money, ideally. All right. So a lot of stuff to check there. Check the ROI on the, the really high surge and surge in fundraising. But also we had, we had IT spend was completely off the charts. Insurance spend off the charts. Staffing, of course, need to take a deep dive on staffing and focus particularly on the number of people. And then after that's fixed, look very closely at benefits, not retirement benefits, the rest of the benefits. I'm going to move into contractors. We may find some themes here. Like I said, I haven't checked these yet, but we'll check contractors paid over $100K per FTE. Yeah, that's high for the number of students and a little bit high for the revenue. But again, remember, revenue is going to be inflated. So if you make that adjustment for normal operating revenue, they're probably high. On contractors.

So number of contractors and employees. That's not good.

And employees, yeah. Uh, I'm really— I'm not so surprised by this. This is what I encounter every day with schools that have budgets that are not balanced. It's, it's one or the other or both almost every time. Actually, every time. I can't think of one case where it wasn't. Um, so let's take a look at the contractors themselves. Uh, Juniata. All right.

Uh-oh. Yeah, colors look good.

Holy cow. All right, just to show you how crazy that food service contract is, let me bring this up. But you can already see, I mean, if you've watched the show more than once, we check these almost every time because it turns out to be, it's a big, it's a big item, right? This is $6 million, but it should not be $6 million. Typical pay, typical spending on a food service contract is about $1,500 to $1,700 per FTE. Student, which would put you less than half of this, right? So really their contract should be like $2,500,000 to $3 million or so. So that would probably be enough to balance their budget if they were just to right-size this food service contract. It's been high for a long time. When's the last time? The last time it was normal was in 2021, and then you had a 3.7, and it's still pretty high there. 3.7. Yeah, still really high. Yeah. So it was already high and then went way higher the year after. I hope, I really hope they didn't work in like some kind of loan to upgrade the kitchen.

Yeah.

Yeah. I just wonder, like, maybe I need to hire these salespeople. Like, how can schools that have massive budget deficits be convinced to spend millions per year On upgrading the kitchen. I just don't understand this stuff. IT services. Remember I did flag the IT services. They're spending a lot more than normal on IT services. Here's one of the contracts. And they might actually put this one on IT as well. So they got $400K to EAB, another million to Illuminated Integrated Services, Integration LLC. That's too high. So it's high for their size and high for their revenue. So we have 2 contracts here that are definitely out of line, and one is IT. We already flagged the IT spend as being high. That's probably why it's high. But it also could be high because of internal staff on top of this contract. So we need to check all that. Everything, anything else flags here for you, Gary?

Nope. It's just in general, color is not good. The darker the color, the worse the comparison.

Yeah, at a minimum, there's a few million dollars here that could be saved if you were to right-size this contract. I know you're probably locked in at this point, but you got to do everything you can to get this back down to like $4 or $3 million to stay competitive with what's like a normal food service contract for schools in your market. Yeah, and in fact, $3 million might be enough. Let's check their— they have a negative cash flow of $5 million. That's just the cash flow, Nate, just to balance the cash flow. But on top of that, they have depreciation, right? $4 million. So their deficit's like $9 million, it looks like. So yeah, they're going to need the $3 or $4 million from that, and then a lot more, you know, another— the other half is going to have to come from somewhere else. Probably the staffing, the IT contract that was $1 million, may not even be necessary to have that IT contract at all. If you have internal staff as well, or you got to have one or the other. Lots of stuff to check here. Remember, all their contracts were— they had a lot of contracts over $100K. They got to go through all those. All right. Hopefully that gives them a lot to dig into, but I'm happy to help them focus this analysis and get going on all of these items. And then, of course, you got to check the enrollment funnel and figure out why enrollment's falling.

So, Matt, really neat changes to the financial compass. And as I was listening to you do the presentation, I, I look at the big picture market all the time, and it's not just for this $219 folks can have access to look at their college, Juniata, today, but they can look at every other private college in the United States to see how they're doing, right?

Yep, you can do a, a really rigorous benchmarking analysis on this app for $200. So it's all there at your fingertips. So somebody that's has never done, if you've never worked for EAB or never worked for Huron or whatever, you can do this like world-class analysis right here for $200, right? It's really take you a few minutes. It doesn't have all the stuff that we use in our benchmarking. Of course, I can't sell all that for $200, but you can get very close and at least motivate a more deep, a deep analysis that we bring with our standard engagement.

So let's just take a look at a couple things and I'm going to look at, I'm going to leave McDaniel up here. Because I had them prepped for the show. And for your graduation rate— and we just, we'll just focus on Juniata College, Matt— look at the graduation rates. They're doing a fine job. And you know what I'm going to say next, right? How many times, how many times we see colleges with serious financial troubles— and I think Juniata fits that definition— that are still doing a good job, a really good job in the case of Juniata, of graduating students? That is not a good indicator for the higher education market that we have both colleges that graduate 30%, for example, of their students having financial troubles. That's understandable. We have colleges graduating in excess of 70% of their students, Matt, also having financial trouble. As you've heard me say week in and week out, that is bothersome in so many ways. And to me, Matt, that's just another indication of what a weak market, what a weak industry higher education is in right now. And then the other thing I want to take a look at— I can't remember what it was— is something called unfunded institutional grants. All right, unfunded institutional grants are something you and I know as merit aid, most scholarships, and it's discounts, just like you and I get discounts for cars and computers and couches and all those kind of things. And Juniata has gone from $200— $200— from $29 million in unfunded discounts in 2016, up almost $6 million in 2023. And again, that is an indication of the market. Even though their tuition prices were high, they felt the need to discount in 2023, for example, almost $35 million in discounts. And even then, Matt, they're still way, way, way above the market. They've got a lot of issues, and a big part of that has to do with pricing being so high. And then very briefly looking at the College Majors Completion app, and we look at this each week and we just take a look at— look at all the low enrollment majors. Economics, you know, you know a little bit about economics, right, Matt? You know, they had 2, 2, 5, and 2. So 11 students have graduated from Juniata College with bachelor's in marketing since 2020, from 2020 to 2023. Juniata folks, include marketing, include marketing, include economics, don't include economics. But these are low enrollment volumes. Why are you getting a return? Are you still trying to be everything to everybody? And Matt, based on what you saw with the number of employees, I can make the argument that Juniata still thinks they can be everything to everybody. And I would encourage them to look at the College Majors Completion app and look at these numbers and say, hey, do we need to be in all of these majors. And then for those of you looking to get more information on Juniata, we have the free college viability report. I'll include the link in the show notes. And for example, I'm looking on Bushnell University. I search for it, and this is what the report looks like. And it's your college viability report for this college, and it provides guidance on graduation rates, enrollment change, and much, much more. And Dr. Hendricks, we are in an era where Moneyball and data is a big deal.

Yeah.

Our decision to make the Financial Compass available to more and more students, first of all, my compliments. I think that's a, that's, that's a brilliant strategic move to get that done because I don't think either you or I can speculate what happens if hundreds or even thousands of individuals have access to this data now.

Yeah, I mean, that's the idea. I think so. Most of the subscribers we're getting at our previous price point, which was, you know, a few thousand dollars, where the administration themselves buying it. And even though we had discounts for faculty and students and the like, it's just not, it wasn't getting to those folks, at least not the rates that we wanted. So hopefully this $200 price point is enough where it's sustainable for us and generates a really big user base, and that's really what I, I'm hoping for.

Well, Dr. Hendricks, we have decided that we are going to take next week off. So for those of you who follow the College Financial Health Show, we'll be back again on Tuesday, December 2nd, with two more colleges. 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.