A financial analyst uses IRS Form 990 data to show why one private college is struggling: contractor spending has surged while officer compensation is unusually high relative to revenue. Cutting unnecessary contracts and reducing overstaffed administrative positions could stabilize the budget.
Chapters
All right, let's— so on the, on the expense side, I'm going to go to the 990 data right away and just get a sense of what's happening here with staffing and contractors, because those are— if you're going to bet on what's causing financial problems on the cost side, those are the two things to bet on. They tend to be the most expensive items on the cost side, so it makes a lot of sense. But honestly, staffing looks low here, right? Total employees per FTE looks normal. Relative to their revenue is actually a bit low. Let's take a look at— oh, that's not an issue. Okay, so we could have something here. Contractor spend is— not the spend, the number of contractors is up sharply again, just like the last school that we looked at, Elizabethtown. And that's high per FTE, quite high. Yeah. And also high relative to their revenue. So again, this is a case where, number one, I'd say look at your contractors, go through each contract, double-check, double-check each contract, you know, just throw out the ones you don't need, right? That's really the simplest thing to do. If you can continue your mission without it, then probably throw it into a pile that's going to be canceled. Here's another one. I just happened to pull this up. This is compensation for officers. And this is relative to their revenue. This is very, very high, right? So this could be happening either because you have too many upper-level administrators or their pay is just too high. What's the raw value? So it's high relative to their FTE, very high relative to FTE, and very high for their revenue as well. I mean, really need to pull this and like have half. Okay, so probably if I were to bet on this, this is probably going to be just a lot of employees over $100K. Yeah, same story here. So you probably just have too many administrators, honestly. Yeah, sorry to say.