Buildings (assets) per student - a measure of quality?

College Search & Selection
1

<p>I am not sure what this means, if anything, but I thought I'd throw this out there. I am pretty much flying blind since I am not a college finance expert by any stretch of the imagination.</p>

<p>In the IPEDS Finance report there is a figure called "buildings" under "assets". I think it is the value of the buildings on campus.
"Buildings-end of year includes end of year values for buildings as a reconciliation of beginning of the year values with additions to and retirements of building values to obtain end of year values. Capitalized leasehold improvements should be included in this amount if the improvements are to leased facilities. "</p>

<p>I divided building assets by total enrollment and came up with "building assets per student". Is this a measure of crowding? What? Is a lower number better (efficiency, leanness)?</p>

<p>There are some beautiful campuses pretty far down on the list.</p>

<p>The U California figures for builing assets were missing. Public schools use the "GASB" and private schools use the "FASB" accounting system, whatever that means. Private schools seemed to sort to the top.</p>

<p>So, any insights?</p>

<p>California Institute of Technology 336568
Yale University 306349
Princeton University 293532
Harvard University 212271
Amherst College 203404
Williams College 199848
Duke University 187635
Pomona College 187379
University of Rochester 178687
University of Pennsylvania 175300
Swarthmore College 170805
Middlebury College 165474
Principia College 164458
Stanford University 163547
Bowdoin College 161857
Wellesley College 159651
Agnes Scott College 157681
Emory University 155082
Washington University in St Louis 151388
Vanderbilt University 146575
Haverford College 146084
Massachusetts Institute of Technology 140056
Dartmouth College 136205
Wabash College 130951
Vassar College 129095
Lafayette College 125590
Smith College 122993
Grinnell College 122935
Yeshiva University 122218
Thomas Aquinas College 121616
Columbia University in the City of New York 120793
Hamilton College 120504
University of Chicago 119628
Kenyon College 118610
Colgate University 115729
Trinity College 111876
Brown University 111576
Davidson College 111507
Wake Forest University 107240
Washington and Lee University 107107
Case Western Reserve University 106999
Virginia Military Institute 106344
Wells College 105533
Johns Hopkins University 104831
University of Michigan-Ann Arbor 104631
Mount Holyoke College 100678
Cornell University 97982
Colby College 97628
Rice University 96696
Birmingham Southern College 95490
Harvey Mudd College 94362
Bard College 93498
DePauw University 92693
Oberlin College 89717
Macalester College 89462
Lawrence University 86166
Northwestern University 85359
Scripps College 84975
Tufts University 83714
Wesleyan University 80611
Denison University 80233
Union College 79720
Pennsylvania State University-Main Campus 79185
Hanover College 79110
Rhodes College 78985
Whitman College 78622
University of Notre Dame 77099
Carnegie Mellon University 76903
Reed College 76744
Ursinus College 76657
Sweet Briar College 76110
Southwestern University 75075
Sewanee: The University of the South 74947
Dickinson College 73912
Illinois Wesleyan University 73821
The College of Wooster 73624
Muhlenberg College 73232
Gettysburg College 73067
Rensselaer Polytechnic Institute 72560
Bates College 71829
University of Miami 71804
Georgetown University 71206
College of the Holy Cross 70814
Bucknell University 69456
Barnard College 69392
University of Washington-Seattle Campus 68481
Earlham College 68076
University of Pittsburgh-Pittsburgh Campus 67684
University of Virginia-Main Campus 67479
St Lawrence University 67336
Colorado College 66841
New College of Florida 66339
Albion College 65838
Drew University 65696
Brandeis University 65509
University of Connecticut 65471
Georgia Institute of Technology-Main Campus 64817
University of Iowa 64741
Wheaton College 64735
New York University 64346
Boston University 63774
Wofford College 63111
Centre College 62754
Furman University 62697
Connecticut College 62654
Skidmore College 62309
Hollins University 62244
Hobart William Smith Colleges 61556
Franklin and Marshall College 60442
University of Richmond 59770
Ohio State University-Main Campus 59663
Occidental College 59551
University of North Carolina at Chapel Hill 59364
Boston College 58198
Tulane University of Louisiana 57280
Lehigh University 56975
Sarah Lawrence College 56695
Hendrix College 56305
University of Puget Sound 56212
Austin College 56122
Wheaton College 55051
Spelman College 55036
Juniata College 54152
Rutgers University-New Brunswick 53331
Pitzer College 53206
Hope College 53185
Mills College 52447
Bennington College 52256
Ohio Wesleyan University 52165
Kalamazoo College 52079
Saint Johns University 50794
Allegheny College 50694
Syracuse University 50637
Randolph-Macon College 50636
Southern Methodist University 49782
Claremont McKenna College 49781
St. Olaf College 49328
Presbyterian College 49216
University of Missouri-Columbia 48888
Goucher College 47873
University of Delaware 47845
Clark University 47545
Augustana College 46956
University of Wisconsin-Madison 46945
Carleton College 46800
Millsaps College 46282
Gustavus Adolphus College 46256
Michigan State University 44834
Willamette University 43606
College of William and Mary 42839
University of Minnesota-Twin Cities 40929
University of Denver 40542
Baylor University 39391
George Washington University 39321
University of Maryland-College Park 38794
Pepperdine University 38113
Miami University-Oxford 37784
College of Saint Benedict 36469
Stevens Institute of Technology 36420
American University 35615
The University of Texas at Austin 35448
Clemson University 35396
Knox College 35385
Purdue University-Main Campus 34948
Iowa State University 33846
The University of Tennessee 33278
University of Illinois at Urbana-Champaign 33197
Fordham University 33117
Marquette University 32658
University of Georgia 32624
Worcester Polytechnic Institute 31843
Saint Louis University-Main Campus 30595
University of Southern California 30315
Texas A & M University 30042
Auburn University Main Campus 29422
Brigham Young University 29365
University of Florida 29206
SUNY at Binghamton 28053
Beloit College 27441
University of Colorado at Boulder 26883
Indiana University-Bloomington 25569
Virginia Polytechnic Institute and State University 25233
Bryn Mawr College 12495
St Mary's College of Maryland 5525</p>

2

<p>This is truly a meaningless ranking, because the numerator is meaningless.</p>

<p>Accounting standards, at least for private colleges, require that property (including buildings) be valued at cost. For a college like Harvard, this means that a lot of its assets have essentially zero value (you bought 500 acres of land in the middle of Cambridge in the 1600s for what price?)</p>

<p>Interestingly, at least for Harvard Medical School, back a few years ago (do not know about now) it didnot carry its property at historic cost, so every year its auditor would issue a qualified financial statement. Some banks would not lend to an organization with a qualified financial statement, so HMS would take its business elsewhere.</p>

3

<p>This information comes from the IPEDS Peer Analysis System, National Center for Educational Statistics, US Department of Education. The numbers I used represent the end-of-fiscal-year resale value of buildings, not the original cost.</p>

4

<p>The problem is there is no quality control over such numbers, and such values are terribly difficult to determine.</p>

<p>How much time and effort do you think a typical college will put into this reporting requirement, to generate a number that no one else asks for?</p>

<p>Worse, how DO you price this stuff? Secondary market for college buildings? You can’t even use commercial real estate for comparables, because commercial real estate does not compare. And why ignore land value? </p>

<p>So, garbage in - garbage out.</p>

<p>It is interesting to see novel ways to compare colleges, but this way is pretty far out.</p>

<p>JMHO.</p>

5

<p>Space is an extremely difficult thing to get a handle on with Universities. General Fund footage? Gross square feet, or net assignable square feet? Looking at the “value” of buildings feels like an even dicier way to compare schools, particularly as it translates to quality.</p>

<p>And since I’ve lately been accused of only advocating for measures that make my school look good, I will point out that the school I’m at has one of the biggest campuses in the country, with a staggering amount of square footage and it’s adding on even as I type, and plenty of its space is probably pretty “valuable”. Yet no, I do not believe this a good way to assess quality.</p>

6

<p>It is interesting that many of the schools we think of as the “best” sorted to the top. I think the method must have some validity. There are also some anomalies. I wonder if urban versus rural affects building valuation?</p>

7

<p>Well, it’s no accident there is correlation. For one thing, top Universities also tend to do a lot of research, which requires modern (high-value) facilities. There’s a lot of infrastructure required to bring in the big bucks and do lots of research.</p>

8

<p>hoedown-
I don’t think research infrastructure explains the correlation between building assets per student and the US News ranking. Notice that the top LACs also bubbled to the top of my BAPS ranking. I think my ranking indicates something about quality. Are high numbers good or bad? Lots of quality space versus inefficiency and waste?</p>

9

<p>Right, I cited that as one example, which fits for Universities. There are a number of correlates to valuable buildings–including good financial resources, donor support, etc. I’m not denying that this ranking might indicate something about quality. However, I am not sure it would lead us to draw better conclusions about these institutions than the variables that correspond to investments in lots of valuable buildings.</p>

<p>One could certainly turn the argument around and suggest that lots of valuable space means that colleges are being wasteful. But if that’s the case, then I’d conclude that many of these schools can “afford” to be–as you’ve noted, the ones at the top are highly regarded and not struggling. </p>

<p>All in all, I just don’t think it’s that valuable a measure and would not use it to rank colleges. The fact that it gives you results that are expected probably confirms what we already suspect: top colleges offer good facilities. But maybe I’m just thinking too narrowly. Can you give us some example of how someone might use this data?</p>

10

<p>“It is interesting that many of the schools we think of as the “best” sorted to the top. I think the method must have some validity. There are also some anomalies. I wonder if urban versus rural affects building valuation?”</p>

<p>Yet you also have Principia College, located in a more rural area with relatively low land values and no buildings that are All That.</p>

<p>How does this measure account for value of the real-estate (if at all)?
Does it include hospitals that are on a campus as part of the buildings? If so, that would work in favor of those campuses that have hospitals and that have them on-campus as opposed to a different location (which seems rather arbitrary). Does it include the dorms?</p>

<p>How does the age of the buildings play in to it – older buildings that aren’t worth a lot (or didn’t cost a lot when originally built) versus older buildings that have historical landmark value? Also, how does it account for rehabbed older buildings? (e.g., older buildings that have had signficiant investment in up-to-date recording labs, scientific labs, TV / computer equipment, etc.)</p>

11

<p>CP,</p>

<p>Are you sure you really read your own ranking? Are you sure you understand them?</p>

<p>Then tell me why U. Rochester should rank way ahead of Stanford, MIT, U. Chicago or Hopkins? (let’s compare like to like)</p>

<p>Tell me why Principia and Agnes Scott are way ahead of Wabash, Colgate, Haverford, Washington and Lee, to name a few?</p>

<p>The answer of course is two fold:</p>

<ol>
<li><p>The input data is unevenly reported.</p></li>
<li><p>The ratio has nothing to do with academic quality</p></li>
</ol>

<p>To explain further, IPEDs also includes the following definition:

This is the norm for most asset valuations and most emphatically does not reference “current market value”</p>

<p>But wait, there’s more. The OP does not seem to understand that this data is muddled by the fact that state institutions can report under GASB (Government Accounting Standards Board) or FASB (Financial Accounting Standards Board). In fact, the full title of one of the data sections reads

</p>

<p>Unlike for certain securities, for physical assets, FASB does not, and never has, allowed assets to be “marked to market” So, at least for any institution that reports data derived under FASB, and this would include most (if not all) private colleges, the numbers reported to IPEDS have nothing to do with current value.</p>

<p>I do wish the OP had taken the time to understand the numbers he was using, because there are some numbers in IPEDS that would make for wonderful rankings, such as instructional expenditures (just look in this section: “expenses by functional and natural classification: Fiscal year 2002 to current year”.</p>

<p>To just pull financial numbers out of a report, without understanding how they are generated, is an invitation to disaster. That’s why smart investors spend a lot of time understanding the components of financial reports before they invest in companies, and why they never pay much attention to certain figures on the balance sheet (like “book value”).</p>

<p>We should use the same care in studying colleges.</p>

<p>edit: x-posted with pizzagirl. Lots of information to look up and analyze in doing the post. Don’t like to shoot from the hip…</p>

12

<p>“I think my ranking indicates something about quality. Are high numbers good or bad? Lots of quality space versus inefficiency and waste?”</p>

<p>If I am a college that has invested in beautiful new dorms and a state of the art student union, have I provided better quality, or am I wasteful versus equal-intellectual schools that provide the same quality education with more moderate dorms and student unions? I think somehow you’d have to link the equity created by the buildings and to what extent they bring in top quality students and/or profs, and I have no idea how you’d do that.</p>

<p>I also wonder if this privileges or disadvantages schools that have an abundance of certain facilities, e.g., lots of performing-arts venues, art museums on campus, etc. Does it also privilege or disadvantage schools where much of the beauty/appeal of the campus is in the natural surroundings? (e.g., Cornell gorges)</p>

13

<p>I would have expected Haverford and Bryn Mawr to be very close to one another, not as far apart as they are, given that both are in the same area from the standpoint of the value of the underlying real estate, and have a generally similar look, feel and history from the standpoint of the types, styles and architecture of the buildings. Frankly they could be considered somewhat sister campuses just 2 miles apart. What do you think would cause them to be so far apart, collegehelp?</p>

<p>I’m also curious why U of Chicago would be so much above Northwestern, given that the underlying value of the real-estate that Northwestern owns is likely greater? (prime Evanston lakefront worth a fortune, and, if the downtown campus is included, unbelievably prime downtown Chicago real estate worth even more of a fortune). Were graduate campuses included in the valuation? Having said that, I think that a NU and U of Chicago education are “equal” (different but equal) and the fact that the NU real estate is likely worth more is a factoid which speaks to location but not quality.</p>

14

<p>PG,</p>

<p>Read my post. It answers your questions such as why NW is below U. Chicago.</p>

<p>Actually, this is an excellent comparison. Many of Northwestern’s buildings were built years ago. New construction, especially some at the medical center downtown, is not even finished yet, and some is controlled by affiliated entities, so does not appear on NW’s books. </p>

<p>Contrast this with Chicago, who has been on a building boom the past ten years, with a completely new hospital, new science buildings and a new dorm.</p>

<p>Why does “newness” count? Because building today will be carried on the books at its cost, which is high, to reflect current costs. A building built 20 years ago may be just a valuable today, but would be carried on the books at a fraction of its value today, because it cost a fraction to build. And this is before depreciation, which lowers the book value over time, even though the economic value may be going up.</p>

15

<p>I spoke with two people from IPEDS about this information before I posted it. They both said the figures I used represent end-of-year resale value (current). They also said the GASB and FASB figures I used for publics and privates were comparable. The difference was that the publics had to report more details.</p>

<p>Pizzagirl-
Since this list is building assets per student, Haverford might have a similar campus but fewer students.</p>

<p>I have posted rankings in the past of colleges according to instructional expenditures per student and get the same kind of critique about who and what is counted under “instructional expenditures”.</p>

<p>U Rochester might rank surprisingly high because they included their huge medical research facility, medical school, hospital, music school, and art museum.</p>

<p>The figures include the value of improvements made to older buildings.</p>

16

<p>CH,</p>

<p>All that tells me is that you spoke to people at IPEDS who do not know what they are talking about.</p>

<p>NO ONE computes an “end-of-year resale value” for any other purpose. To do so is complete BS and frankly of no value.</p>

<p>You would think with the financial meltdown we’ve had the past few months, all because of the difficulty valuing illiquid assets (you think college buildings of all things are more liquid, or easier to value, than credit swaps?), perhaps a little alarm bell might have gone off in someone’s mind?</p>

<p>I apologize for the sarcasm, but I see no other way to get across to you how meaningless this is. </p>

<p>I wish some of the real estate experts who participate on these boards would explain the challenges in valuing such assets. So many university buildings are purpose built and hard to recycle. For example, it took 7 years to sell the campus of Bradford College, Haverford MA, after it closed its doors in 2000. Some prospective purchasers put no value on the buildings at all, valuing it only for the land.</p>

17

<p>I found out a little more about the figures I am using. They come from the “General Purpose Financial Statement” that colleges and Universities complete when they are audited each year.</p>

<p>Column titled Ending Balance
This is the value of the Asset at the end of the fiscal year including additions and retirements. An entry here will automatically generate the CV in the column titled Retirements. </p>

<p>Line 23 – Buildings – Enter the Gross Asset Value Amount (including accumulated depreciation) for structures built for occupancy or use as classrooms, research, administrative offices, storage, etc., in the beginning balance, additions, and ending balance columns. Include built-in fixtures and equipment that are an essential part of the building’s permanent structure.</p>

18

<p>CH,</p>

<p>The tipoff here is the “including accumulated depreciation”. This is an accounting concept that you “wear out” assets, so you record a debit during their useful life.</p>

<p>For profit companies like it, for the most part, because it reduces profits, which in turn reduces taxes, without reducing cash flow. For a non-profit, it has no financial impact at all, but at least maintains consistency with for-profit accounting.</p>

<p>I hope you can see that you can’t have both a “resale value” while recording depreciation. Many older commercial buildings are fully depreciated, meaning their value on the books is zero. These same buildings get sold for millions.</p>

<p>This BTW, is one reason you’ve seen so many older trophy headquarters buildings sold by companies - it unlocks the “hidden value” of the asset once it has been fully depreciated. (In practice, taxes and depreciation issues make this complex because there is no free ride - you “pay back” the depreciation through an increased basis, but you get the idea.)</p>

19

<p>"Many of Northwestern’s buildings were built years ago. New construction, especially some at the medical center downtown, is not even finished yet, and some is controlled by affiliated entities, so does not appear on NW’s books. </p>

<p>Contrast this with Chicago, who has been on a building boom the past ten years, with a completely new hospital, new science buildings and a new dorm.</p>

<p>Why does “newness” count? Because building today will be carried on the books at its cost, which is high, to reflect current costs. A building built 20 years ago may be just a valuable today, but would be carried on the books at a fraction of its value today, because it cost a fraction to build. "</p>

<p>So if I’m understanding you correctly (and taking it out of NU/U Chicago, but just speaking in general), this might also mean that the school that is busily investing in brand-new buildings might have less cash available than the school that is relying on older buildings (built a long time ago and fully depreciated). Would there be a cash-flow-available-per-student type of measure that would be worthwhile or useful to calculate?</p>

20

<p>PG,</p>

<p>Most of the construction boom at research universities is for buildings related to federally supported research. And the buildings are built with borrowed money, often tax exempt bonds. Each university negotiates an overhead rate (indirect cost rate) with the federal government that, among other things, allows the expenses for buildings to be recovered. So, at least in theory, research buildings are revenue neutral overall. In practice, it is more complex (including fund-raising to cover some costs), but no university builds new research facilities expecting a hit to its bottom line. </p>

<p>Cash flow is tough to calculate for non-profits because of their accounting practices and lack of full disclosure: in my understanding, rarely do their financials include enough information to calculate cash flow, but I have not studied the subject extensively.</p>