Endowments of small LACs

paying3tuitions · July 25, 2007, 9:27am

^^heavens, I sure read those charts wrongly, seeing Amherst at 1.3 million rather than 1.3 billion. And I misunderstood the intent of your question. I always have financial aid and grant money front-and-center on my brain.

Good thing I majored in Art History. Yeesh. Terrible to have no sense of feeling for whether an endowment figure should be in the millions or billiions. Well, I'm good at what I do and terrible at what I don't do.

You don't have to worry; I serve on no committees that concern finance...anywhere, ever...

Good luck, NEMom.

northeastmom · July 25, 2007, 9:32am

paying3tuitions, LOL. I cannot relate to what 60 million vs. 220 million, or 1.3 billion does for a school. I also have grants and loans on the brain too! It is very much on the front burner in my college search. I just don't want to put my kid into an Antioch situation.

paying3tuitions · July 25, 2007, 9:33am

^^yes, Antioch shook us all up. Thanks for your post.

northeastmom · July 25, 2007, 9:57am

JHS, I sent a PM to you.

MarathonMan88 · July 25, 2007, 10:04am

[quote]
Do small LACs even HAVE a bond rating?

[/quote]

Not only do they have bond ratings--it's news in the Chronicle of Higher Education when the rating changes, because Moody's (or other rating agencies) will often tell why they've changed the rating.

Here's just one quick example:

[College X upgraded] by Moody's Investors Service, from Aa3 to Aa2. Applies to $59-million in new and outstanding bonds. Reasons cited include the institution's "exceptionally strong student demand," resulting in the acceptance of less than 25 percent of applicants; financial reserves that would cover almost 4.7 years of operations; and limited plans to borrow more money.

<a href="http://chronicle.com/weekly/v47/i40/40a02701.htm%5B/url%5D">http://chronicle.com/weekly/v47/i40/40a02701.htm</a>

JHS · July 25, 2007, 10:14am

Thanks for the PM, northeastmom. I stand corrected -- obviously, a number of private colleges have current bond ratings. Many smaller ones don't, but it is much more common than I would have guessed. You should probably post a link to the S&P article on this thread -- it is a great resource, not only for the ratings themselves, but also for explaining what factors S&P is looking at in rating the schools.

northeastmom · July 25, 2007, 10:42am

I am not sure if this allowed, so I did not post it.

northeastmom · July 25, 2007, 10:52am

MarathonMan, I have now sent a PM to you. Thanks.

My_Sweet_Babboo · July 25, 2007, 11:41am

Here's an article from the Boston Business Journal on bond ratings for local colleges:

<a href="http://www.bizjournals.com/boston/stories/2006/09/04/story1.html?page=1%5B/url%5D">http://www.bizjournals.com/boston/stories/2006/09/04/story1.html?page=1</a>

Surprisingly, Northeastern University chose not to be rated.

Papa_Chicken · July 26, 2007, 3:54pm

I found a few LAC financial statements to show how endowment investment income fits into supporting annual budgets.

Mills College (Ca) is a good example. Most finacial statements are structured the same as this one.
<a href="http://www.mills.edu/administration/administrative_offices/vice_president_treasurer/audited_financial_statement.pdf%5B/url%5D">http://www.mills.edu/administration/administrative_offices/vice_president_treasurer/audited_financial_statement.pdf</a>

The first in a series of statements starting on page 4 is what's called "Statements of Financial Position" commonly called the Balance Sheet, measuring the value of certain assets and liabilities at the end of the measured period (fiscal year 2006 in this case.) Under "Assets" you'll see an "investments" line item, totalling $239 Million. This line contains the colleges endowment. In Mills' case, total investments includes the endowment plus other misc investments.....if you page down to note 5 on page 12, you'll see an investment breakdown, with $198M as the total under endowment..this is the figure for Mills' fiscal year 2006 end endowment value reported elsewhere. So, out of the $239M reported on the Balance Sheet, most of it is endowment. Some schools report just the endowment value under the Balance Sheet investment item...one has to check the footnotes every case.

The second statement on page 5 in this document is entitled "Statement of Activities"... the for-profit equivalent of this particular financial statement is called an "Income Statement" or "Profit & Loss Statement" measure the revenues and expenses over the period measured. The two top main sections of this statement report money in...that is, revenues, and money out, that is expenses. Revenues includes a line item for investment income...that's the one we are interested in...it should be predominantly income brought in from endowment interest or the like, usable for their annual operations. Under the 2006 total column, Mills took in $8.6M in investment income. [Assuming a 10% average return from the endowment, Mills used less than 50% of their annual return for current operations, presumably re-investing the remainder.] Note the total expenses line...$47.7M....hence, Mills paid for 18% of their annual operating expenses with income from their endowment.

So, following the Mills model, a college with substantially less endowment would have substantial less investment income to subsidize their everyday operations....everything from teacher pay to latte bars. A college with $40M endowment using 50% of a 10% return would have added revenue of only $2M for the year. To me, that's a big difference and undoubtedly the spending per student at a poorly endowed institution would likely be significantly less that a moderately endowed school like Mills.

Back to the financial statements, there's one line in the revenue section which I don't fully understand...."net assets released from restrictions for operations"....I suspect this may be gifts, not endowment, released during the period. At some colleges like Williams, this line item is substantial.

Here's a few more LAC financial statements to peruse. Look especially at Berea where income from endowment constitutes about 50% of the colleges expenses for the year.

Davidson: <a href="http://www2.davidson.edu/administration/vpbf/vpbf_assets/annualreport05.pdf%5B/url%5D">http://www2.davidson.edu/administration/vpbf/vpbf_assets/annualreport05.pdf</a>
Berea: <a href="http://www.berea.edu/vpf/finance/documents/2006FinancialStatements.pdf%5B/url%5D">http://www.berea.edu/vpf/finance/documents/2006FinancialStatements.pdf</a>
Williams: <a href="http://www.williams.edu/admin/controller/statements/williams_financial_statement_2006.pdf%5B/url%5D">http://www.williams.edu/admin/controller/statements/williams_financial_statement_2006.pdf</a>
Hamilton: <a href="http://my.hamilton.edu/college/business_office/accounting/Hamilton%20College%20'04ye.pdf%5B/url%5D">http://my.hamilton.edu/college/business_office/accounting/Hamilton%20College%20'04ye.pdf</a>
Whitman: <a href="http://www.whitman.edu/content/business_office/financial-statements%5B/url%5D">www.whitman.edu/content/business_office/financial-statements</a>
Amherst: <a href="http://www.amherst.edu/%7Etreasurer/Treasurer%20Rpt%202006.pdf%5B/url%5D">http://www.amherst.edu/~treasurer/Treasurer%20Rpt%202006.pdf</a>

Papa_Chicken · July 26, 2007, 5:09pm

a few more LAC financial statements:

northeastmom · July 26, 2007, 5:14pm

What are the search words that are pulling these up? This is helpful to those that want to wade through.

Papa_Chicken · July 26, 2007, 5:20pm

For the target college, I google: "____ college" "financial statement"

I usually have to wade through some financial aid hits, which are not what we want.

If I don't get a direct connect from that, then I go to the college's web site and search on "financial statement", and if that doesn't work, I then search for the responsible administrative department and peruse their pages. Departments can be called Finance, budgeting, bursar, controller, and other financial lingo. I have struck out on many colleges that do not appear to post the audited financials. Perhaps its the same secretive bunch as those that don't post their Common Data Sets?

mythmom · July 26, 2007, 5:55pm

I would be concerned. One thing I would check immediately would be percentage of full-time faculty vs. part-time faculty. A school in financial straits will often economize bt hiring adjuncts. A large adjunct faculty definitely does impact academic quality.

I do not mean to offend adjuncts. I teach full-time at one college and adjunct at another, and while I don't think I offer a different classroom experience when I adjunct, a largely full-time faculty ensures more curriculum review, more continuity of classes and better mentoring for students.

northeastmom · July 26, 2007, 6:14pm

Mythmom, thanks for that tip. I guess cutting a fair number sport teams might be a tip off, but I might be wrong.

mezzomom · July 26, 2007, 9:05pm

[quote]
I guess cutting a fair number sport teams might be a tip off, but I might be wrong.

[/quote]

Maybe yes, maybe no. Sometimes decisions such as this are financial, but sometimes they're related to a new direction. Questions of this nature can often be answered by reading a school's strategic plan, but like financial data, the strategic plans aren't always readily found on a school's website. They're definitely worth asking for though.

Mizo · July 26, 2007, 9:09pm

I would check the book, The Hidden Ivies by Greene, published in 2000. It reviews '30 colleges of excellence' mostly well known LACs such as Grinnell, Mt. Holyoke... it includes total endowment information for each school as well as per capita in regards to the student body. The info is dated but could serve as a baseline for how they are doing 7 years later.

blucroo · July 26, 2007, 9:35pm

Be careful when looking at percent increases....Tufts almost doubled their endowment between 05 and 06 due to a major push and one amazing donor (guy who founded ebay, I think), but they are still near #50 and don't have the $ to give merit aid.

Papa_Chicken · July 26, 2007, 9:42pm

now this article with college listing is very interesting....
<a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.article/2,1,7,0,1145780039739.html%5B/url%5D">http://www2.standardandpoors.com/portal/site/sp/en/us/page.article/2,1,7,0,1145780039739.html</a>
doesn't cover every private colllege, though.

here's a listing exceprt....there's much more

[quote]
AAA

Amherst College MA Stable 
California Institute of Technology CA Stable 
Columbia University NY Stable 
Dartmouth College NH Stable 
Grinnell College IA Stable 
Harvard University MA Stable 
Massachusetts Institute of Technology MA Stable 
Pomona College CA Stable 
Princeton Theological Seminary NJ Stable 
Princeton University NJ Stable 
Rice University TX Stable 
Rockefeller University NY Stable 
Stanford University CA Stable 
Washington University MO Stable 
Yale University CT Stable

AA+

Brown University RI Stable 
Cornell University NY Stable 
Duke University NC Stable 
Northwestern University IL Stable 
Swarthmore College PA Stable 
University of Southern California CA Stable 
Wellesley College MA Stable 
Williams College MA Positive

AA

Agnes Scott College GA Stable 
Davidson College NC Stable 
Denison University OH Stable 
Emory University GA Stable 
Haverford College PA Stable 
Johns Hopkins University MD Stable 
Middlebury College VT Stable 
Oberlin College OH Stable 
Smith College MA Stable 
University of Chicago IL Stable 
University of Pennsylvania PA Stable 
University of Richmond VA Stable 
Vanderbilt University TN Stable 
Vassar College NY Stable 
Wake Forest University NC Stable 
Washington and Lee University VA Stable 
Wesleyan University CT Stable

AA-

Boston College MA Stable 
Bryn Mawr College PA Stable 
Carnegie-Mellon University PA Stable 
Case Western Reserve University OH Stable 
Colgate University NY Stable 
Colorado College CO Stable 
Holy Cross College MA Stable 
Lafayette College PA Stable 
Lehigh University PA Stable 
Mount Holyoke College MA Stable 
Reed College OR Stable 
Southern Methodist University TX Stable 
St. Louis University MO Stable 
Trinity College CT Negative 
Trinity University TX Stable 
Tufts University MA Stable 
Whitman College WA Stable

A+

Berklee College of Music MA Stable 
Drexel University PA Stable 
Franklin and Marshall College PA Stable 
Hampton University VA Stable 
Howard University DC Stable 
Loyola University LA Negative 
Morehouse College GA Stable 
Muhlenberg College PA Stable 
Rhodes College TN Stable 
Syracuse University NY Stable 
Transylvania University KY Stable 
Tulane University LA Negative 
University of Puget Sound WA Stable 
University of Rochester NY Stable 
University of the South TN Stable 
Wisconsin Medical College WI Stable 
Worcester Polytechnic Institute MA Negative

A

American University DC Stable 
Bryant University RI Stable 
Buena Vista University IA Stable 
Catholic University of America DC Stable 
Clark University MA Stable 
Dickinson College PA Stable 
George Washington University DC Stable 
Hampden-Sydney College VA Stable 
Hendrix College AR Stable 
Hobart William Smith Colleges (Colleges of the Seneca) NY Stable 
Hofstra University NY Stable 
Hollins College VA Negative 
Kenyon College OH Positive 
Loyola College MD Stable 
Lycoming College PA Stable 
Philadelphia College of Osteopathic Medicine PA Stable 
Randolph-Macon College VA Stable 
Rensselear Polytechnic Institute NY Stable 
Seattle University WA Stable 
St. Lawrence University NY Stable 
University of Dayton OH Stable 
University of Denver CO Stable 
University of Miami FL Stable 
Villanova University PA Stable 
Willamette University OR Stable 
York College of Pennsylvania PA Stable

A-

A.T. Stills University of Health Sciences MO Stable 
Adelphi University NY Stable 
Allegheny College PA Stable 
Baldwin-Wallace College OH Stable 
Bradley University IL Positive 
Centre College of Kentucky KY Stable 
College of Notre Dame MD Stable 
Duquesne University PA Stable 
Emerson College MA Stable 
Fairfield University CT Stable 
Gettysburg College PA Stable 
Goucher College MD Stable 
Illinois Wesleyan University IL Stable 
Loyola University of Chicago IL Stable 
Madonna University MI Stable 
Midwestern University IL Stable 
New School NY Stable 
Quinnipiac University CT Stable 
Randolph-Macon Woman's College VA Stable 
Regent University VA Stable 
Sarah Lawrence College NY Stable 
Seton Hall University NJ Positive 
Simmons College MA Stable 
Saint Francis College NY Stable 
Saint Mary's College IN Stable 
Saint Michael's College VT Stable 
University of Indianapolis IN Stable 
Ursinus College PA Stable 
Wayland Baptist University TX Stable

BBB+

Azusa Pacific University CA Stable 
Babson College MA Stable 
Boston University MA Stable 
Brooklyn Law School NY Stable 
Elizabethtown College PA Stable 
Georgetown University DC Stable 
Georgian Court University NJ Stable 
Inter American University of Puerto Rico PR Stable 
Massachusetts College of Pharmacy and Health Services MA Stable 
McDaniel College MD Stable 
Millsaps College MS Stable 
Saint Ambrose University IA Stable 
Saint Edwards University TX Stable 
Saint John's College MD Stable 
Saint Joseph's College NY Stable 
Saint Louis College of Pharmacy MO Positive 
Stevens Institute of Technology NJ Stable 
University of Portland OR Stable 
University of Saint Thomas TX Stable 
Widner University PA Stable

BBB

Abilene Christian University TX Stable 
Carroll College WI Stable 
Centenary College LA Negative 
Chatham College PA Stable 
Columbia College IL Positive 
Gannon University PA Stable 
Hampshire College MA Stable 
Hope College MI Positive 
Houghton College NY Stable 
Iona College NY Stable 
La Salle University PA Stable 
Lynchburg College VA Stable 
Marywood University PA Stable 
Mercyhurst College PA Stable 
Monmouth University NJ Positive 
Niagara University NY Stable 
Nova Southeastern University FL Stable 
Pace University NY Negative 
Pacific Lutheran University WA Stable 
Pacific University OR Stable 
Philadelphia University PA Stable 
Regis University CO Stable 
Rider University NJ Stable 
Rivier College NH Stable 
Rockhurst University MO Negative 
Southern California College of Optometry CA Stable 
Springfield College MA Stable 
Saint John's College Santa Fe Campus NM Stable 
Suffolk University MA Stable 
Sweet Briar College VA Stable 
University of Dallas TX Stable 
University of the Sacred Heart PR Negative 
Wartburg College IA Stable 
Waynesburg College PA Stable 
Western New England College MA Stable 
Westminster College UT Stable 
Wilkes University PA Stable

BBB-

Albany College of Pharmacy NY Stable 
Ana G. Mendez University System Inc. PR Stable 
California College of the Arts CA Stable 
Barry University FL Stable 
Cedar Crest College PA Stable 
Curry College MA Stable 
Daemen College NY Stable 
Eastern University PA Stable 
Geneva College PA Stable 
Gwynedd-Mercy College PA Stable 
Lawrence Technological University MI Stable 
Lindsey Wilson College KY Stable 
Manchester College IN Stable 
Mount Saint Mary's University MD Stable 
Neumann College PA Stable 
Nichols College MA Stable 
Park University MO Stable 
Polytechnical University of Puerto Rico PR Stable 
Sacred Heart University CT Stable 
Saint Francis University PA Stable 
Santa Fe College NM Stable 
Southern New Hampshire University NH Stable 
Southern Wesleyan University SC Stable 
Southwest Baptist University MO Negative 
Saint Bonaventure University NY Stable 
Stillman College AL Negative 
Texas Lutheran University TX Stable 
University of Hartford CT Stable 
Vaughn College of Aeronautics and Technology NY Stable 
Woodbury University CA Stable

BB+

Benedict College SC Stable 
Dowling College NY Stable 
Eastern Nazarene College MA Negative 
Franklin Pierce College NH Stable 
Immaculata College PA Stable 
Polytechnic University NY Stable 
Saint Peter's College NJ Stable

BB

Regis College MA Stable

[/quote]

NJ113 · July 26, 2007, 10:00pm

Great data Papa Chicken. Thanks for sorting it by rating and posting it.

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