Endowments of small LACs

Parents Forum
21

<p>^^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.</p>

<p>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.</p>

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

<p>Good luck, NEMom.</p>

22

<p>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.</p>

23

<p>^^yes, Antioch shook us all up. Thanks for your post.</p>

24

<p>JHS, I sent a PM to you.</p>

25

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

[/quote]
</p>

<p>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. </p>

<p>Here's just one quick example:</p>

<p>[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.</p>

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

26

<p>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.</p>

27

<p>I am not sure if this allowed, so I did not post it.</p>

28

<p>MarathonMan, I have now sent a PM to you. Thanks.</p>

29

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

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

<p>Surprisingly, Northeastern University chose not to be rated.</p>

30

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

<p>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"&gt;http://www.mills.edu/administration/administrative_offices/vice_president_treasurer/audited_financial_statement.pdf&lt;/a&gt;&lt;/p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

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

31

<p>a few more LAC financial statements:</p>

<p>Bowdoin: <a href="http://www.bowdoin.edu/treasurer/pdf/financialstatements.pdf%5B/url%5D"&gt;http://www.bowdoin.edu/treasurer/pdf/financialstatements.pdf&lt;/a>
Bucknell: <a href="http://www.bucknell.edu/Documents/FinanceOffice/Bucknell%206-30-06%20audited%20financial%20statements.pdf%5B/url%5D"&gt;http://www.bucknell.edu/Documents/FinanceOffice/Bucknell%206-30-06%20audited%20financial%20statements.pdf&lt;/a>
Claremont McKenna: <a href="http://admin.claremontmckenna.edu/treasurer/annual-reports/pdf/Financial0506.pdf%5B/url%5D"&gt;http://admin.claremontmckenna.edu/treasurer/annual-reports/pdf/Financial0506.pdf&lt;/a>
Colgate: <a href="http://portaldata.colgate.edu/imagegallerywww/3200/ImageGallery/2006%20Financial%20Statements.pdf%5B/url%5D"&gt;http://portaldata.colgate.edu/imagegallerywww/3200/ImageGallery/2006%20Financial%20Statements.pdf&lt;/a>
Colorado: <a href="http://www.coloradocollege.edu/Bulletin/AnnualReport/financial.asp%5B/url%5D"&gt;http://www.coloradocollege.edu/Bulletin/AnnualReport/financial.asp&lt;/a>
Denison: <a href="http://www.denison.edu/finance/afs2006.pdf%5B/url%5D"&gt;http://www.denison.edu/finance/afs2006.pdf&lt;/a>
Dickinson: <a href="http://www.dickinson.edu/departments/finops/financialstatements/financialstatement0506.pdf%5B/url%5D"&gt;http://www.dickinson.edu/departments/finops/financialstatements/financialstatement0506.pdf&lt;/a>
Gettysburg: <a href="http://www.gettysburg.edu/about/offices/fa/financial_services/forms/GBCFINALFS.pdf%5B/url%5D"&gt;http://www.gettysburg.edu/about/offices/fa/financial_services/forms/GBCFINALFS.pdf&lt;/a>
Grinnell: <a href="http://www.grinnell.edu/offices/accounting/zauditedfinancialstatements/includes/final%20fs%20wo%20supps.pdf%5B/url%5D"&gt;http://www.grinnell.edu/offices/accounting/zauditedfinancialstatements/includes/final%20fs%20wo%20supps.pdf&lt;/a>
Haverford: <a href="http://www.haverford.edu/business/forms/finance2006.pdf%5B/url%5D"&gt;http://www.haverford.edu/business/forms/finance2006.pdf&lt;/a>
Oberlin: <a href="http://www.oberlin.edu/control/Report06/Financial%20Stmt%20-%20FY06.pdf%5B/url%5D"&gt;http://www.oberlin.edu/control/Report06/Financial%20Stmt%20-%20FY06.pdf&lt;/a>
Occidental: <a href="http://departments.oxy.edu/vpbus/Occidental_College_FINAL_FY06.pdf%5B/url%5D"&gt;http://departments.oxy.edu/vpbus/Occidental_College_FINAL_FY06.pdf&lt;/a>
Pitzer: <a href="http://www.pitzer.edu/offices/treasurer/annual_report/PIT_05-06_Financials_Final.pdf%5B/url%5D"&gt;http://www.pitzer.edu/offices/treasurer/annual_report/PIT_05-06_Financials_Final.pdf&lt;/a>
Pomona: <a href="http://www.pomona.edu/welcome/CollegeFinancialStatements.pdf%5B/url%5D"&gt;http://www.pomona.edu/welcome/CollegeFinancialStatements.pdf&lt;/a>
Richmond: <a href="http://controller.richmond.edu/about/FinPosn06.pdf%5B/url%5D"&gt;http://controller.richmond.edu/about/FinPosn06.pdf&lt;/a>
Smith: <a href="http://www.smith.edu/controller/Financial0506.pdf%5B/url%5D"&gt;http://www.smith.edu/controller/Financial0506.pdf&lt;/a>
Swarthmore: <a href="http://www.swarthmore.edu/Admin/investment_office/FinancialRpt_05-06.pdf%5B/url%5D"&gt;http://www.swarthmore.edu/Admin/investment_office/FinancialRpt_05-06.pdf&lt;/a>
Union: <a href="http://www.union.edu/finance/fs_06.pdf%5B/url%5D"&gt;http://www.union.edu/finance/fs_06.pdf&lt;/a>
Washington & Lee: <a href="http://treasurer.wlu.edu/budgets/2006%20WL%20AFS.pdf%5B/url%5D"&gt;http://treasurer.wlu.edu/budgets/2006%20WL%20AFS.pdf&lt;/a&gt;&lt;/p>

32

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

33

<p>For the target college, I google: "____ college" "financial statement"</p>

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

<p>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?</p>

34

<p>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. </p>

<p>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.</p>

35

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

36

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

[/quote]
</p>

<p>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.</p>

37

<p>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.</p>

38

<p>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.</p>

39

<p>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"&gt;http://www2.standardandpoors.com/portal/site/sp/en/us/page.article/2,1,7,0,1145780039739.html&lt;/a>
doesn't cover every private colllege, though.</p>

<p>here's a listing exceprt....there's much more</p>

<p>
[quote]
AAA </p>

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

<p>AA+ </p>

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

<p>AA </p>

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

<p>AA- </p>

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

<p>A+ </p>

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

<p>A </p>

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

<p>A- </p>

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

<p>BBB+ </p>

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

<p>BBB </p>

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

<p>BBB- </p>

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

<p>BB+ </p>

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

<p>BB </p>

<p>Regis College MA Stable </p>

<p>

[/quote]
</p>

40

<p>Great data Papa Chicken. Thanks for sorting it by rating and posting it.</p>