Oberlin's strategic plan

<p>Mackinaw:</p>

<p>Here are selected per student financial indicators for a few LACs. All of these are from actual FY04 results, except Grinnell which was their budgeted numbers for FY04. The percentage of total endowment spent for operating expense is probably understated by a tenth or two because it is based on the year ending endowment size and probably should be based on an average endowment size during the year. For example, Swarthmore claims to have spent 4.2% of endowment, whereas this spreadsheet shows 3.9%. Several others are understated, including Williams, in a similar fashion. Also, I tried to use average enrollment for the year when it was given in the financials. I a couple of cases, I had to use the fall enrollment. Close enough for government work.</p>

<p>I see no purpose in doing these for universities. The grad schools, research revenues/expense, and the sundry other business units make it impossible to break out meaningful numbers for comparison. For example, Emory just sold a drug patent for $524 million, which begs the question, "Is it a school or a pharmeceutical company?" That blurred mission makes comparing finanicals between universities and LACs impossible. I will try to post a few more. I'd like to capture a few small endowment schools (Haverford, Davidson, etc.) </p>

<p>One thing jumps out from these numbers. I don't know what the heck Grinnell is bellyaching about. Swarthmore is conservative with a target spending from the endowment of 4.2%. Grinnell spent under 3%. The only explanation is that they talk about their unusually aggressive high risk investment strategy. They may plan for more volatility. Nevertheless, it's easy to see why they would want to increase enrollment and they have the endowment to justify it. Conversely, spending 6% of endowment, it's easy to understand Oberlin's concern.</p>

<p>BTW, compare the Total Student Revenue line with the Total Spending line just below it. This represents the "hidden merit aid" that every enrolled student gets. It is easy to see why Williams and Swarthmore (and Amherst and Pomona) have more customers than they can handle. Sell a $68,000 product for $26,500 and people generally line up around the block. This is also why you can't "make it up on volume" unless your per student endowment supports it. Oberlin is smart to downsize.</p>

<p>ALL OF THESE NUMBERS ARE PER STUDENT!</p>

<p>Swarthmore 1,462 </p>

<p>Tuition 29,406<br>
Financial aid (10,663) 36.3% discount rate
Net Tuition 18,743 </p>

<p>Room/Board 7,843 </p>

<p>Tot Student Revenue 26,585 38.9% of total spending</p>

<p>Total Spending 68,304 </p>

<p>Endowment 738,714<br>
End Spending 29,155 3.9% of endowment</p>

<p>Williams 2,052 </p>

<p>Tuition 27,970<br>
Financial aid (9,037) 32.3% discount rate
Net Tuition 18,933 </p>

<p>Room/Board 6,800 </p>

<p>Tot Student Revenue 25,734 38.4% of total spending</p>

<p>Total Spending 66,936 </p>

<p>Endowment 599,209<br>
End Spending 28,814 4.8% of endowment</p>

<p>Oberlin 2,883 </p>

<p>Tuition 28,895<br>
Financial aid (12,113) 41.9% discount rate
Net Tuition 16,781 </p>

<p>Room/Board 5,457 </p>

<p>Tot Student Revenue 22,239 55.4% of total spending</p>

<p>Total Spending 40,135 </p>

<p>Endowment 199,965<br>
End Spending 12,102 6.1% of endowment</p>

<p>Grinnell 1,375 </p>

<p>Tuition 25,573<br>
Financial aid (12,073) 47.2% discount rate
Net Tuition 13,500 </p>

<p>Room/Board 6,898 </p>

<p>Tot Student Revenue 20,399 43.8% of total spending</p>

<p>Total Spending 46,615 </p>

<p>Endowment 939,477<br>
End Spending 22,103 2.4% of endowment</p>

<p>Grinnell Notes: Budgeted FY04 figures. Room/Board also inc. bookstore</p>

<p>
[quote]
I agree that the equation for a LAC is a bit different.

[/quote]
</p>

<p>That's what I was talking about. I should have said that science education at small undergrad colleges is hideously expensive. David Baltimore (Pres. of Caltech) talked about that very topic in his dedication speech for the new science center at Swarthmore.</p>

<p>You have a lot of fixed overhead and operating costs that are spread over very few students. For example, Swarthmore operates Physics, Chemistry, Bio, and Engineering departments with a total of 75 majors combined per graduating class with 40+ doing Bio. There are significant research grants from HHMI and elsewhere, but that's spending money, not a profit-making operation. It's certainly not a pharmeceutical company that runs a college on the side!</p>

<p>BTW, Org Chem II is one of Swarthmore's large classes with 63 enrolled. However, it is split up into five different weekly lab sections, each taught by a Swarthmore professor, not a TA. Org I is taught as both a lecture section and a freshman seminar section capped at 12. All Physics courses, starting with freshman year are capped at 25. Virtually all upper level Chem and Physics courses for majors are taught as seminars, capped at 12.</p>

<p>The cost of LAC sciences is why three of the Claremont Colleges chose to share a Joint Sciences Department instead of sharing, for example, a Psych department.</p>

<p>I-Dad, MHC Strategic Plan is available at</p>

<p><a href="http://www.mtholyoke.edu/cic/about/plan/%5B/url%5D"&gt;http://www.mtholyoke.edu/cic/about/plan/&lt;/a&gt;&lt;/p>

<p>Other reports germane to this discussion:</p>

<p>Financial Aid changes - <a href="http://www.mtholyoke.edu/offices/comm/csj/961108/task.html%5B/url%5D"&gt;http://www.mtholyoke.edu/offices/comm/csj/961108/task.html&lt;/a&gt;&lt;/p>

<p>Financial Reports - <a href="http://www.mtholyoke.edu/offices/fs/finrpt.shtml%5B/url%5D"&gt;http://www.mtholyoke.edu/offices/fs/finrpt.shtml&lt;/a&gt;&lt;/p>

<p><a href="http://www.mtholyoke.edu/offices/comm/csj/planfor2003/financial.shtml%5B/url%5D"&gt;http://www.mtholyoke.edu/offices/comm/csj/planfor2003/financial.shtml&lt;/a&gt;&lt;/p>

<p>More reports used to be available, but they are now restricted.</p>

<p>Thank you, Interestdad! I need to spend somewhat more time digesting these figures (and Xiggi's sources) to have much else to say. One reason I'm curious about all this is admittedly that my own alma mater (Reed) for a long time has suffered from a paltry endowment (it was literally less than $5 million when I was enrolled, back in the Pleistocene Age). And I think the dearth of finaid is one reason for its low retention rate (ca. 70% 6-yr graduation rate) (as well as low "yield"). One can hope that the endowment growth in the last 10 years will begin to help with this problem, though of course that's not the only factor.</p>

<p>OTOH, my daughter attended RISD, which I think has a very strong endowment for an art school, but it is rather stingy with financial aid and yet has something like a 94% 6-year graduation rate. Its students tend to be relatively well off, including a significant percentage from overseas. They may often end up as starving artists but they usually arrive well fed and coddled.</p>

<p>Mac:</p>

<p>Reed has a large endowment, somewhere around $350 million. On a per student basis, that's larger than Oberlin, Mt. Holyoke, and Davidson just off the top of my head.</p>

<p>I think Reed is very well-positioned. They are in a region of the country that is dramatically underserved by elite liberal arts colleges so they face very little competition in their own backyard.</p>

<p>And, they have a very clearly-defined identity. I think that will be really crucial from a competitive standpoint as filling freshmen classes gets more difficult down the road.</p>

<p>The quality of their educational product speaks for itself.</p>

<p>I'm reminded of a story in which a friend of mine asked a rich guy "How did you become so rich?" His answer: "I take money from people who have less than I do, and I keep it." I do think Reed has begun to focus more on using its endowment to increase finaid, but I don't know what their payout is now (in percentage of earnings or overall endowment) in comparison with some of the other small schools mentioned here.</p>