johnwesley

^^and, what if they don't publish an annual financial report? What if they publish an annual budget, instead?

interesteddad

Well, that would bite. I have found the budgets to be totally inscrutible. They use yet another group of financial buckets.

Actuallly, non-profits are required by law to make their financial reports available, I believe. You can get the Federal 990 tax filings at GuideStar nonprofit reports and Forms 990 for donors, grantmakers and businesses

Lots of interesting stuff there. Highest paid professors and their salaries. Maybe a list of donors for the year, etc.

In some cases (not always), when I find a college that doesn't publish its annual financial report, it's because they don't want people to see it. You won't find one for a college in financial trouble.

Here are Wesleyan's Annual Financial Reports for the last four years:

Wesleyan University: Financial Services

This is probably the first document I'd look for if I were interested in a college.

interesteddad

JohnWesley:

Wesleyan was nice enough to provide detail on allocation of plant operations in their financial report.

They have $43 million in physical plant expenses as follows:

Physical plant operations $ 19,392
Major maintenance expenses & non-capitalized costs 5,815
Depreciation 9,063
Interest expense 8,979
Total expenditures to be allocated $ 43,249

Instead of putting this money in the Institutional Support bucket as Swarthmore does, they allocate it as follows based on a square footage of building space formula:

Instruction $ 12,910
Research 4,325
Libraries 3,153
Student services 904
Institutional support 1,246
Auxiliary activities 20,711
Total allocations $ 43,249

That's fine. Perfectly reasonable. But, you then can't compare the Institutional Support category as "bloated overhead" versus "lean overhead" when one includes all physical plant operation expenses and the other only includes $1.2 million out of $43 million in actual expense. They are both spending the money on the physical plant. It just a question of looking at the buckets where the money gets allocated or not. IPEDS makes no distinction.

You really have to look at the totals to avoid these pitfalls. Otherwise you are counting lawnmowing and electricity as a bloated "instructional expense" for one school with an offsetting lean "institutional support" overhead versus a school with the same expense showing a lean "instructional expense" without lawn mowing and a bloated "institutional support". It all comes out in the wash when you look at total dollars divided by total students.

johnwesley

interesteddad, you've just provided a sterling example of why the IPEDS figures are probably simpler and closer to "apples versus apples" than donning a green eyeshade and poring over individual financial statements. I doubt you could get one CFO in ten that would agree with you that depreciation and interest expense are the same as direct expenditures.

collegehelp

OK, I added together Institutional Support and Operation and Maintenance of Plant. It seemed to affect the publics but not the privates.

I also sorted by public (1) vs private (2) and by Carnegie Classification.

Here are the LACs:

St Mary's College of Maryland 1 21 29.5%
New College of Florida 1 21 26.2%
Virginia Military Institute 1 21 18.0%

Mills College 2 19 19.3%
Union College 2 19 14.7%

Bennington College 2 21 27.9%
Thomas Aquinas College 2 21 27.4%
Spelman College 2 21 27.3%
Millsaps College 2 21 26.7%
Austin College 2 21 26.7%
Earlham College 2 21 26.2%
Southwestern University 2 21 24.4%
Principia College 2 21 24.3%
Franklin and Marshall College 2 21 23.7%
Reed College 2 21 23.7%
Trinity College 2 21 22.6%
Hendrix College 2 21 22.3%
Agnes Scott College 2 21 21.7%
Sewanee: The University of the South 2 21 21.2%
Claremont McKenna College 2 21 21.2%
Wheaton College 2 21 20.8%
Wofford College 2 21 20.8%
Sweet Briar College 2 21 20.7%
Swarthmore College 2 21 20.7%
Randolph-Macon College 2 21 20.6%
Vassar College 2 21 20.3%
Knox College 2 21 20.0%
Ursinus College 2 21 19.8%
Macalester College 2 21 19.8%
Middlebury College 2 21 19.6%
Wellesley College 2 21 19.5%
Skidmore College 2 21 19.4%
Beloit College 2 21 19.2%
University of Richmond 2 21 19.1%
Connecticut College 2 21 19.1%
Sarah Lawrence College 2 21 18.8%
Carleton College 2 21 18.7%
Albion College 2 21 18.6%
Centre College 2 21 18.6%
Hollins University 2 21 18.6%
Colgate University 2 21 18.5%
Dickinson College 2 21 18.4%
Lawrence University 2 21 18.3%
Davidson College 2 21 18.2%
Presbyterian College 2 21 18.2%
Birmingham Southern College 2 21 18.0%
Barnard College 2 21 17.7%
Gettysburg College 2 21 17.6%
Illinois Wesleyan University 2 21 17.5%
College of Saint Benedict 2 21 17.5%
Juniata College 2 21 17.5%
Bryn Mawr College 2 21 17.1%
Williams College 2 21 17.1%
Hobart William Smith Colleges 2 21 17.0%
Hanover College 2 21 17.0%
Pitzer College 2 21 16.9%
Haverford College 2 21 16.8%
College of the Holy Cross 2 21 16.8%
Pomona College 2 21 16.8%
Whitman College 2 21 16.5%
Allegheny College 2 21 16.4%
Bowdoin College 2 21 16.3%
St Lawrence University 2 21 16.3%
Harvey Mudd College 2 21 16.3%
Wheaton College 2 21 16.2%
Saint Johns University 2 21 16.2%
Colby College 2 21 16.1%
Drew University 2 21 16.1%
Augustana College 2 21 15.9%
Colorado College 2 21 15.9%
Bates College 2 21 15.7%
Kenyon College 2 21 15.6%
The College of Wooster 2 21 15.5%
Lafayette College 2 21 15.5%
Bucknell University 2 21 15.2%
Muhlenberg College 2 21 15.2%
Grinnell College 2 21 15.1%
Wesleyan University 2 21 15.0%
Hamilton College 2 21 14.7%
Oberlin College 2 21 14.7%
Goucher College 2 21 14.6%
Furman University 2 21 14.3%
Occidental College 2 21 14.3%
Kalamazoo College 2 21 14.0%
Smith College 2 21 13.9%
Bard College 2 21 13.9%
Wabash College 2 21 13.8%
Willamette University 2 21 13.7%
Washington and Lee University 2 21 13.6%
Amherst College 2 21 13.6%
Mount Holyoke College 2 21 12.9%
St. Olaf College 2 21 12.6%
University of Puget Sound 2 21 12.2%
Rhodes College 2 21 12.2%
Wells College 2 21 12.0%
Denison University 2 21 11.6%
Gustavus Adolphus College 2 21 11.4%
DePauw University 2 21 11.2%
Ohio Wesleyan University 2 21 11.2%
Hope College 2 21 10.0%
Scripps College 2 21 9.3%

collegehelp

(Institutional Support + Operations and Maintenance)/Total

Public Universities

Indiana University-Bloomington 1 15 18.3%
University of Connecticut 1 15 14.8%
Rutgers University-New Brunswick 1 15 14.6%
Purdue University-Main Campus 1 15 14.5%
University of Georgia 1 15 14.1%
University of California-Riverside 1 15 13.7%
University of Maryland-College Park 1 15 13.4%
Georgia Institute of Technology-Main Campus 1 15 13.2%
Michigan State University 1 15 13.0%
University of Minnesota-Twin Cities 1 15 12.8%
The University of Texas at Austin 1 15 12.4%
The University of Tennessee 1 15 12.0%
University of Florida 1 15 11.6%
University of California-Berkeley 1 15 11.4%
Texas A & M University 1 15 11.1%
University of Pittsburgh-Pittsburgh Campus 1 15 10.9%
Virginia Polytechnic Institute and State University 1 15 10.8%
University of California-Santa Cruz 1 15 10.7%
University of Washington-Seattle Campus 1 15 10.0%
University of California-Santa Barbara 1 15 9.9%
University of Colorado at Boulder 1 15 9.6%
University of Wisconsin-Madison 1 15 9.4%
Iowa State University 1 15 9.2%
University of Delaware 1 15 9.1%
University of Illinois at Urbana-Champaign 1 15 8.6%
University of Michigan-Ann Arbor 1 15 8.1%
University of California-San Diego 1 15 7.3%
Ohio State University-Main Campus 1 15 6.5%
University of Virginia-Main Campus 1 15 6.5%
University of Iowa 1 15 6.5%
Pennsylvania State University-Main Campus 1 15 6.0%
University of California-Los Angeles 1 15 5.6%
University of California-Irvine 1 15 5.5%
University of California-Davis 1 15 5.3%
University of Missouri-Columbia 1 15 3.9%

SUNY at Binghamton 1 16 17.9%
Auburn University Main Campus 1 16 15.9%
Miami University-Oxford 1 16 14.9%
College of William and Mary 1 16 12.2%
Clemson University 1 16 11.1%

collegehelp

Private Universities

University of Notre Dame 2 15 19.8%
Rensselaer Polytechnic Institute 2 15 18.2%
Harvard University 2 15 17.7%
Georgetown University 2 15 16.1%
Brandeis University 2 15 15.5%
Brown University 2 15 14.6%
Cornell University 2 15 14.3%
Massachusetts Institute of Technology 2 15 13.0%
Yeshiva University 2 15 12.5%
Tulane University of Louisiana 2 15 11.7%
Northwestern University 2 15 11.7%
Tufts University 2 15 11.4%
Princeton University 2 15 11.3%
Dartmouth College 2 15 11.3%
Case Western Reserve University 2 15 11.0%
University of Southern California 2 15 10.5%
Rice University 2 15 10.1%
Boston University 2 15 9.3%
New York University 2 15 8.8%
Stanford University 2 15 8.7%
Yale University 2 15 8.5%
Columbia University in the City of New York 2 15 8.1%
Duke University 2 15 8.0%
University of Chicago 2 15 7.1%
Carnegie Mellon University 2 15 6.9%
Johns Hopkins University 2 15 6.8%
University of Miami 2 15 5.3%
Washington University in St Louis 2 15 4.8%
Emory University 2 15 4.6%
University of Pennsylvania 2 15 4.3%
University of Rochester 2 15 2.8%
California Institute of Technology 2 15 2.6%
Vanderbilt University 2 15 2.3%

Marquette University 2 16 18.9%
Boston College 2 16 16.6%
Lehigh University 2 16 15.4%
Fordham University 2 16 14.3%
University of Denver 2 16 13.6%
Clark University 2 16 13.4%
Stevens Institute of Technology 2 16 13.1%
Baylor University 2 16 12.9%
George Washington University 2 16 11.8%
Syracuse University 2 16 11.2%
Saint Louis University-Main Campus 2 16 10.6%
Wake Forest University 2 16 10.6%
Brigham Young University 2 16 7.8%

Pepperdine University 2 17 25.1%
Southern Methodist University 2 17 23.4%
American University 2 17 16.7%
Worcester Polytechnic Institute 2 17 14.8%

interesteddad

Closer to the truth? You do realize that the numbers for Wesleyan contain millions of dollars of interest and depreciation masquerading as direct instructional expense, right?

To be fair, the depreciation part is an expense. It's the prorated annual cost of the new phone system the college buys this year or the wireless network. It's just smoothing the cost out over the useful life of the item. The interest is paying for buildings plain and simple. Every college I've looked at is borrowing to build their new science centers because they can borrow the money for less interest than they can earn in endowment returns.

collegehelp:

That won't do it. Not every college lists plant operation expenses. Some, like Swarthmore, include it in Institutional Support. Others, like Wesleyan, stick a bunch of it in Instructional Expense, Academic Support, Research, etc. You'll never get a clean comparison between schools unless you go with total spending divided by total students.

vossron

But that would turn collegehelp's apparent intention (exposing bloat) on its head, since spending-per-student is considered positive (isn't it?). I think both are fairly close to nonsense (i.e., punishing support of students as well as rewarding the waste of huge endowments).

I'm curious about more meaningful (to me, at least) lists showing what undergrad schools accomplish, like average GRE (LSAT, MCAT, etc.) score divided by average SAT/ACT score. Comparing that to spending-per-student would be interesting!

johnwesley

interesteddad wrote:
>To be fair, the depreciation part is an expense. It's the prorated annual cost of the new phone system the college buys this year or the wireless network. It's just smoothing the cost out over the useful life of the item. The interest is paying for buildings plain and simple. Every college I've looked at is borrowing to build their new science centers because they can borrow the money for less interest than they can earn in endowment returns.<

Yes but, you're confusing (once again) capital expenses with operating expenses. I can assure you that Wesleyan maintains separate balance sheets for both.

More likely, Wesleyan purchases millions and millions of dollars worth of cutting-edge scientific equipment in conjunction with its 24 hour a day, 365 day a year research labs, and allocates their depreciation as an operating expense.

collegehelp

I just want to point out that Institutional Support is different from Academic Support. Institutional Support does not consist of programs designed to help students. It is administrative overhead. That is what I am trying capture: efficiency, "leanness", student-centered priorities. Or, the lack thereof.

hoedown

It's all well and good to try to demonstrate one's deep knowledge of higher education finance on this thread, but I don't think it's realistic to suggest that students and their families should make annual financial reports, budgets, and IPEDS finance reporting a significant tool in their college search and decision-making, or the first one they should start with.

What's "lean" and "efficient" to one person may look like skimping to another. And in fact, the same amount per student could have very different effects on two different campuses, depending on how it is spent, and one what. I think families would be well-served to focus on fit, value for the money, and what current students report about how much support, service, and quality instruction they feel they are getting for the money. This is one case where the nonquantifiable, squishy response of students on campus would mean more to me than a hard-dialed ratio analysis from a trained CPA.

I think this thread is interesting, to be sure, but not all of the posts in it strike me as realistic.

interesteddad

The reason to look at the financials is to find out whether the college is financially stable and in equilibrium. The admissions brochures usually don't tell you when a college is spending 8% of its endowment on operating expense, defering maintenance, and planning major cuts in the faculty over the next four years to balance the books.

interesteddad

hoedown:

Just to clarify. I do NOT think looking at college financials is an effective means of ranking colleges with any precision. Rather, it is an effective means of learning more in a discriptive sense about private colleges. A college supporting half of its operating budget from conservative endowment spending faces a different set of challenges than one supporting essentially all of its budget from tuition.

Other data points I would turn to for building a snapshot of a private college include:

a) diversity in the student body

b) fianancial aid data, how many/how much?

c) Percentage of majors in each department. Does the school tilt one direction or another?

d) Admissions data. Do I even have a prayer of getting in or should I move on?

e) Measures of campus culture: % of varsity athletes, binge drinking rates, alcohol poisoning hospitaliations, fraternity %, and so forth.

f) The most recent strategic planning document.

interesteddad

That may be what you are trying to capture, but all you've really captured is variations in accounting schemes.

For example:

Is $43 million a year to operate and maintain Wesleyan's campus "lean" or "bloated" compared to other schools? Beats me. My assumption is that Wesleyan's mananger are probably as concientious as anyone elses. But, we'll never know because your numbers only include $1.2 million of the $43 million Wesleyan spends.

Of course, $1.2 million to operate and maintain a campus looks "lean" when the real cost is $43 million.