In the wake of the abrupt closure of the University of the Arts in June and the ongoing volatility in the higher education market, The Inquirer decided to take a closer look at the financial health of other small, nonprofit colleges in the region. The newspaper enlisted the expertise of Julee Gard, a finance executive at a small college in Illinois, to assess the financial viability of 13 local institutions using her proprietary financial model.

Navigating the Turbulent Waters of Small College Finances

Introducing Julee Gard: A Financial Steward for Small Colleges

Julee Gard, a seasoned certified public accountant with over 30 years of experience, currently serves as the Vice President for Administration and Finance at the University of St. Francis in Joliet, Illinois. Gard's expertise extends beyond her day-to-day responsibilities, as she recently obtained her doctoral degree in higher education management from the University of Pennsylvania's Graduate School of Education in 2023. During her time at Penn, Gard developed a financial viability index, a tool designed to assess the financial health of smaller and medium-sized, primarily tuition-dependent private colleges.

The Financial Viability Index: A Comprehensive Assessment Tool

Gard's financial viability index is a comprehensive tool that evaluates colleges across five distinct categories: poor, marginal, good, very good, and excellent. The index, scored from 0 to 100, considers eight key factors, with a particular emphasis on how well a school covers its operating expenses through revenue from tuition and room and board. The model places a strong emphasis on metrics such as earnings before interest, depreciation, and amortization, as well as cash flow. Additionally, the index takes into account factors like return on net assets and the amount of reserves a school maintains relative to its annual operating expenses.

Assessing the Financial Health of 13 Local Colleges

For The Inquirer's analysis, Gard applied her financial viability index to 13 small, private colleges in the region, including Widener, La Salle, Arcadia, Delaware Valley, Gwynedd Mercy, Eastern, Holy Family, Immaculata, and Neumann Universities, as well as Chestnut Hill, Rosemont, and Ursinus Colleges, and Moore College of Art and Design. The assessment spanned the fiscal years from 2015 to 2023, or 2024 in cases where the latest audited financial statements were publicly available.

Findings: A Mixed Bag of Financial Resilience

Gard's analysis revealed a diverse landscape of financial health among the 13 colleges. Four institutions – La Salle, Rosemont, Delaware Valley, and Neumann – were categorized as "poor" for the 2023 fiscal year, indicating significant financial challenges. Notably, Neumann University managed to improve its standing, moving up to the "marginal" category for the 2024 fiscal year, while La Salle remained in the "poor" category.On the other end of the spectrum, Holy Family University stood out as the only institution that scored in the "excellent" category for all years of the study. Eastern University, Moore College of Art and Design, and Gwynedd Mercy University were classified as "very good," while Ursinus College and Widener and Immaculata Universities were deemed "marginal." Chestnut Hill and Arcadia Universities fell into the "good" category.

Interpreting the Findings: Actionable Insights for College Leaders

Gard's research emphasizes that her financial viability index should not be used to predict college closures. However, her findings suggest that the model can provide valuable insights for small, tuition-dependent institutions, enabling their leaders to respond proactively and effectively to financial challenges. The data can help college administrators identify areas for improvement and implement timely, targeted strategies to enhance their institutions' financial resilience.As the higher education landscape continues to evolve, the insights gleaned from Gard's analysis offer a valuable resource for small, nonprofit colleges in the region. By understanding their financial standing and identifying areas for improvement, these institutions can navigate the turbulent waters of the current market and position themselves for long-term sustainability.