Forbes magazine college financial grade

We have taken on some debt in the last few years. That’s likely the source of it. HSU and McM have worked very hard to right their financial ships the last few years.
We do, however rank 204 out of 905 private schools of at least 500 students. The Forbes article noted that 70% of schools on the list saw their rating drop on account of COVID. 

Interesting results of other schools in our orbit:
Oklahoma Christian 1.35
Lipscomb 1.51
Dallas Baptist 1.55
Cal Baptist 1.85
UIW 1.85
Mary Hardin Baylor 1.86
Lubbock Christian 1.98
Houston Baptist 2.00
Seattle 2.11 (also Gonzaga 2.11)
Pepperdine 2.20
Harding 2.34
TCU 2.85
Baylor 2.93
Trinity 3.31

Having debt with inflation as it has been this year is not the worst thing. 

My friend who is on the HSU Board of Trustees would gladly trade financial conditions with ACU.

The only thing that I can think of for ACU to have an absurdly low "GPA" would be the purchase of bonds recently. These bonds were available for several projects underway -- the Moody renovation, the Cullen renovation (although I don't think it will keep the Cullen name), 2 new dorms -- one already in use and 1 in progress and particularly the SERC. Fund raising for both Moody and Cullen is almost 100% in place, but much of that money is pledges over 3 year periods. The bonds allow for the building to begin now. The fundraising for the dorms is planned to pay for 40% of the cost and it has hit that total for Bullock Hall and is closing in on the goal for Dorm #2. The plan is always for revenue generating buildings like dorms to pay for 60% of the cost from expected income. SERC is very early in the fund raising process, but the need was great enough that the school wanted to move forward in getting the facility built and fund raise as it goes -- using bond money to pay the immediate bills.

I would love to see what process Forbes used to formulate the "GPA". The past 4 years at ACU have been the 4 highest years of fundraising in the history of the school. The fund raising has been off the charts. The return on endowment continues to be among the best in the country for schools with an endowment between $100 million and 1 billion. The current endowment is in the $700 million ballpark. That should put ACU well above most of the overtly faith-based schools.

I do think that one thing that hurt Lipscomb's "GPA" is their high debt ratio -- they rolled the dice and borrow hundreds of millions of dollars. My only hope is that we don't bite off a little more than we can chew in debt.

Here is Forbes methodology:

1. Endowment Assets Per FTE (15%): This measures schools’ endowment assets at year end per full-time equivalent student. Stanford, MIT, Harvard and Yale each have more than $1.5 million per student, and Princeton has more than double that. Private colleges generally needed more than $335,000 per student to receive full credit in this category.
2. Primary Reserve Ratio (15%): This ratio broadly measures a college’s liquidity, grading how well its expendable assets could meet its annual expenses without straining its normal operations. Expendable assets are defined as total unrestricted net assets, plus temporarily restricted net assets, plus debt related to property, plant and equipment, minus property, plant and equipment net of accumulated depreciation, divided by total annual expenses. Pennsylvania’s liberal arts and science bastion Swarthmore College, which scored and A+ grade and a primary reserve ratio of 11, could cover 11 years of expenses with its existing assets. By contrast, Georgetown University, which scored a B- minus, has a ratio of 0.64 based on most recent government data. Any college with a ratio of at least 2.4 received full credit.
3. Viability Ratio (10%): This metric analyzes a college’s expendable assets divided by its debt load, similar to the primary reserve ratio’s measurement relative to annual expenses. Schools with no debt received full credit, as did any college with a ratio of at least 2.6. Because of more than $425 million in debt related to its facilities, venerable Williams College (B+) has a viability ratio of only 0.25 versus 6.04 for nearby rival Amherst College (A+).
4. Core Operating Margin (10%): This measures whether tuition, donations and investment revenues cover a college’s educational expenses by subtracting its core expenses from its core revenues and dividing the difference by its core revenues. Little known National University of San Diego, with its adult learner focus, had an operating margin of 59% versus Duke University which had negative margins for fiscal 2020.
5. Tuition As A Percentage of Core Revenues (15%): Diversified revenue streams make any organization more financially secure, and colleges are no different. Schools that get the lion’s share of their revenue from tuition are more vulnerable to enrollment declines and price competition. Tuition accounts for less than 10% of revenues at only 9 colleges, including Yale, Caltech, MIT, Hillsdale College and Brigham Young University.
6. Return On Assets (10%): This metric divides a college’s change in net assets during the year by its assets at the beginning of the year. Full credit went to only 25 colleges with at least a 23% return, including Bard College, National University and Nashville’s historically Black Fisk University.
7. Admissions Yield (10%): Any college would rather be an applicant’s first choice than their safety school. Admissions yield measures the percentage of accepted students who choose to attend, and a higher number is a sign of a healthy enrollment. While top ivy league colleges tend to have yields in the 70% range, tuition-free College of the Ozarks, which Forbes dubbed “Bible Belt Ivy” and has a “work for tuition” requirement, had an admissions yield of 87%. Any school with a yield of at least 52% received full credit.
8. Percent Of Freshmen Getting Grant Aid (7.5%): Colleges that hand out scholarships and grants to a large chunk of their incoming freshmen may be wealthy and generous, but an unusually high percentage in this category is often more indicative of desperation to entice students to enroll. Every school needs well-heeled families paying the full sticker price to boost their coffers. Any college where this is less than 40%, like Wake Forest (34%) receives full credit, but colleges like Ohio’s Oberlin College or Denison University, where 85% and 99% of incoming freshmen receive aid, are penalized.
9. Instruction Expenses Per FTE (7.5%): This measures how much schools actually spend on educating each student. A higher amount reflects a college able to invest in its core purpose. This year, Washington University in St. Louis wins top honors with $140,000 spent per student, with Stanford coming in second at $115,000 per student. Meanwhile the largest Ivy League in terms of students, Cornell University, is spending $31,000 per student on instruction annually.

Hopefully this explains it. But probably not.

ACU and its students/supporters/constituents should be beyond grateful for Jack Rich and what he has done for ACU over the past decades. His leadership and decision making re: the endowment fund has been superb. Not only that, he and his family have donated significant funds for various projects at ACU. He should be given some type of special honor for all that he has done for ACU. He is also a very humble man, a true example of a servant leader. I wonder how many graduates and current students even have any knowledge of this.