Assessing a college/university's financial health while on the job market?

In our newest "how can we help you?" thread, a reader writes:

I seem to recall on the Cocoon, back in the height of the pandemic, someone offering a resource (from some kind of financial rating agency or consulting firm) for assessing the financial health of colleges/unis. This came up in the context of someone worrying about taking a job at a college that might do under during their time there. How do you all approach this issue? Can you recommend specific ratings sites/catalogs/etc.?

These are really great and important questions. I've personally heard of a few cases where people accepted a job at a university, only to have their job threatened or eliminated a couple of years later--not to mention, of course, the unethical ACU debacle reported here. Given the ongoing threat to the humanities, and near-constant news stream of universities closing programs and eliminating faculty positions, it behooves job-candidates to find out whether any job they accept is likely to be stable. But is there any good way to find this out? I don't recall the earlier discussion at the Cocoon, and am curious to hear any tips that readers have.

Anyone have any tips or other insights to share?

Comments

[MMS]

I think this is the thread: https://philosopherscocoon.typepad.com/blog/2022/01/the-job-market-financial-health-of-universities.html?cid=6a014e89cbe0fd970d0282e13e7f34200b#comment-6a014e89cbe0fd970d0282e13e7f34200b

[Hope to help]

I think a good Google search can help. Here are things I would look at:

1. Endowment size: 500 million or up. Beware if the school has less than 100 million.

2. Location: Rural schools, especially those in the Midwest, are facing steep population declines. Schools in populated cities will fare much better in the 2025 demographic cliff.

3. Enrollment trend: Has the school's enrollment grown, stayed steady, or declined through COVID-19? If it has declined, how precipitously?

4. Prestige: Schools such as Carlton and Swarthmore will be fine---many more students want to study at these prestigious schools than can be accepted. Other schools, however, lack prestige and are a harder sell for students.

5. Recent cuts: Did the school recently cut programs, staff, and/or faculty?

6. Tenure lines: Is the school offering a tenure line in philosophy? If the school is offering one year or three year renewable contracts, this can be a sign of financial distress.

7. School type: Private or public? Private schools with small endowments and low prestige are largely tuition driven.

[OP]

MMS, that is indeed what I had in mind! Thank you. Your ability to search old Cocoon threads exceeds mine.

[Realist]

Let's be realistic ...
many financially secure state colleges across America do not have endowments of 100 million. So I think if you use that as a standard you might as well leave the discipline. Indeed, many people may not want to work at such places, but most of us will work at such places.

[Assc prof]

Be wary of unit titles that read like artists on a Wu-Tang track:

Department of Philosophy, Geography, and Communication Studies

School of English, Religion, Philosophy, and Anthropology

What these kinds of titles signify are past cuts, and where there are past cuts, there are often future cuts.

[Michel]

The standard-ish measure for US universities that you'll be told by other academics elsewhere on the internet is that an endowment of $100 000/student is the lower limit for an endowment being able to make significant budget contributions to smooth things over (e.g. spending 4-5%). You can find out this kind of information by looking at 990 forms on sites like guidestar.org. So, yes, as Realist says, that's not realistic for most institutions--but that simply means that most institutions don't have much wiggle room when the going gets rough. Them's just the breaks.

The other major measure, of course, is enrollment. If enrollments are steady and the endowment:student ratio isn't bad, then you're in pretty safe territory. If enrollments are slipping, then endowment size matters a lot more.

Otherwise, you can run Google searches for the university's name along with keywords such as 'accreditation', 'financial', and 'tuition'.

[Asst Prof]

An endowment of less than 100 million at a private college is a danger sign, I agree. An endowment of less than 100 million at a regional state university is not necessarily a danger sign, due to the presence of state support. However, it does indicate a lack of an large donor base, more reliance on tuition dollars, the possibility of lay-offs in cases of pandemics or drops in enrollment, etc.

For regional state universities, there is a great deal of variability in terms of financial health, and it is not reducible to endowment numbers. I would search local news articles about the university, look at the university website to see if they are undergoing overhauls in structure, general education, etc., try to find slide decks of "state of the university" presentations by the President/Chancellor in which enrollment numbers are presented, ask the department faculty about future plans for curriculum development and potential tenure lines, search online for course enrollment numbers in the philosophy classes (are all classes full? are there many classes with only a handful of students?).

[Tim]

I would review the bond rating of the institution or the state system. Both S&P and Moody’s issue ratings on the creditworthiness of higher ed institutions. They have access to the financials beyond public disclosures. For S&P, you do need to create a free account to access. My struggling university has not been transparent about its dire financial situation, but watching the bond rating get lowered each year (ultimately to “junk bond” status) has been eye-opening. Here are their most recent sets of ratings:

https://www.spglobal.com/ratings/en/research/articles/230714-u-s-higher-education-rating-actions-second-quarter-2023-12790104

[there are colleges beyond the US]

Given that two high-profile instances of jobs being threatened happened in places outside of the US, perhaps some thoughts beyond that region would be helpful? There is ACU in Australia and Yale-NUS College in Singapore.

The latter had the backing of two significant institutions with finances and prestige, and Singapore had a track record of other partnerships like Duke-NUS. What actually prompted it will probably never be public (likely internal Singapore politics had much to do with it), but none of the advice here would have helped anyone in that case.

Perhaps not signing on to new institutions is a good rule, no matter how stable they appear? (Though NYU's global campuses appear to be doing well.)

[At least I still have a job]

I am at a university that just retrenched ~18% of its faculty, some of whom had just started this August. It is horrible to go through.

I saw a retrenchment clause in my contract, and I asked the dean if there had ever been a retrenchment, and he said there was several years ago, but that the university was doing well now and that they were increasing their faculty each year by 10-20%. All of this was true. However, here is what I should have asked as follow up:

1. Was there a retrenchment before this last one? [turns out, the answer would have been 'yes']
2. When was that retrenchment?
3. Was there a retrenchment before that?...
4. Repeat. [You may find a pattern here.]

Next, ask if there is a union (we do). Ask what percentage of faculty are in the union.