Ithaca College has earned a grade of C+ for the status of its fiscal health, according to a recent article from Forbes. 

The article, “Dawn Of The Dead: For Hundreds Of The Nation’s Private Colleges, It’s Merge or Perish,” was written by Matt Schifrin, vice president and assistant managing editor for Forbes Media, and Forbes reporter Carter Coudriet. Published Nov. 27, the article graded the financial condition of all private, nonprofit colleges in the United States with enrollments over 500 students.

The article found that the wealthiest and most elite private institutions, like Stanford University and Yale University, have improved financially over the last few years. On the other hand, most small private institutions have grown poorer. Forbes has been analyzing private college finances every year since 2013, with 2018 as the sole exception. Ithaca College received a grade of B in 2016; a B- in 2015 and 2017; and a C+ in 2013, 2014 and 2019.

To grade the schools, nine components were considered and weighted: endowment assets per full-time enrollment student headcount (15%), primary reserve ratio (15%), viability ratio (10%), core operating margin (10%), tuition as a percent of core revs (15%), return on assets (10%), admission yield (10%), percent of freshman getting institutional grants (7.5%) and instruction expenses per full-time enrollment student headcount (7.5%). 

Bill Guerrero, vice president of finance and administration, said he was surprised by the college’s C+ rating.

“I would have put us in the ‘B’ category,” Guerrero said. “We have work to do, but we are in much better circumstances than other schools.”

In Forbes’ 2019 assessment, 933 colleges were evaluated. Out of the 933 colleges ranked, 498 of them received grades in the “C” range. This is approximately 53% of schools, up from 47% in 2013. Emerson College, a midsized liberal arts college in Boston, also received a grade of C+. Middlebury College, a midsized liberal arts school in Middlebury, Vermont, received a grade of B+, and Colgate University, located in Hamilton, New York, received a grade of A-. 

Data is sourced from the U.S. Department of Education’s Integrated Postsecondary Education Data System (IPEDS) database. Forbes’ 2019 article used the average of 2016 and 2017 data points, as these were the two most recent final release fiscal years. 

“We wish that we were using more current data, but we’re sort of beholden to the government on that one,” Coudriet said. 

In the two years of data covered in the 2019 article, the Ithaca College averaged over $40,000 of endowment assets per full–time enrolled student. Endowment assets refer to the total of a nonprofit institution’s investable assets, and the number is divided among all students who qualify as full time. This is a median among other colleges on the list, Coudriet said. 

The college performed well in the primary reserve ratio category, Coudriet said. The primary reserve ratio is how long a school can survive on its expendable assets. To determine these numbers, total unrestricted net assets, temporarily restricted net assets and debt related to plant, property and equipment are first added together. Then, actual values of plant, property and equipment net of accumulated depreciation are subtracted. The resulting number is then divided by the school’s total annual expenses.

“Essentially, if in a pinch, if a school needed to liquidate its assets to stay open, that number is how long it could cover its annual expenses with that amount of money,” Coudriet said.

The University of Pennsylvania and Emory University, both top schools on the ranking, have primary reserve ratios only slightly over 1.0, meaning their expendable assets would cover their expenses for approximately a year if need be, Schifrin said. Ithaca College’s primary reserve ratio is less than one, suggesting it would last less than a year, Coudriet said.

Guerrero cited the college’s bond rating by Moody’s Investor Services as an indicator of its financial health. A bond rating often includes an analysis of various financial factors and is meant to serve as a guide for potential investors. Moody’s gave the college an A2 rating, stating in its report that the college’s outlook is stable. An A2 rating is the second–highest rating an institution can receive.

“As you will see on our definitions guide, a stable outlook indicates a low likelihood of a rating change over the medium term,” said Ashleigh Thurston, client service employee at Moody’s. 

Most of the “C” and “D” colleges on the list are tuition-dependent schools. Approximately 86% of the college’s revenue comes from student tuition and fees, but Guerrero said the college is making efforts to diversify revenue sources. 

Moody’s report also outlines that while the college relies heavily on student charges, it “continues to generate positive annual operating performance despite stagnant to declining net tuition per student due to increasing competition for students.” The number of high school students graduating in the Northeast is projected to decrease over the next 10 years, according to the Western Interstate Commission on Higher Education. With a smaller group of high school students searching for colleges, schools must compete even more for prospective students. 

“We are experiencing lower enrollment,” Guerrero said. “We have our strategic plan, Ithaca Forever, that is to guide us and rightsize our operations. Therefore, with decline in enrollment when we are student–dependent, our operations need to adjust accordingly.”

New York state private institutions now compete with New York state’s Excelsior Scholarship, which is only applicable at state institutions and select statutory colleges at private institutions. The Excelsior Scholarship, in combination with other student financial aid programs, potentially offers prospective New York state students an education free of tuition costs. Despite the Excelsior Scholarship’s extensive eligibility requirements, like required residence in New York state after an individual’s education has been obtained, the scholarship resulted in a weakening of the college’s operating margins to approximately 5% from 11% in the 2017 fiscal year, according to Moody’s report.

“When the Excelsior Scholarship was announced by Governor Cuomo in 2017, it definitely affected private schools and the community colleges,” Guerrero said.

However, the college combatted this by awarding $6 million of additional financial aid to prospective students in the 2018 fiscal year, Guerrero said.

When considering an institution as a prospective student, financial status is important to consider, Coudriet said. While there are some schools that are prone to close, sooner rather than later, most schools will be able to get by, he said.

“Ithaca’s got a C+,” Coudriet said. “That’s definitely not even close to the worst school on the list. I certainly wouldn’t be looking to transfer because of the data.”