Which top colleges have a significant budget deficit? Which ones are red flags?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How did a tiny school like Middlebury run up such a large deficit?

A $4.49 million budget deficit against an overall budget of $344 million isn't that significant (1.3% of overall budget). Reasons mentioned are rising healthcare costs, staff and faculty pay increases, and debt servicing.

But the deficit has to be funded somehow and if it is recurring, it could lead to financial instability.

Or to quote Dickens: “Annual income twenty pounds, annual expenditure nineteen nineteen and six , result happiness.
Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery”.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How did a tiny school like Middlebury run up such a large deficit?

A $4.49 million budget deficit against an overall budget of $344 million isn't that significant (1.3% of overall budget). Reasons mentioned are rising healthcare costs, staff and faculty pay increases, and debt servicing.

But the deficit has to be funded somehow and if it is recurring, it could lead to financial instability.

It was also larger than $4.49 million. That’s with the easier stuff (but by no means easy) out of the way. More to come.

[Anonymous]

Unless the school is having real issues I wouldn’t focus too much on the deficits. You’re not buying the school nor funding the deficits. Rather, your kid will attend for about 4 years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How did a tiny school like Middlebury run up such a large deficit?

A $4.49 million budget deficit against an overall budget of $344 million isn't that significant (1.3% of overall budget). Reasons mentioned are rising healthcare costs, staff and faculty pay increases, and debt servicing.

But the deficit has to be funded somehow and if it is recurring, it could lead to financial instability.

It was also larger than $4.49 million. That’s with the easier stuff (but by no means easy) out of the way. More to come.

What is the value of the Middlebury Institute? Certainly, real estate in downtown Monterrey is worth a pretty penny. I assume the revenue from the sale will go to the undergraduate college?

[Anonymous]

Anonymous wrote:

Anonymous wrote:How did a tiny school like Middlebury run up such a large deficit?

A $4.49 million budget deficit against an overall budget of $344 million isn't that significant (1.3% of overall budget). Reasons mentioned are rising healthcare costs, staff and faculty pay increases, and debt servicing.

Middlebury under Laurie Patton definitely was not running the ship the way that it should have been run. It is pretty apparent that she ignored a couple of items that needed addressing for pretty much her entire tenure. MIIS was losing an average of $6M-$8M per year when she arrived at Middlebury and she never forcefully addressed the issue during her tenure. The MIIS debacle has cost Middlebury at least $150M in direct and indirect costs over that period of time. She also agreed to the two tiered pension system in 2017 capping new hires at an 11% match while existing hires stayed at a 15% match. The original reasoning for the rich match was that it allowed Middlebury to pay a slightly below market salary in return for rich benefit packages. However over time salaries were brought to market but the 15% match stayed in place for many employees. This was estimated to cost about $2.5M per year. Overall they should have done much better and people have every right to question Patton's judgement, especially in light of how quickly Ian Baucomb addressed both issues.

Deficits aren't unique to Middlebury but Middlebury stands out in consistency. A quick check of the 'middle wealth' NESCACs (Colby, Hamilton, Middlebury, Wesleyan) shows that all of them except Wesleyan have ran at least one deficit during the 2020-25FY period. Hamilton had one deficit year coming out of Covid, Middlebury had a deficit every year and Colby has run deficits for the last three years though not as big as Middlebury. None of the deficits endangered their finances in any significant way and all have solid investment grade Bond ratings.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How did a tiny school like Middlebury run up such a large deficit?

A $4.49 million budget deficit against an overall budget of $344 million isn't that significant (1.3% of overall budget). Reasons mentioned are rising healthcare costs, staff and faculty pay increases, and debt servicing.

Middlebury under Laurie Patton definitely was not running the ship the way that it should have been run. It is pretty apparent that she ignored a couple of items that needed addressing for pretty much her entire tenure. MIIS was losing an average of $6M-$8M per year when she arrived at Middlebury and she never forcefully addressed the issue during her tenure. The MIIS debacle has cost Middlebury at least $150M in direct and indirect costs over that period of time. She also agreed to the two tiered pension system in 2017 capping new hires at an 11% match while existing hires stayed at a 15% match. The original reasoning for the rich match was that it allowed Middlebury to pay a slightly below market salary in return for rich benefit packages. However over time salaries were brought to market but the 15% match stayed in place for many employees. This was estimated to cost about $2.5M per year. Overall they should have done much better and people have every right to question Patton's judgement, especially in light of how quickly Ian Baucomb addressed both issues.

Deficits aren't unique to Middlebury but Middlebury stands out in consistency. A quick check of the 'middle wealth' NESCACs (Colby, Hamilton, Middlebury, Wesleyan) shows that all of them except Wesleyan have ran at least one deficit during the 2020-25FY period. Hamilton had one deficit year coming out of Covid, Middlebury had a deficit every year and Colby has run deficits for the last three years though not as big as Middlebury. None of the deficits endangered their finances in any significant way and all have solid investment grade Bond ratings.

oof that sounds rough. huge loss over the long-term for midd. I wonder why they sunk so much money into a losing business half a country away?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How did a tiny school like Middlebury run up such a large deficit?

A $4.49 million budget deficit against an overall budget of $344 million isn't that significant (1.3% of overall budget). Reasons mentioned are rising healthcare costs, staff and faculty pay increases, and debt servicing.

Middlebury under Laurie Patton definitely was not running the ship the way that it should have been run. It is pretty apparent that she ignored a couple of items that needed addressing for pretty much her entire tenure. MIIS was losing an average of $6M-$8M per year when she arrived at Middlebury and she never forcefully addressed the issue during her tenure. The MIIS debacle has cost Middlebury at least $150M in direct and indirect costs over that period of time. She also agreed to the two tiered pension system in 2017 capping new hires at an 11% match while existing hires stayed at a 15% match. The original reasoning for the rich match was that it allowed Middlebury to pay a slightly below market salary in return for rich benefit packages. However over time salaries were brought to market but the 15% match stayed in place for many employees. This was estimated to cost about $2.5M per year. Overall they should have done much better and people have every right to question Patton's judgement, especially in light of how quickly Ian Baucomb addressed both issues.

Deficits aren't unique to Middlebury but Middlebury stands out in consistency. A quick check of the 'middle wealth' NESCACs (Colby, Hamilton, Middlebury, Wesleyan) shows that all of them except Wesleyan have ran at least one deficit during the 2020-25FY period. Hamilton had one deficit year coming out of Covid, Middlebury had a deficit every year and Colby has run deficits for the last three years though not as big as Middlebury. None of the deficits endangered their finances in any significant way and all have solid investment grade Bond ratings.

oof that sounds rough. huge loss over the long-term for Midd. I wonder why they sunk so much money into a losing business half a country away?

That is a great question. I generally considered Laurie Patton to be a generally mediocre but not harmful president but after spending a bit of time digging into the whole MIIS debacle and the retirement match she really was asleep at the wheel when it came to their finances. They are very wealthy so it did no lasting harm but it's reasonable to think that they could be sitting on a $2B endowment if she had taken the MIIS situation seriously.

[Anonymous]

Anonymous wrote:We're compiling a college list now with our junior. Some colleges we've come across and researched have significant budget deficits. We are trying to figure out which ones to worry about.

We know that a college budget deficit can be a significant red flag, particularly if the uni is a small, private, or regional college with a low endowment. And a structural, long-term deficit often leads to reduced academic quality, fewer student services, etc.

Here are the colleges with budget deficits that we are aware of (see below). Are we missing any others we should know about? Which ones to truly worry about (I'm assuming some big ones will figure it out with its endowment but not sure if that's smart thinking)?

Colleges with Budget Deficits (rough amounts reported from the past year):

USC: $200 million
UChicago: $160 million
Stanford $140 million
Penn State: $140 million
Harvard: $113 million
American U: $80 million
GW: $76 million
NYU: $71 million
Boston U: $30 million
Middlebury: $14 million
WashU (St. Louis): $7 million
Brandeis: $2 million
Pitzer: $1.3 million

You can add UCLA. UCLA's budget deficit is $220 million for this year, they've already put in a hiring freeze, and some other major cuts.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We're compiling a college list now with our junior. Some colleges we've come across and researched have significant budget deficits. We are trying to figure out which ones to worry about.

We know that a college budget deficit can be a significant red flag, particularly if the uni is a small, private, or regional college with a low endowment. And a structural, long-term deficit often leads to reduced academic quality, fewer student services, etc.

Here are the colleges with budget deficits that we are aware of (see below). Are we missing any others we should know about? Which ones to truly worry about (I'm assuming some big ones will figure it out with its endowment but not sure if that's smart thinking)?

Colleges with Budget Deficits (rough amounts reported from the past year):

USC: $200 million
UChicago: $160 million
Stanford $140 million
Penn State: $140 million
Harvard: $113 million
American U: $80 million
GW: $76 million
NYU: $71 million
Boston U: $30 million
Middlebury: $14 million
WashU (St. Louis): $7 million
Brandeis: $2 million
Pitzer: $1.3 million

You can add UCLA. UCLA's budget deficit is $220 million for this year, they've already put in a hiring freeze, and some other major cuts.

The public R1s are definitely going to hurt and it will be interesting to see what various states do. Do they focus funding? Do they cut across the board peanut butter style? Do they rebalance programs? The one thing that they are unlikely to do is devote more resources because the right thing isn’t fiscally or politically possible right now.

[Anonymous]

Duke had a 330 million projected deficit-- made lots of cuts and ended up 75 in the black. Faculty retired, buyouts, etc. Changed the whole advising system for 1st and 2nd years due to large number of staff leaving. It can be done.

[Anonymous]

Anonymous wrote:Duke had a 330 million projected deficit-- made lots of cuts and ended up 75 in the black. Faculty retired, buyouts, etc. Changed the whole advising system for 1st and 2nd years due to large number of staff leaving. It can be done.

Yes USC is similarly slashing resources like Duke. USC also changed their advising system (i.e., eliminated all full-time advisors). Now existing faculty have to take on the role of adviser off the side of their desk for no additional pay while they fired all the full-time advisers whose sole job had been to guide and advise students and be available 5 days per week.

[Anonymous]

I think Bard & Bennington will potentially close in ~10 years. Both have had deficits the past few years and don’t look to be turning around.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We're compiling a college list now with our junior. Some colleges we've come across and researched have significant budget deficits. We are trying to figure out which ones to worry about.

We know that a college budget deficit can be a significant red flag, particularly if the uni is a small, private, or regional college with a low endowment. And a structural, long-term deficit often leads to reduced academic quality, fewer student services, etc.

Here are the colleges with budget deficits that we are aware of (see below). Are we missing any others we should know about? Which ones to truly worry about (I'm assuming some big ones will figure it out with its endowment but not sure if that's smart thinking)?

Colleges with Budget Deficits (rough amounts reported from the past year):

USC: $200 million
UChicago: $160 million
Stanford $140 million
Penn State: $140 million
Harvard: $113 million
American U: $80 million
GW: $76 million
NYU: $71 million
Boston U: $30 million
Middlebury: $14 million
WashU (St. Louis): $7 million
Brandeis: $2 million
Pitzer: $1.3 million

You can add UCLA. UCLA's budget deficit is $220 million for this year, they've already put in a hiring freeze, and some other major cuts.

The public R1s are definitely going to hurt and it will be interesting to see what various states do. Do they focus funding? Do they cut across the board peanut butter style? Do they rebalance programs? The one thing that they are unlikely to do is devote more resources because the right thing isn’t fiscally or politically possible right now.

UCLA is running 30 to 50 million a year deficits in the athletic department. Last year 50 million out of a total of 220 million. This is becoming an issue for schools like UCLA, Rutgers, Cal, Washington and Florida State.

[Anonymous]

Anonymous wrote:I think Bard & Bennington will potentially close in ~10 years. Both have had deficits the past few years and don’t look to be turning around.

I worry about Bard and Bennington. The closing of Hampshire is not a good sign. And they all have strong brands. This is why you really do need strong boards and presidents. A weak board or leadership is disastrous for colleges in 2026.

[Anonymous]

Anonymous wrote:I think Bard & Bennington will potentially close in ~10 years. Both have had deficits the past few years and don’t look to be turning around.

Bard just raised $500 million and got $500 million to match that from Soros. An endowment of over $1 billion is more than adequate for a school that size.