Financial report on schools draws fire

MOBILE, Ala. - The University of West Florida gets the highest grades in our area in one study judging the financial health of local colleges and universities.

The Chronicle of Higher Education published a story Monday, citing an analysis by Bain & Company of nearly 1,700 public and private nonprofit institutions from 2005 to 2010. “The study found that one-third of the institutions have been on an ‘unsustainable financial path’ in recent years, and an additional 28 percent are ‘at risk of slipping into an unsustainable condition’," said the Chronicle.

Spring Hill College in Mobile while cutting expenses 7% during the 5 year period, saw its ratio of liabilities to assets, increase. While Spring Hill College President Richard Salmi, S.J. was unavailable for comment, Spring Hill spokesman John Kerr said, ”We do know that all private colleges suffered with some endowment loss (equity) during the past few years when the economic crunch hit and Spring Hill was no exception but the college’s liabilities declined, not increased. Spring Hill has been effectively repositioning itself financially in recent years and that effort included decreasing expenditures 7%. The college is in the lowest part of this unusual report’s ‘at risk’ category.”

Both expenses and the ratio of liabilities to assets increased for the University of South Alabama and The University of Mobile , putting the two schools in a category of colleges that, according to the study, “have been on an unsustainable financial path in recent years”.

Keith Ayers, Director of Public Relations for USA told Fox 10 News, "This study has been dismissed as flawed because it looks at a period of time just after the collapse of the stock market and exaggerates the threat to higher education. For instance, it states that the nation's top universities including Harvard and Princeton are ‘unsustainable,’ and makes the same claim about Alabama's four strongest research universities, Auburn, Alabama, UAB and USA. The study is misleading, alarmist and not worthy of legitimate consideration."

The Chronicle noted in its story that, “Bain and Sterling [Partners, a private-equity firm] maintain the analysis sends a sobering signal, even if some might see the findings as overly alarmist and self-serving. ‘Financial statements have gotten significantly weaker in a very short period of time,’ says Tom Dretler, an executive in residence at Sterling, a firm that is a major investor in Laureate Education Inc. and other educational companies.”

U of M Director of Media Relations Kathy Dean said, “The University of Mobile is on sound financial footing and we continue to be very fiscally conservative while we are also in the process of building a new 94-bed residence hall to meet the growing need for on-campus housing. The University of Mobile is doing well, is financially stable, and we are looking forward to our 51st year this fall. We are surprised that the study reaches these dire conclusions with no apparent investigation into the individual circumstances of the many institutions named.”

Based on the study’s criteria, The University of West Florida was determined to be in the “financially sound” category.

Data from Pensacola State College , formerly Pensacola Junior College, were not included in the study.