Baylor posts its audited financial statements on its website, but how many people realize they’re there – or take the time to look them over? This post highlights some of the information in those financial statements and raises questions that can’t be answered by the financial statements.
It’s important to start by noting that rumors have circulated over the past several years that Baylor is in financial trouble because of the debt it has incurred over the past 13 years beginning in 2002. It’s true that Baylor’s total liabilities are approximately $850 million, but it’s also true that Baylor’s net assets (total assets minus total liabilities) are twice that amount or $1.7 billion. Baylor has a healthy balance sheet.
That said, here are some questions that should be asked – and deserve to be answered. We hope that you’ll join the discussion by adding to the comments at the end of the post. But we will ask you to identify yourself before posting.
- How much debt are Baylor students incurring in order to help maintain Baylor’s healthy balance sheet?
- What percentage of Baylor graduates are graduating with student debt, and what is the average debt of those graduates? Baylor doesn’t report the average debt of its graduates to U.S. News — or anywhere else for that matter — so there’s no way to know how much current students are borrowing against their futures in order to finance a Baylor education. Do all of the regents know the answer to this question?
- Is Baylor counseling students about taking on too much debt and making sure students (and their parents) understand what the monthly payment on their student loans will be at various debt levels?
Baylor has been able to balance its operating budget and even run a surplus for the past 10 years even though the average discount on tuition and fees has risen to approximately 40% versus a projected discount rate of 24% used in the Vision 2012 financial model (as revised in 2004). Baylor has been able to do that by enrolling a couple of thousand more students per year than were projected in that Vision 2012 financial model. Here are the questions that need to be asked that can’t be answered by the financial statements.
- How dependent has Baylor become on tuition dollars funded by taxpayer-guaranteed student loans to generate the revenue required by the operating budget?
- How much will Baylor be impacted if those taxpayer-guaranteed student loans are curtailed as the national debt approaches $20 trillion and our politicians are forced to look for ways to trim other areas of the federal budget when interest rates normalize and interest expense in the federal budget doubles or triples over the next few years?
- What if students and their families simply wake up to the fact that even though taxpayer-guaranteed student loans are available, that it’s probably not a wise financial decision to borrow $60,000 or $80,000 or even $100,000 for a college education?
Baylor raised $104 million — or approximately $21 million per year — for its endowment over the five years ended May 31, 2014. For the year ended May 31, 2014, Baylor received $19.9 million in contributions to endowment versus $62.9 million as projected in the revised Vision 2012 financial model. Here are the questions that need to be asked that can’t be answered by the financial statements.
- Is that an acceptable level of donations to endowment for a university of Baylor’s standing?
- How much have those donations been impacted by the ongoing dispute between Baylor and the BAA, especially in light of the fact that the greatest transfer of wealth in history is occurring right now?
- Have the significant amount of restricted gifts for the stadium, business school and other specific facilities and programs hurt Baylor’s ability to attract gifts to the general endowment?
Again, we invite you to join the discussion in the Comments and raise other questions that you have after reviewing the numbers.
Editor’s Note: Readers can see the full set of Baylor’s financials in just four clicks by going to the Baylor.edu website, clicking on About on the toolbar, then clicking on Senior Administration followed by Facts & Figures, and then Financial Highlights. You can then choose the specific fiscal year that you want to look at.