A committee of the Louisiana Board of Regents has placed four schools on “fiscal watch” based on low scores on a 0-to-5 scale for fiscal health, Gannett Louisiana reports.
Regents staff examined the most recent state audits for 36 public institutions in Louisiana’s four higher education systems. The scores range from 0 or “poor financial health” to 5, which is “excellent financial health.”
Southern University at New Orleans fared the worst in the report, scoring a zero, while LSU Health Sciences-Shreveport scored a 1. Grambling State University scored a 1.3 and Southern University at Shreveport scored a 1.5.
The LSU System scored a 2.9, and the Southern University System scored a 1.8 overall. Baton Rouge Community College had one of the highest scores in the state, a 4.5.
Answers as to why the four schools placed on fiscal watch fared so poorly are expected to come Sept. 21 during Board of Regents budget hearings. Leaders at the four schools are required to submit written corrective action plans to the board during those hearings.
Matt Adams, a policy analyst with the Board of Regents, says the corrective action plans are to include causes for financial stress and details about how leaders plans to operate within that stress and eventually come out of it.
Likely contributing factors are declining state funding, a 26% increase in mandated costs to the state since 2008 and drops in full-time enrollment at some institutions. Since 2008 SUNO has seen a 13 %t drop in enrollment; Grambling has seen a loss of 19%, Adams says.
“Obviously enrollment is not the only reason an institution would be in fiscal stress,” he says. . “As we know right now, it’s a combination of things.”
The financial health scores are based on year-end audited financial statements for each higher education system. Staff used the most recent audits available against a set of standards created to measure and monitor the financial health of campuses, using as its framework a model adopted by the Ohio Department of Education in 2000.
It takes in such data as expendable net assets, total long-term debt, total revenue, operating and nonoperating expenses and changes in total net assets. Staff use this data to create three ratios—viability, primary reserve and net income ratio—from which four scores are generated for each campus. They’re weighted differently and are used to come up with a final composite score ranging from 0 to 5.
Southern President-Chancellor Ray Belton told a committee of the Board of Regents that recurring cuts from the state, drops in enrollment from higher admissions standards from the GRAD Act and higher tuition have “wreaked havoc” on Southern institutions.
The audit shows Southern’s total revenue decreased $19 million (8.1%), while total expenses decreased only $3.9 million (1.6%). The LSU System did not have the same problem as Southern when it came to revenue and expenses. It did lose a lot of revenue—a decrease of $114.6 million—but operating expenses declined by more, $195.2 million. And while Southern’s schools saw a decline in enrollment from fall 2013 to 2014, the state’s flagship system saw its student population grow.
Gannett Louisiana has the full story.