After the sudden closure of the University of the Arts in June and continued volatility in the higher education market, The Inquirer decided to take a closer look at the financial health of other small, nonprofit colleges in our region.

At the request of the applicantJulee Gard, chief financial officer at a small college in Illinois, rated 13 small, private, low-endow local colleges using her Financial Viability Index. The schools were Widener, La Salle, Arcadia, Delaware Valley, Gwynedd Mercy, Eastern, Holy Family, Immaculata and Neumann Universities; Chestnut Hill, Rosemont and Ursinus Colleges; and Moore College of Art and Design.

” READ MORE: Some small, private colleges like Rosemont and La Salle are in fragile financial health, a review of 13 schools found.

Here’s a closer look at Gard and her model.

Who is Julie Gard?

Gard, who had a more than 30-year career as a certified public accountant, is vice president for administration and finance at the University of St. Francis of Joliet, Illinois, a position he held for nearly nine years.

She got it doctor’s degree in higher education management from University of Pennsylvania in 2023, and while there he developed his Financial Viability Index, primarily to assess the financial health of smaller and mid-sized, largely tuition-dependent, private colleges.

What is her financial viability index?

Her index classifies schools into five categories: poor, marginal, good, very good and excellent. The index, scored from zero to 100, includes eight factors, with an emphasis on how well the school covers its operating expenses with revenue from tuition and room and board. Key indicators are earnings before interest, depreciation and amortization and cash flow. Other factors include return on net assets and the amount of reserves a school has relative to a year’s worth of operating expenses.

The system calculates points for each of the eight factors and adds or subtracts depending on whether the school the three-year trend is up or down.

How did she use the model for her thesis?

Gard evaluated more than 370 private colleges with full-time equivalent enrollments of less than 2,000 students. She used information gleaned from their audited financial statements beginning in fiscal year 2016, because that’s when the federal government began requiring nonprofits that receive a certain amount of federal grants to make the statements available on a federal website. Most audits also include data on the previous year.

What were the conclusions of her dissertation?

Gard is adamant that the model should not be used to predict college closings.

But in her 2023 dissertation, she noted that nearly 80 percent of the 39 private institutions that closed since 2017 were in the worst financial health category immediately before closing. Since then, the percentage has risen to about 85%.

She also found that schools in the worst category could improve. “There were 11 institutions that were (a financial viability index) in the red for the four years (FY17 to FY20) in this study, and as of January 2023, none of those 11 institutions have announced their intention to hang up,” she wrote.

Her tool, she wrote, can “provide small, tuition-dependent institutions with useful information to help institutional leaders respond in a timely and effective manner.”

What did her review for The Inquirer entail?

She calculated the scores for 13 colleges from 2015 to 2023 or 2024 in cases where the most recent audited financial statements became available to the public.

What did her review find?

Four schools — La Salle, Rosemont, Delaware Valley and Neumann — were placed in the lowest or poor category for fiscal year 2023. Neumann improved one category to marginal for 2024, while La Salle remained in the poor category for 2024; Audited 2024 financials for the other two schools were not available as of Nov. 8.

Holy Family University was the only school to score in the top category – excellent – ​​for all years of study.

Eastern University, Moore College of Art and Design and Gwynedd Mercy University scored the second highest category, or very good.

Ursinus College and Widener and Immaculata Universities were in the second lowest, or marginal, category, while Chestnut Hill and Arcadia were in the medium or good category.