The University of St. Thomas in Houston seems to have turned a corner with its finances in 2024, though its position remains precarious as the school posted a deficit in its operating budget for the seventh consecutive year, according to the institution’s most recent annual audit.
A massive increase in donations and endowment earnings improved St. Thomas’ overall standing, said Julee Gard, a university CFO in Illinois who studies the financial health of small and mid-sized private schools. That contributed to a $15.8 million boost in assets, improving on worrisome reports when available financial resources fell by a combined $30.7 million in the 2022 and 2023 fiscal years, she said.
“One year does not make a trend, obviously, but if the prior two years were the start of a really bad trend, they certainly turned that around,” Gard said. “I think it shows relative stability.”
The private Catholic university released its 2024 audited financial statement this month, ahead of a crucial site visit in its once-a-decade reaccreditation process. Financial sustainability is considered a major factor in the review – and St. Thomas’ audit by an independent group showed that asset improvements and cash flows “ended in accordance with accounting principles generally accepted in the United States of America.”
St. Thomas officials similarly pointed to growing assets as a sign of a better financial outlook. The 2024 fiscal year ended with $227 in net assets between cash, investments, property and other means, according to the audit. The endowment, which makes up the majority of the assets at $146 million, performed well, Gard said.
And while a gap persisted between earnings and spending for core operations, those operating losses narrowed to $5.8 million in 2024, down from $11.9 million in 2023 – as the university still increased financial support to students.
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Gard, at University of St. Francis in Illinois, said the 2024 financial statement was more promising. She analyzed the document using an index she created to assess the health of small and mid-sized private institutions. Gard doesn’t use the model to predict school closures, though about 85% of schools that closed since 2016 had performed in the lowest threshold of her index immediately before shutting their doors, she said.
St. Thomas was in that lower threshold in 2022 and 2023 but scored this year in a middle “yellow” zone, according to her analysis.
The index speaks most to liquidity: While most of St. Thomas’ holdings are not cash and some donations and endowment amounts are restricted, a portion could be converted to cash if necessary, Gard said. Schools that are most financially unstable are usually those that take loans against the endowment, which wasn’t the case for St. Thomas, she said.
On its face, a negative cash flow appeared to be the most concerning issue for St. Thomas but was actually misleading, Gard said. A $15 million cash shortfall – the worst it’s been in seven years – includes amounts spent to pay down accounts and accrued liabilities.
“That’s not a sign of deteriorating financial health,” she said.
Gard’s analysis found a decrease in available cash reserves, however. She and other experts also agreed that it’s a best practice for universities to keep their operating revenues and expenses even. Investments that are used to cover the losses are dependent on the stock market.
“I would not say that this is … a rosy picture, but they’re making it work,” said Brown, the Texas A&M professor.
See here and here for the background. I appreciate that UST is able to provide a college education for a modest price. For the sake of their students, I hope they continue getting their finances in order and are able to carry on with that mission.