The Harsh Reality

This is the present value four year cash profile of the average of 31 at risk schools in The 2024 New England Survey assuming no decline in enrollment over time.  As long as the average school chooses to or must continue to use cash to finance $19 million of investment in their physical plant, the $14 million negative cash flow will dramatically reduce cash in Year 1 after the Base Year and:  A cash deficit will emerge immediately and grow exponentially thereafter.  All dollars are in millions: 

To continue to pay the bills, the average at-risk school would  have to see an increase in giving, invade endowment or somehow secure more non-student revenue, borrow more, or cut operating expenses or investment in plant.   But, as noted earlier, at about 5%, the average at risk school is already drawing close to what is considered a prudent maximum on its endowment. And it has limited borrowing capacity if it could secure additional debt at all. And at only $30 million, the average for controllable non-compensation expenses is too small to offer any potential for significant savings.  So, this is the reduction in force ("RIF")  that would allow the school simply to carry on in terms of cash if it continues to invest in its physical plant – again assuming no decline in enrollment:

And this is what things would look like if enrollments decline by just 5% over 3 years.  Between Years 1 and 3 after the Base Year, a cumulative RIF of 171 positions or 25% of the initial faculty and staff count would be needed:

And, without a doubt, some of the 31 will experience declines at the upper ends of the projected risk spectrum.   With a 10% decline in enrollment, it would take a 28% RIF - 188 out of 673 faculty and staff positions - and at the 15% level,  it would take a 35% RIF - 233 out of 673 faculty and staff positions - to get by if additional cash for operating purposes cannot be secured.