FOR IMMEDIATE RELEASE April 6, 2015 CONTACT: ERIC COTE (401) 374-8500 [email protected] Saving Sweet Briar Forensic Accountant Releases Interim Report As of August 2014, Sweet Briar College Financial Records Indicate No Immediate Financial Threat to Warrant Closure CPA Also Challenges College President's Claim that $250 Million Endowment is Needed Richmond, VA - The forensic accountant hired by Saving Sweet Briar, Inc. to review the finances of Sweet Briar College has completed his initial review and reports that as of August 2014, the college's financial condition was stable and did not support the decision to close the college. R. Steven Spitzer, a CPA with Yount, Hyde & Barbour, P.C., who serves as auditor of record for a number of Virginia colleges, examined the College's annual financial statements from the past five years, independent ratings of the college's finances and other metrics in reaching his conclusions. Among the measures used in his analysis were the Composite Financial Index (CFI), developed by a number of consulting groups, endorsed by the Council of Independent Colleges and widely used in assessing the health of educational institutions, a financial responsibility composite score from the United States Department of Education and a study by Forbes magazine. A summary of Spitzer's findings is below. "Assuming the College's finances are handled in a prudent and responsible way going forward, it would still remain financially viable," Spitzer's report stated. "Today's independent report validates what we have said from the beginning," said Sarah Clement (Sweet Briar College, AB 1975; University of Virginia School of Law, JD 1984). "The numbers used by the administration to justify their decision to close Sweet Briar College simply do not add up. Today's report also underscores the urgency of gaining access to additional information from the College so we can assess the school's true present day financial standing." Spitzer's report also questions claims by Interim President Jones that the College needs a $250 million endowment to stay open, an assertion Jones has made publicly in the media. An endowment of that size would rank third in endowment-funds-per-student in the region - above the University of Virginia. "It is difficult to imagine why Interim President Jones would claim that an endowment of this magnitude is necessary to keep Sweet Briar open," said Spitzer. Another indication of a college's financial standing is its accreditation. The Southern Association of Colleges and Schools Commission on Colleges (SACSCOC), the regional commission that accredits Sweet Briar College, has not issued any warnings or made any changes to its most recent accreditation statements about the College. If the College was in dire financial condition, as Sweet Briar's President and Board of Directors have claimed, SACSCOC, which is charged with monitoring the institutions it accredits, would have spoken on the subject. END R. Steven Spitzer, CPA, CFE April 6, 2015 Preliminary Analysis of Financial Condition of Sweet Briar Institute Sweet Briar College's Financial Condition Did Not Warrant Closure An initial review of Sweet Briar College's finances shows that the College was not in dire financial straits just eight months before the College's Board and Interim President announced they were closing the College for financial reasons. Assuming the College's finances are handled in a prudent and responsible way going forward, it would still remain financially viable. Three reliable sources, two of which were released only eight months before the closure announcement, show that the College is not in bad financial shape: On July 30, 2014, a study by Forbes magazine was released grading the financial health of more than 900 private not-for-profit institutions. The Forbes study took into account nine components, broken into three categories to determine the financial health of private institutions. Sweet Briar College received a rating of 3.899 out of 4.50 and was given a grade of "A". The College ranked number 88 out of the over 900 institutions studied. Only four institutions in Virginia ranked higher: Washington and Lee, the University of Richmond, Hollins University and Randolph College. The remaining 23 Virginia institutions ranked by Forbes fell below Sweet Briar College. The Composite Financial Index (CFI), developed by a number of consulting groups and endorsed by the Council of Independent Colleges to assess the health of educational institutions, provides a more complex picture of the financial health of an institution. The CFI score is calculated based on information from each institution's audited financial statements. Comparison of CFI scores over time provides a long-term view of an institution's financial performance. The CFI score falls along a scale of -4 to 10. An institution with a score of greater than 3 is considered well-positioned to strategically invest institutional resources to optimize achievement. The CFI for Sweet Briar College was 5.09 and 4.72 for the years ended June 30, 2014, and June 30, 2013, respectively. The USDOE uses a financial responsibility composite score made up of three ratios based on official audited financial statements to gauge an institution's financial health. Composite scores range from negative 1.0 to positive 3.0. A score greater than or equal to 1.5 indicates a financially responsible institution. The USDOE's composite score for Sweet Briar College was 3.0 (the highest score possible) as of June 30, 2013, the yearend date of the most recent Department of Education report. The Facts Do Not Seem to Support Interim President Jones' Claim that the College Needs a $250 Million Endowment to Stay Open Interim President Jones has asserted publicly several times that the College needs $250 million in its endowment to remain open. See, e.g., Sheryl Stolberg, "Anger and Activism Greet Plan to Shut Sweet Briar College," New York Times (March 22, 2015). It is hard to imagine why such a claim would be made. Sweet Briar College has about 700 students. Colleges and universities with $250 million endowments are typically much larger, and include Duquesne University (about 10,000 students), Seton Hall University (about 10,000 students), and Ithaca College (6,723 students). See National Association of College and University Business Officers (NACUBO), U.S. and Canadian Institutions Listed by Fiscal Year 2014 Endowment Market Value. Sweet Briar ranks 17 out of 35 public and private colleges and universities in the region in terms of overall endowment size. See Virginia College Endowments as ranked by NACUBO, February 2015. As reported by the Washington Post on January 28, 2014, Sweet Briar College ranks a very respectable 10 out of 30 public and private colleges and universities in Virginia, Washington, D.C. and Maryland, with respect to the amount of endowment funds per-student. See Top College Endowments Per Student (2013), Washington Post, January 28, 2014. If Sweet Briar College had a $250 million endowment, as Interim President Jones suggests is required, it would rank third in endowment-funds-per-student in the region - above the University of Virginia. Id. It is difficult to imagine why Interim President Jones would claim that an endowment of this magnitude is necessary to keep Sweet Briar open. Conclusion Our preliminary conclusion upon a review of the publicly-available data is that, as of approximately eight months before the closure announcement, the College was financially viable, and there was not an urgent financial reason to close. 1. 2. 3. 4. 5. 6. 7. 8. Data Reviewed and Considered Audited financial reports for years ending June 30, 2009, through June 30, 2014. IRS Forms 990, "Return of Organization Exempt from Income Tax," for years ending June 30, 2010 through June 30, 2013. Financial analysis by the U.S. Department of Education. Financial analysis by Forbes magazine. Composite Financial Index (CFI) Methodology. NACUBO, U.S. and Canadian Institutions by FY 2011-2014 Endowment Market Value. NACUBO, Virginia College Endowments, Rank and Percent Change, February 2015. Top College Endowments Per Student (2013), Washington Post, January 28, 2014.