Liberty gets fine-ancial
LU tests perfectly in financial stability
Liberty University recently achieved a perfect score in a test of the financial stability of private and public institutions by the U.S. Department of Education.
The test looked at more than 3,000 institutions during the 2014-2015 school year, examining their debts and assets to grade the overall financial health of the institution, according to the Liberty University News Service.
Institutions were graded on a scale of -1 to 3, with three being a perfect score and scores lower than 1.5 considered failing.
Liberty received a perfect score of 3, joining more than 800 universities including Temple and Harvard.
Liberty’s Vice President of Financial Analytics Richard Martin said the school is doing even better financially than the score from the department would indicate.
“Another number to look at is the composite financial index which ranks on a 0-10 rating, and Liberty has been at a nine or above the past four or five years,” Martin said. “Most schools are at the four or five range.”
Martin said Liberty is maintaining stability even as their revenue and assets increase almost yearly because of what the leadership learned from the poor economic state of the university in the 1990s.
“We were coming out of a time where we had to be very fiscally conservative with everything,” Martin said. “We learned some things that we were able to apply at a time in higher education where a lot of change had happened, and we were well-positioned to take advantage of them, mainly the prominence and acceptance of online education in the early 2000s.”
The online program at Liberty is what Don Moon, Liberty’s chief financial officer, said was a major key to the ability of the school to gain its revenue.
“The online program gave us the flexibility to grow, and it’s what really helped push the revenue up and grow more quickly,” Moon said.
Liberty has 95,000 online students in addition to 15,000 residential students. According to the Liberty University News Service, Liberty passed $1 billion in net assets in 2012, a mark that Harvard took 329 years to reach.
Moon said Liberty began experimenting with alternative forms of education even before the internet. Liberty had an established distance learning program starting in 1985 that allowed students to take a class under the proctoring of their pastor even if they were not on campus. Liberty then began using the internet and the online site blackboard in the early 2000s, which allowed for tools like timed tests and discussion groups.
According to Martin, 2,500 online programs were added in higher education between the years of 2013-2015.
This model of both residential and online education has propelled Liberty into such a positive state financially that they have more freedom to make the financial decisions in each department to best serve the students.
“A lot of schools have to draw from their endowment to help cover their operating cost, but we are fortunate enough that our revenue exceeds our operating cost,” Moon said. “We are able to add into our endowment every year to continuously grow it.”
Moon said this added flexibility allows the university to plan farther into the future than was ever possible before.
“We used to have to plan what we would do tomorrow and for this week, now with the funding that we have, it allows us to plan for next month and next year,” Moon said. “It took a big burden off of us being able to plan for things a lot further into the future.”
Martin said this planning includes maintenance for the new buildings being constructed as part of Liberty’s master plan as far as 60 years into the future.
“If we don’t plan for the renovations that will be required in the future now it will never happen,” Martin said. “It’s like a retirement account on steroids.”
Martin said he wants to avoid the possibility of having to borrow funds from partners outside of the school in order to complete these renovations because it may lead to unwanted consequences.
“When you start getting into partnerships, that’s how some schools lose their autonomy, which is important for us in maintaining our Christian mission,” Martin said. “A lot of schools have to compromise their mission in order to keep or get financial partners.”
Moon said maintaining Liberty’s mission of training Champions for Christ will always be the goal of the school.
“We try to make the best financial decisions that will benefit students the most,” Moon said. “Training up Champions for Christ will always be the basis of how we make our decisions.”
Cockes is a news reporter.