Special Topics Paper #2: Arcadia University

Arcadia University (formerly known as Beaver College) was established in 1853 under the auspices of Beaver Female Seminary. According to their history, Beaver College transitioned into a coeducational institution in 1972 and obtained university status with a name change in 2001 (Arcadia, 2014a). Presently, Arcadia University enrolls over 4,000 undergraduate and graduate students in over 90 degree and certificate programs. Additionally, Arcadia’s College of Global Studies receives high praise and it renowned within the higher education sector. This dedication is noted within the Arcadia Promise to provide, “a distinctively global, integrative, and personal learning experience” (Arcadia, 2014c).
Moody’s Investor Service (2013) projects a negative outlook within the higher education sector. However, over the last five years Arcadia has maintained stable financial ratios and has completed several major capital programs. For instance, in 2010 the University’s endowment was valued at $46.8 million and has grown to $58.2 million in 2013. However, it should be noted that other sources of gifts, contributions, and grants have decreased by 50% over the last five years. According to Moody’s Investor Service (2013) weak economic conditions could be the cause for the decrease in financial support.
Arcadia’s main sources of revenue consist of net tuition and fees, auxiliary enterprise, and net revenue from The College of Global Studies. Its current operating margin ratio is at 1.76%, which is slightly under the optimal target of 3% - 5% (see Appendix A). This phenomenon could be explained by a slight decrease in the total number of students. Over a five-year period, Arcadia has gradually experienced a slight decrease in students from 4,004 in 2009 to 3,906 in 2013. To address this issue, Arcadia has created a five-year strategic plan (2013 – 2018) to improve and strengthen their programs and infrastructure.
Kelly and Carey (2013) support the idea of levering partnerships to maximize impact and cost-effectiveness within an institution or initiative. In 2013, the College of Global Studies was able to contribute over $1 million in revenue to the University’s operating budget. As a leader in the international sector, Arcadia is able to utilize their experience and resources to provide study abroad opportunities to members outside of their institution. Currently, the College of Global Studies enrolls students from more than 300 colleges and universities nationwide (Arcadia, 2014b). Therefore, Arcadia has added this program into their strategic plan with visions of expansion and improvement.
Overall, Arcadia’s financial ratios meet the optimal targets (see Appendix A). However, their cash & investment to debt ratio falls short. Currently, Arcadia’s liquid assets are unable to cover 100% of the university’s debt. Townsley (2002) explains, “…small colleges will face tremendous pressure to make capital investments” (p. 171). As such, Arcadia recently completed two major capital projects with expansion of the Student Center and the Sports Complex. Currently, the institution has obtained Series 2013 Bonds to cover $4.7 million in outstanding bonds and several capital improvement projects. These projects place an additional strain on the institution’s debt ratio and could cause serious financial instability if they are unable to maintain positive revenue.
Burke (2011) expresses the need for institutions to build negative entropy by increasing their endowments and cash and investment to debt ratios. Additionally, the institution should develop a campaign to increase student enrollment within their graduate and global studies programs, as numbers in these categories have dropped over the years. While all of these recommendations are mentioned in their current strategic plan, it is imperative that administration allow for feedback as they trudge through the process.