Financial Data Show Member Institutions’ Focus on Maintaining Adequate Reserves

CIC released the 12th edition of the Financial Indicators Tool (FIT) in October 2018, providing CIC member institutions with customized financial data drawn from the most recent U.S. Department of Education Integrated Postsecondary Education Data System (IPEDS) and GuideStar data updates. Member institutions can use FIT to assess their individual institutional performance on a number of indicators as well as to make benchmarking comparisons to similar institutions.

One of the indicators, the Operating Reserve Ratio, measures an institution’s financial strength by comparing expendable net assets to total expenses. The ratio represents the portion of a year that an institution can meet its financial obligations with readily available assets. When looking at the 2018 FIT data for this ratio—covering the 2010–2011 to 2015–2016 fiscal years—the national pattern is one of declining ratios (see Figure below). National and regional median ratios, however, still remain above the baseline financial threshold of .40 (equating to 40 percent of a year, or 4.8 months).

2018 FIT Operating Reserve Ratio by Region

Line graph depicting operating reserve for six regions and the national median across six academic years
Note: Numbers in key are of all baccalaureate and master’s-level, private nonprofit institutions in each region. Total N = 724.
Source: Council of Independent Colleges. 2018. Financial Indicators Tool.

The national median Operating Reserve Ratio in 2015–2016 was .55, which is identical to that of 2010–2011; in 2013–2014, the national median peaked at .62. By region, institutions in the Far West and New England respectively posted the two highest ratios (.66 and .65) in 2015–2016, followed by the Midwest region (.60). The lowest regional ratio median was that of the Southeast region (.43). While declining trends should be viewed with caution, the results also reflect CIC member institutions’ continued focus on reducing expenditures and maintaining sufficient reserves to continue operations should revenues be less than expected.

Ruffalo Noel Levitz generously supports the benchmarking project, which allows CIC to provide the reports at no cost to all its Institutional Members. The Austen Group, a division of Ruffalo Noel Levitz, gathers the data and prepares the FIT reports for CIC. View more information about FIT and CIC’s other benchmarking services or contact Lesley McBain, CIC’s director of research projects, at