Financial Data Show Increases in Operating Margins of Independent Colleges

The latest CIC Financial Indicators Tool (FIT) reports, released in July 2019, provided CIC member institutions with customized financial trend data calculated from the most recent Integrated Postsecondary Education Data System (IPEDS) and GuideStar updates. The FIT reports allow member institutions to assess their individual institutional performance on a set of indicators and to make benchmarking comparisons with similar institutions.

One indicator, the Operating Margin Ratio, measures whether an institution is operating within its available resources to educate students by showing whether an institution ends fiscal years with a surplus or a deficit. A 4 percent annual surplus is the target for financial health; prolonged decreases may indicate financial distress. The 2019 FIT data for this ratio—covering the 2011–2012 to 2016–2017 fiscal years—show that in both national and regional contexts operating margins have rebounded from a decline that began in 2013–2014 and bottomed out in 2015–2016.

In 2016–2017, the national median Operating Margin Ratio was 3.9 percent, compared with the previous year’s -1.5 percent, approaching the 4.0 percent recommended level for financial health. To provide historical context, in 2012–2013 the comparable figure was 6.1 percent, which dropped to 5.4 percent in 2013–2014 and plunged to 1.4 percent in 2014–2015.

By region, institutions in New England and the Midwest posted the highest median Operating Margin Ratios in 2016–2017 (6.9 percent and 4.6 percent respectively, increasing considerably from -1.5 and -2.7 percent respectively in 2015–2016). The Far West region followed with a healthy 3.9 percent, up from -2.7 percent in 2015–2016. Institutions in the West posted the lowest regional ratio median (1.4 percent, up from 0.3 percent in 2015–2016).

FIT Operating Margin Ratio by Region

Line graph depicting operating margin ratio across six regions and the national median
Source: Council of Independent Colleges Financial Indicators Tool, 2019.

CIC’s Financial Indicators Tool benchmarking report is produced by the Austen Group and is provided at no cost to CIC Institutional Members thanks to the generous support of Ruffalo Noel Levitz. View more information or contact Lesley McBain, director of research projects, at lmcbain@cic.nche.edu.